Court order payments can be scary and confusing. If a court order has told you you have to pay the money back, they will generally say to do it in installments or by a specific date.
This is always the first option given to you, so you have the chance to pay back the debt without your accounts being seized. If you don’t stick to these rules, and the creditors believe you are holding back, there are other ways for them to get their money back.
Knowing these rules can help you manage your money and speak up when something goes wrong because there are areas when your account cannot be touched.
Even when you owe money to someone, you have rights. There are some forms of money that the courts and your debt collectors cannot touch because they are considered essential under federal law.
These forms of money are:
– Accounts that contain only government benefits.
– Accounts with $3,600 or less and contain no government benefits.
– Accounts with $3,000 or less and contain some government benefits.
If you have an account that contains some government benefits but also includes your wages and savings, then the debt collectors cannot touch it if the total sum is $3,000 or less.
If you are in New York State, then you have additional rights given by the state itself. The amount that you can have in your account is larger than in other states due to the larger cost of living needed in New York.
Your bank account will be frozen when a creditor that you own money takes your debt to court and has received a court judgment against you.
The bank gets notified of this judgment and freezes the account until the court settles the issue. At this time, the creditors cannot take your monthly payments out of your account, but neither can you.
Although you cannot take money out, you can still put money in. Remember, if you choose to do this, that money may become frozen too. Until the courts settle the issue, it would be wise to keep your money out of the frozen bank account, so you can still pay for bills and groceries.
Your bank cannot give you notice of when your account will be frozen because if you were given this time, you could try to remove or hide the money. This is why many people only find out their account has been frozen when they go to an ATM or try to pay with their card.
That being said, the creditor or debt collector is required to notify you that a lawsuit has been filed against you. This pre-legal letter will ask you to pay some or all of the amount before taking the issue further.
If you don’t comply, you will receive a legal letter stating that the creditor or debt collector has obtained a judgment against you. At this point, your account will be frozen.
This means that if your first notice of the court case was from a frozen bank account, then you were not given proper notice under the law. Talk to a lawyer to see what this means for your case.
As soon as the judgment has been made against you, the creditor has the right to take the money you owe them. They can do this at any time.
Many judgment creditors will seize these funds right away, but there are cases where the funds won’t be taken at all. This might be due to a number of factors like accounts that hold benefits in them.
The most likely situation will be that the judgment creditors will wait a couple of weeks before taking money from your account.
Until the fund has been removed, your account will remain frozen. This is another reason why some judgment creditors might not withdraw the money at all.
There is a process to unfreeze your bank account and erase the judgment against you, and it is called ‘vacating.’ In the vacating process, you can explain that you have an excusable default or that the court has a lack of jurisdiction for the case.
If the vacating process is accepted, then the creditor and debt collector has no right to freeze the account, and you will be able to use it again.