Consumer Rights

• A creditor cannot freeze your bank account simply because you owe that creditor a debt. Before placing a lien against money in your bank account, the creditor must sue you and receive a legal judgment from the court. The court’s judgment against you, not the debt itself, is what gives creditors the right to seize your bank accounts. This protects consumers from falling victim to bank levies without having the opportunity to defend themselves in court.
  
  

Summons

• When a creditor decides to sue you, it first files paperwork with the court requesting a hearing of the case. It then must serve you with a summons and complaint to notify you of the lawsuit and give you the opportunity to mount a defense. State laws vary regarding how creditors must serve a summons, but most states allow creditors to send a summons and complaint via certified mail to your last known address.
  
  

Time Frame

• The summons will stipulate that you have a limited amount of time to respond to the court before the judge will automatically grant the creditor’s request for a judgment. During this time frame, the creditor does not yet have a legal judgment and cannot freeze your bank accounts. If you do not respond to the summons, the court awards the creditor a legal judgment by default. Thus, a creditor has the legal right to place a lien on your bank account before you respond to a summons if the time period for doing so expires and the creditor obtains a default judgment against you as a result.
  
  

Exceptions

• An exception to this rule applies if you owe unpaid child support, back taxes or unpaid federal student loans. Unlike retail creditors, government creditors do not need a judgment against you before garnishing your bank accounts. You will receive notice of the upcoming garnishment, but you will not receive a summons and the automatic right to defend yourself in court.
  
  

Exempt Income

• Unless the bank lien is a result of a debt you owe to the government, your creditor cannot garnish exempt income from your bank account. Exempt income includes such funds as unemployment, public assistance, child support, alimony and Social Security payments. If a retail creditor places a lien on your bank account and that account contains exempt income, fill out an exemption claim form with your bank in order to have the freeze immediately lifted.