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Legalease
Legalease, Lawyer
Category: Legal
Satisfied Customers: 16348
Experience:  15 years exp all aspects of general law
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Today a creditor took everything that was in my checking account:

Customer Question

Today a creditor took everything that was in my checking account: I was not given notice of this prior. How can they take everything? Are they not limited to 25% of my income? Don't they have to determine what that is first ?
Submitted: 1 year ago.
Category: Legal
Expert:  Legalease replied 1 year ago.
Hello there.-I am sorry that this happened to you. First, you will have to contact your bank and find out what court (if any) or what government agency ordered this to be done. A creditor cannot simply take money from your account like this unless they are the IRS or state tax or child support authority (no court proceeding is needed for those creditors to attach you accounts and the bank cannot do anything else but comply). All other creditors (such as credit cards) must have a court order before they can take such action and before the bank will honor such a request/action.-If this is a non government creditor, the creditor would have made an application to a local county court (it may be where you are living now or it may be a prior county that you lived in) and the "notice" that they are required to send you of the action and the hearing date is simply to your last known address to them. That's right -- they do not need to serve you with Sheriff or constable or any formal service of process other than putting it into the mail to any address that they have on file for you that they claim is your last known address. The creditor then certified to the court that they "served" you via US Mail and the court sets a hearing date. In the meantime, the complaint and court summons to you are probably in a dead letter file somewhere or were misdirected somewhere -- and then the court hearing continues without your presence and the court issues a default judgment. Once the court issues the default judgment the creditor then claims that they cannot find you and the court issues an order to attach your property "wherever it may be found" to pay the debt. And then they run searches and use investigators and find your bank accounts and start grabbing everything that they can get. Yes, it should be illegal but it is not. In fact, it is perfectly legal and your bank had no choice but to file the court order and follow it. Because it was a default judgment, there is no limit to the amount of the garnishment. -So, at this point you need to close the account and stop any direct deposits into it immediately and go to another bank or try to deal in cash if you can do so. Ask them for a copy of the order to stop and divert your money in the account (they should be able to tell you who asked for it and what court approved it). You will then have to go to the clerk's office at that court and ask them for a Motion form. You must prepare and sign a Motion to Remove Default Judgment and state in the materials that you never received any paperwork from the creditor and you never received a court summons and in the interests of justice and fairness, you respectfully ***** ***** the court re open the case and set the matter up for a hearing date to remove the default judgment and reverse the bank and property garnishment order. Courts regularly remove default judgments under these circumstances and give you an opportunity to defend against the charges or account OR to work out a payment plan so that they will not be permitted to garnish wages or bank accounts so long as you are paying as agreed. Regarding the amount already taken, the court might give some or all of that back to you if your financial situation is so dire that you do not have enough money to meet your next months expenses -- that is really a decision that rests with the individual judge in your case after hearing all sides and reviewing any materials you submit to them. -I hope that helps. Please let me know if you have any further follow up questions. If not, can you please press a positive rating before you leave the website so I will be paid for my time. Doing so will not cost you anything additional -- it is simply the trigger to Just Answer to pay me for my time. THANK YOU VERY MUCH-MARY
Customer: replied 1 year ago.
I still don't understand how they can take everything we have. Everything that I have read says that they can only take 25% of your income. How can the court just allow them to take everything all at once and leave you with nothing to pay for living expenses? If they know our bank account numbers they know who our employers are as well. Why wouldn't they have to garnish wages instead of leave a person destine to be homeless? The debt is for $23,000.
Customer: replied 1 year ago.
There was only $1500 in my account that they could take, so I assume every dime that goes into that account they will automatically withdraw it up to $23,000?
Customer: replied 1 year ago.
What else can they do? Can they force the sale of my home? Can they take my vehicles which are paid off and unrelated to this debt?
Customer: replied 1 year ago.
Also I run a non profit organization and they have not pulled the money out of that account. Should I expect that will happen soon?
Expert:  Legalease replied 1 year ago.
Hello again --
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I apologize for the delay in returning your messages -- I had a personal emergency and was off line from about noon yesterday until just now. I will answer your additional questions as you presented them :
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1. Yes, there is a wage garnishment limit of 25% in a situation where a creditor receives a regular judgment against you. However, as I explained above, I believe that this is a situation where a default judgment was issued against you because you failed to file an answer to their written complaint so that the case could go forward to either a settlement or trial (in either case (settlement or trial) the court would have access to your wage information and a statement of assets and liabilities which is required from the defendant / debtor in such cases). When you did not file an answer and did not defend against their lawsuit, the court issued a default judgment against you and immediately following that, the court issued an order to permit the creditor to seize any assets that are known or unknown. So, you have to remember, in this case, as it stands right now, the court and the creditor have not received any financial information from you in order to process any garnishment or anything else. So, the court literally permits the creditor to grab whatever they can and to put a stop to this you must file a Motion to Remove Default at the court where the case took place against you.
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2. Yes, if you continue to deposit money into that account, the funds will be diverted to the creditor up to the full amount of the default judgment against you (the court typically permits the creditor to add a reasonable attorneys's fee award to the creditor because your credit agreement most likely states that in the event that they pursue court action against you for any outstanding balance, the defendant / debtor must pay the creditors reasonable attorneys fees and costs -- so if the 23K amount is the full amount of the debt, then the default judgment amount may be a bit more than that amount due to a possible addition of attorneys fees and costs). This will continue to happen until you go to the court hearing and the judge vacates the default judgment and the collection orders to the bank. This is why I suggested that you close the account and if you have any direct deposits it might be in your best interests to change the direct deposits to another account that does not have your name on it for the time being if it is in any way possible for you to do so.
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3. Yes, they could potentially seize your vehicles and then have the Sheriff sell them at auction with the proceeds going to pay down the debt. They can also put a lien on your house and potentially move to foreclose if there is enough equity available in the house to pay them after the property is foreclosed and the mortgage (if any) is paid. THis process takes some time to complete (about 6 months or so) and if you file the Motion to Remove Default you will actually have a hearing on that matter probably well before any such drastic actions such as this take place.
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4. If the non profit's bank account is in the name of the non profit with you as the signatory, then the creditor has no right to attach that account because you do not own it. There have been mistakes made at the bank level in such cases (the creditor insists it is your account and the bank initially permits the garnishment -- and then you call it to the attention of the court and the court will order the creditor to return any funds it received from that account).
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I hope that this additional information helps and again, it sounds like the creditor used an old address that it had for you and sent the complaint to that address and you did not receive the court paperwork and you still have not received it. (The documents would be a written complaint against you with the creditor as the plaintiff and you as the defendant) and a written certificate of "service" from their local lawyer's office basically telling the court that they mailed the complaint and any additional documents to the "last" address that they had for you when you were actively using the account.
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Again, I am sorry that I was not online yesterday afternoon. Please let me know if you have any additional questions. If not, can you please press a positive rating below so I will be paid for my time assisting you -- I am paid nothing unless you press a positive rating before leaving the website. Doing so will not cost you any additional money - it simply acts as the trigger to Just ANswer to pay me for my time assisting you with these issues.
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THANK YOU
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MARY
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Customer: replied 1 year ago.
You said that I should close that account and go to another bank but wouldn't that bank also be subject to the same thing?
Customer: replied 1 year ago.
Never understood I just re-read it and you said into an account without my name on it
Customer: replied 1 year ago.
Never mind I misunderstood I meant to type
Expert:  Legalease replied 1 year ago.
Hello there --
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Yes,all of the banks where you have any individual accounts or joint accounts with your name on th account would be subject to the same thing happening == however, changing banks and/or accounts will buy you additional time to get your Motion to remove default in front of the original court where it was filed and changing banks and/or accounts will slow down the entire process so that no more money is removed from any of your accounts to pay for this debt while you are waiting for these matters to be heard by the court. Please let me know if you have any additional questions. If not, can you please press a positive rating below so I will be paid for my time assisting you -- I am paid nothing unless you press a positive rating before leaving the website. Doing so will not cost you any additional money - it simply acts as the trigger to Just ANswer to pay me for my time assisting you with these issues.
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THANK YOU
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MARY