Seizing/Freezing Bank Account

[Nesreen]

Greetings all - I live and work in Texas and have some unpaid credit card debt. I recently had a creditor contact me at work, which I informed him he was contacting my place of business. A few minutes later, our HR manager informed me that the gentleman called her and requested an employment verification.

If my wages in Texas can not be garnished for credit card debt, why would he need a verification of employment? Also, can a creditor/CA simply seize money from your bank account, or would a judgement need to be granted prior to doing that? I haven't been ordered to court, so do I need to be worried about my bank account as of now?

[LUEser]

No, they can't do anything to your bank account legally without a judgment.

And then they have to have a writ of execution on top of that each time they want to hit your bank account.

But since they have no judgment, they get no writ. Your bank acct is safe.

And you're also right about TX being a non wage garnishment state.

Why they would verify your employment? Not sure exactly.

This is a creditor you say, and not a CA?

If it was a CA, I'd be asking what purpose they had in verifying employment, especially if they already knew my location.

[flacorps]

No, they can't do anything to your bank account legally without a judgment.

Whoa WHOA WHOA!.

Creditors's remedies in TX suck so badly that legal evolution has produced a Newtonian equal and opposite reaction.

The monster that has been spawned is a means of attaching a bank account at the outset of a suit so that the monies are frozen until the suit is resolved. That is how creditors collect in TX ... attach on the front end, levy on the back end (which means that even if you can find an attorney to fight for you, how are you going to pay him?).

Which means that TX debtors need to exercise care regarding their bank accounts before that lawsuit gets filed. Move it out of state, or at least to a small bank in a neighboring county and whatever you do, don't deposit any small checks from dubious sources ... they're "trojan checks".

This attorney now knows the OP works. That makes the OP suitworthy if the lawyer can find the bank account. There are about a million ways to do that, many of them illegal, but hardly anyone gets caught doing the illegal stuff and when they do there's hardly ever even a slap on the wrist (for the creditor, anyway--big bank employees selling accountholders' info in bulk have gone to prison).

[jq26]

Great info flacorps. I had learned in class that there were states that allowed the freezing of D's assets at the time of filing suit, but I never knew how it was done.

Also, great info on the "trojan ckecks". That is a really good way to find assets from the potential plaintiff's standpoint. Good to watch out for this.

[Methuss]

Um, the CA violated the FDCPA.

The FDCPA specifically says a debt collector may contact 3rd parties ONLY to verify location information. Since the CA called you, they already had that. Calling your HR department was not only unnecessary, but not legal.

Some CAs do this as a means of spitefully attacking the debtor by messing with the employer relationship. Now your HR department thinks you are a deadbeat on a debt and a liability to them. If you work in an industry where honesty is a job requirement you are now a risk...the employer may think you more likely to steal to pay the debt. Right or wrong this happens with employers... a lot.

If your HR department notified you by e-mail or something written of the call they got, print a hard copy and take it home. If you can, take home a soft-copy as well (make a .pst in Outlook and save the message to the file then copy it to a disc). That's your evidence if you should find the need to sue the CA for their violations.

[LUEser]

OP, my sincerest apologies. I had no knowledge of such actions that were available to creditors in TX.

I was much too hasty to post a response.

Thank you FLA and Methuss for clearing this up for the OP.

Again, my sincerest apologies, OP.

I will add this, however, with hesitancy.

Have you considered using a holdings source such as Paypal to transfer your funds to from the bank prior to them filing suit.

They have a pretty sweet Debit Card program, and it only take about two weeks for you to get your card. (This is assuming you don't want to relocate to a bank out of state, though I think that would be a very sound move on this part.)

And it places a very large burden to track money trail. (i.e. how can they attach a lien on a paypal account that money was transferred into from an out of state bank?)

One last time OP, sincerest apologies.

[flacorps]

The good news is that paypal accounts are subaccounts of a master bank account. That's very tricky for any lawyer to attach.

The bad news is that Paypal is very touchy about Paypal accounts being misused for any purpose other than legitimately buying and selling. They will freeze your account in a heartbeat if they catch a whiff of any sort of shenanigans. And their schnoz gives 'em false readings now and then.

There are plenty of Paypal horror stories on the web. If you're going to use their basket, definitely do not put all your eggs in it.

Unless there's an existing judgment already, Methuss is right that the FDCPA has been violated ... one important rule in dealing with creditors is to always push for your rights (heck, push beyond your rights when you can).

[Andy Simmons]

"Also, can a creditor/CA simply seize money from your bank account, or would a judgement need to be granted prior to doing that? I haven't been ordered to court, so do I need to be worried about my bank account as of now?"

---Prejudgment remedies for an unsecured creditor in Texas are very limited compared to other states. There is something called a writ of attachment, but I have never seen it used by a credit card debt collector in Texas.

For one thing, they have to file a motion with the court to get this remedy, and the court will not grant that kind of motion without a hearing, which means the debt collection lawyer will actually have to go to court and do some lawyering. I don't think they care much for that. They mostly just like to show up and take default judgments against all you folks who don't fight back or who botch your do-it-yourself defenses. Getting a writ of attachment takes some real legal skill. The judge will be scrutinizing their work very closely if they try to get that remedy.

And they also have to post a bond. That means they have to put up some money. They don't like to do that.

Furthermore, the amount of the debt has to be liquidated, meaning that the amount of damages has to be certain.

Plus, they would have to know your bank account number and the name and address of the bank, in order to serve the writ. Without this info, the constable has no place to go with the writ. And it costs them money to have the writ served. There's a fee they have to pay to the constable for service of the writ.

Perhaps the original creditor might have known your bank information from looking at the checks you used to pay your credit card bills, but by the time the debt has been sold to the debt collector, this information has been separated from the debt portfolio.

Never seen it happen. Not in Texas.

By the way, I just won another credit card case today. The lawsuit was five figures. I filed a motion for summary judgment and the debt collection company non-suited their case without a fight. The debt purchaser plaintiff could not prove they owned the debt and could not prove the amount. Their business records were a sham, as is often the case.

[Andy Simmons]

"The monster that has been spawned is a means of attaching a bank account at the outset of a suit so that the monies are frozen until the suit is resolved. That is how creditors collect in TX ... attach on the front end, levy on the back end (which means that even if you can find an attorney to fight for you, how are you going to pay him?). "

---I am a Texas attorney and I really don't see it this way. You make it sound like the collections bar (they call themselves "creditor's rights lawyers) have recently gotten some law passed in Texas that lets them run around seizing bank accounts whenever they file a lawsuit. There are some prejudgement remedies available in Texas, but they are nothing new, and as I explained in my other post, they are not easy to obtain for an unsecured debt and I have yet to see anyone attempt it against your average credit card debtor.

No, Texas is still a debtor's state. The main problem credit card debtors have in Texas is the same problem everywhere - the most recent bankruptcy reform makes it harder to declare bankruptcy, so if you do lose one of these cases, you face harder choices than before.

Before the bankruptcy reform, I worked on two or three bankruptcies a week, on average, and quite a lot of the debt was credit card debt. The credit card companies never even showed up at the creditor meetings. They typically got nothing when a consumer filed for bankruptcy.

It was after the bankruptcy reform that I first started getting calls from all these people getting sued by credit card companies...

Since the bankruptcy reform, I have not worked on a single bankruptcy case.

[flacorps]

Never seen it happen. Not in Texas.

TX is a big state. What goes on at one end of her may be different from what goes on elsewhere. I don't live in Texas, and frankly all I know is that on the boards I see numerous Texans posting that their bank accounts have been frozen before they even knew they were sued.

That could mean that a single creditors firm in a single county has a single judge in their pocket ... could be a big county with only a few judges sitting on those kinds of cases and they may have worked something down at the clerk's office that makes sure their cases get assigned to that judge.

If it is an isolated situation, it may stay isolated forever, or it could easily spread.

But it does make sense that creditors would be doing it since they have so little else in the way of post-judgment leverage.

[flacorps]

On another board, Why Chat said this back in '04:

In Tx and other "debtor friendly" States. it is VERY easy to have yor bank account frozen WITHOUT a "Court order". They just need a rubber stamp Magistrate's "freeze order" PRIOR to filing suit.

I trust Why Chat, and I have since seen this pattern from a handful of unhappy Texans.

It makes sense that creditors whose options are extremely limited will evolve workarounds wherever possible.

Hitting the bank account at the outset seems to be one such potential workaround.

I'm sure that use of the search feature with appropriate keywords on a few of the debtor-related boards would turn up examples of it happening ... I have found some that were surprises for people, but they related to judgments that existed prior to the account freeze.

[Andy Simmons]

Perhaps, but I'd be surprised if there was a judge in Texas who would go out of his or her way to help credit card debt collectors do something that extraordinary and in all likelihood, improper. Most of these debt collection firms don't have that kind of influence, and it really goes against the grain of Texas legal culture to liberally allow these kinds of remedies against consumers on unsecured debts.

I just listened to an hour long CLE on credit card debt colleciton in Texas, and in an entire roomful of debtor and creditor lawyers, not one lawyer mentioned this happening or even being an option. Then, in the very next presentation, a lawyer gave a talk on pre-judgment remedies, and he didn't mention it being used or capable of being used against credit card consumers. So I just find it hard to believe this is something that is going on here.

If you could point me to a link where someone explains exactly what happened and under what procedure, I could provide some analysis.

[flacorps]

PMing Why Chat might produce some examples. Or Why Chat might just chime in here ...

Stuff goes on here and there that defies imagination. My favorite was up in the northeast someplace (I can't remember which antediluvian state this was), but what they did is call the debtor in monthly for a debtor's exam in a distant county (at one point the interval was two weeks--and this person had cancer and MS and had to drive to the exams). First exam that got skipped, the debtor would have gotten picked up by the sheriff, except the debtor had a BK filing receipt in hand. Bail would have been set at the exact amount of the debt, plus court costs--payable entirely in cash, no bond. Once bail was made, the amount would have been seized and paid over to the creditor. Happy ending for everyone but the debtor.

[flacorps]

I just listened to an hour long CLE on credit card debt colleciton in Texas, and in an entire roomful of debtor and creditor lawyers, not one lawyer mentioned this happening or even being an option.

Is the secret formula on Coke cans or KFC buckets? Especially if there's something not quite kosher about the secret formula?

[flacorps]

If you could point me to a link where someone explains exactly what happened and under what procedure, I could provide some analysis.

Lookee what I just stumbled across:

http://www.tyla.org/newsitem_detail.cfm?NewsItemID=107

I'll also note that this can be done to a Californian, but only for business debt.

http://www.barkerolmsted.com/about/attorneys/documents/PrejudgmentAttachment_Barnier.pdf

Anybody else who knows about anyplace else, please feel free to chime in.

[Andy Simmons]

This assumes the purchaser of the credit card debt is willing to go to the expense of filing the motion, attendnig the hearing, and posting the bond.

It also assumes they know your bank account information.

None of these are likely in the third party purchaser of credit card debt cases. Dodeka, Unifund, etc., they don't like to invest that kind of money up front in these cases.

And just because they get this remedy doesn't mean they won the case or get to keep the money. They still have to file suit and win their case. If they lose, the money that was frozen in your account is returned to you.

See why they don't bother with this in Texas?

[flacorps]

It also assumes they know your bank account information.

That's easy. They just send the debtor a "trojan check"

[flacorps]

Why be the unlucky person this happens to? Bank in a neighboring county, bank out of state, bank in your spouse's name or just don't bank.

[admin]

Just my opinion, but I think I would side with Andy, who is a lawyer in Texas.

[flacorps]

Just my opinion, but I think I would side with Andy, who is a lawyer in Texas.

Oh, I agree the probability may be low. But the burden is also low (simple protective actions) and the liability is whatever you have in the account, which regardless of whether it is low or not is probably significant to you, and at least a significant inconvenience if it goes away (unless you just have a small account as "bait" so you know to take some other actions you want to put off unless absolutely necessary).

So with an unacceptable liability and a low burden, the low probability doesn't necessarily trump in my analysis.

[jq26]

So with an unacceptable liability and a low burden, the low probability doesn't necessarily trump in my analysis.

What are you? Some kind of lawyer?

[gator944]

Let me just say, Trust what FLACORPS has to say.

[kbyrd50]

have a judgment on me in Texas for a credit card for 5,000. I don't have any money in the bank nor do I have any assets. I usually just cash my check. Can they prohibit me from cashing my wages at my bank if they freeze my checking account for a judgment? Any answers would greatly be appreciated laws in Texas