Can debt collectors take money from my checking account?

by Kathy

I live in Ohio, got injured at work---needless to say, credit cards took a hit! I am still not able to work and receiving calls,letters from collectors. Can they take my workers comp (it is direct deposited into my checking account). Would it be better to take my name off the account completely and just leave it in my husbands name?
Will they be able to touch it without my name being on it?

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May 10, 2010
Can debt collectors take money from a checking account
by: Mary

Thanks for submitting your debt collection question on our Q&A page.

Debt collectors who are trying to collect past due credit card debt usually cannot take money from your checking account unless they sue you first, win their lawsuits and get judgments against you. However, in Ohio, workers comp payments are 100% exempt; in other words, debt collectors cannot take that money as payment for a past due debt you owe. That's the good news. The bad news is that if a debt collector does get a judgment against you and then tries to collect on the judgment by seizing the money in your bank account, the bank will freeze ALL of the funds in the account, including your workers comp money, even though it's exempt, and to get access to those particular funds, you'll have to request a hearing. In your hearing request, indicate what portion of the funds in your account are from workers comp. Then when the day of your hearing arrives, bring proof of the source of those funds -- deposit information, for example. Assuming you provide the court with adequate proof, you will regain access to the workers comp money that is in your account.

My best advice if you are behind on your credit card payments and concerned about what debt collectors may do to you is for you to explore your debt management options right away. One of those options is working with a nonprofit credit counseling agency; it may be able to get your credit card companies to agree to let you clear up your past due balances by making smaller payments you can afford in order to clear up your debts.

Another option is contacting a reputable debt negotiation firm to explore the option of settling your debts for less than what you owe on them. Click here if you would like to get a free consultation with a debt negotiation specialist. Also, if you click on the following link, you can find out how the negotiation process works by listening to a debt settlement podcast I did with Michael Bovee, who is the president of Consumer Recovery Network.

Bankruptcy is a third option you may need to consider if neither credit counseling nor debt negotiation is right for you. Go here for a free consultation with a bankruptcy attorney.

Bottomline, I urge you to take control of your financial situation immediately by exploring your debt management options so you can avoid the legal hassles associated with being sued and having the funds in your bank account frozen and your credit histories further damaged by court judgments.

Please share what happens with your situation in the comments section for this question. We are very interested in hearing how this turns out for you.

May 10, 2010
Debt Management
by: Kathy

Thank you for your answer regarding collectors taking money out of my checking account. In all honesty, I did engage a debt management company to help with this debt. Unfortunately, it was a rip off. All they did was take 3000.00 and some dollars, right off the top and kept the collectors from calling me. It will be very hard to trust a debt management company again!

Reply from So sorry to hear you had such a bad experience. These firms are no longer allowed to collect up front payments. Hopefully that will help others avoid the problems you've had.

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