Bank Freezes Check Account To Collect Credit Card Debt

A creditor can garnish a bank account after it obtains a money judgment and the Sheriff’s office issues a writ of execution. I am often asked whether a credit card company can freeze an account without a judgment and without even filing a lawsuit. The general answer is "no" but it does happen occasionally.

This week a prospective bankruptcy debtor called to complain that his bank had frozen his account without warning because he was delinquent on a credit card issued by the bank. Sometimes people don’t convey complete information to attorneys, and it could be that the credit card company had a judgment already. Another possibility is that the bank had issued a secured credit card and that there was a credit card agreement which gave the bank the right to collect by taking money from the borrower’s bank account without first going to court. In the absence of a secured credit card arrangement or a civil judgment the bank may have improperly collected its credit card debt in which case the borrower could have a claim against the bank.

posted by Jonathan Alper, bankruptcy and asset protection lawyer, Orlando, Florida

Comments

[Winifred]

what are the restrictions on banks which freeze accounts or credit cards because of alleged third-party fraud? Is there a time limit, and can they freeze large amounts of money for a small alleged fraud? Must they provide some access to a token amount of money if their investigation exceeds a week?

[Credit Card Application]

the borrower’s bank account without first going to court. In the absence of a secured credit card arrangement or a civil judgment the bank may have improperly collected its credit card debt in which case the borrower

[first credit card]

if you are eager to acquire your first credit card it is essential that you choose a better credit card company. much better that you do comparison from those credit offers. You have to consider the interest rate, credit limit, the benefits and rewards you can get from a particular bank. If you already have obtained a credit card, you should learn how to manage your finance wisely to avoid debt problems and bad credit.

[suemccartin]

Bank of america does this routinely, I've also heard of two married people with separate checking accounts at the same bank (a local credit union) having had their checking account frozen because the other party, with their own account, overdrew the account and had unpaid fees on their account. I don't exactly feel this is quite reasonable but apparently banks are getting away with this. I feel it's something that needs to stop.

[xs4]

Its sad if a credit car d company can freeze a bank account without judgment.
I found this article really very nice and helpful according to use of credit cards.
Credit Card Debt