Sunday, January 5, 2014

Frozen Bank Account

What I would have done differently…

I would have been shopping for a bankruptcy attorney as soon as I thought there was a possibility that bankruptcy would happen sometime in the future.  How would I have shopped?  I would have asked others who went through it for a referral, I would have done my homework on the internet and I would have interviewed the attorney’s based on their attitude towards my situation.  I would have found out how much it was going to be and I would have asked what the whole process was and how long it would take!


Help!  My checking account is frozen by a creditor!  What should I do?


This happened to us and was the deciding (desperation) factor in filing bankruptcy.  We went to use our debit card to purchase gasoline and it was declined.  We found out that a very old creditor was able to put a garnishment on our checking account.  I was a bit unnerved by the fact that someone could do this without any prior notice to us, but what the hell, nothing surprised me anymore!  The account was frozen and we had 7 days before all of the money we had (all 1027.00 of it) would be sent to this creditor until the whole $5000 was paid in full.  Seriously, how were we supposed to function?  How ridiculous was this? At this point we already had an IRS levy and a garnishment on my husband's paycheck, how much more could we take?


Talk about panic!  This had to end and it had to end now.  My first reaction was to file bankruptcy immediately. The sad thing was that our so called bankruptcy attorney did not bother to tell us the full story.


Did you know…that if you receive a garnishment against your checking account that there is only so much that they can take.  Well I did not know that, in fact, I did not find out until the bank forwarded the garnishment papers.  Who ever is garnishing you can not take the whole checking account.  I believe that every state is different but if you are having financial problems and are close to having a legal judgment against you, you might want to find out what the “exemption” is.  In the state I live, they can not take anything over $1250 in your bank accounts if you are the head of the family.  They also have to leave $350 for each dependent.  This is not an automatic exemption.  You have to go to the circuit clerk office or sheriff’s office of your city or county and file it.  It is granted automatically.  This is good information to know in case you get this far into problems. 


Another thing we learned is that if you go to court and make an agreement with a creditor, do not ever write them a check out of your working checking account.  The reason is because if you default even in the slightest way, they know where your account is and can quickly garnish it without you even knowing about it until it actually happens.  If they do not know where you have your checking account, it will take them a long time to find out.  Send them a money order from 7/11, it will protect you just in case things get worse.