 Don't blab too much to bill collectors
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 Dear
Bankruptcy Adviser,
I made a payment agreement with a debt collector to pay off a credit card. Before I could make the first payment, the debt collector levied my bank account. Is this lawful?
-- Jacqueline
 Dear
Jacqueline,
If you have a payment agreement with a debt collector to resolve
a judgment against you, it may not be lawful for the debt collector
to levy your bank accounts. The agreement should state that the
debt collector will not levy your accounts. However, even without
this language, the collector cannot violate any agreement until
you have failed to make agreed-upon payments.
Any violation by the collector may be a good case for an attorney
familiar with the provisions of the Fair
Debt Collection Practices Act. You may have a cause of action against the
debt collector and possibly any attorneys acting on behalf of the debt collector.
One of the keys is to determine that the agreement was entered into before the
date when the sheriff served the levy upon your bank account. Obtaining
the necessary proof may be difficult or impossible without a signed, written agreement.
Otherwise, you may be in the difficult "he said, she said" predicament
in which you only had one employee's word, but nothing in writing. In
the future, you might be able to avoid this problem from your first communication
with the debt collector. When you communicated with the collector about a payment
plan, you may have provided your banking information. You may even have set up
automatic deductions from your checking account. Providing
a debt collector with your banking information is very risky, as it could be used
against you in later proceedings. For example, with that information the collector
can get an order of attachment from the court, provide that order to the sheriff,
who then serves notice of levy upon the bank you have told them about. Any money
you have in that bank at the time of levy could be taken from you to pay the debt
collector. If you did not provide that information, then the debt collector may
not have known where to find your money. When I am negotiating
for a client, I never tell the collector anything. Of course, whatever information
I do have about my clients is protected by the attorney-client privilege. While
I hope you never find yourself in this situation again, if you do, remember that
you want to tell the collector as little information as possible about your assets.
The debt collector will attempt to levy and/or attach as many of your assets as
possible to pay the outstanding debt. My other
columns have more information on how to deal with collectors. Negotiating
with a collector is very tricky business. They are aggressive negotiators and
many are willing to "cross the line" if they know you lack the ability
to catch them. You can negotiate on your own, retain an attorney or professional
negotiator. While this can be expensive, a wage garnishment order, bank levy or
property lien can be much more expensive. OK, Jacqueline, you're
probably wondering, "What do I do now?" First, I would consider changing
banks. If you have additional debt and if you continue to use that account, the
collector will probably try to levy it again. Then, make sure that you are current
with your accounts as best you can. Finally, check
your credit report, for free, every year to make certain that there are no
stray marks that can hurt you down the road. You've had to suffer in the short
term -- now it's time to look out for yourself in the long term.
Justin Harelik is a practicing attorney in Los
Angeles. To ask a question of the Bankruptcy Adviser, go to the
"Ask the Experts"
page and select "bankruptcy" as the topic.
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