debt

How debt collectors get your money

Levies

If debt collectors discover that you have a checking account or savings account, they can serve the bank with a bank levy, and you'll receive notice that the bank has frozen funds on your account, says Labrador. A bank levy is when a bank account is frozen so you cannot access it while creditors take the funds that are owed to them.

"Then you'll have 21 days to tell them why it's not the lender's money. Otherwise, it will be pulled from your account to satisfy the judgment," she says.

Attachments

With an attachment, collectors can take some types of personal property, such as your car or house, to sell to pay off your debt. But there are a number of restrictions that govern attachments. They usually can't take your car if it's the only one you have, and they can't take the home that you live in. But they can take second homes, second cars and other valuable property such as boats or land, says Detweiler.

Still, you have rights. As you make your way through the debt collection process, keep good records. Get everything in writing, take notes during phone calls and refer to the Fair Debt Collection Practices Act if you're concerned about harassment, unfair practices or illegal or deceptive actions taken by collectors. You also can take your complaints to the Federal Trade Commission, says Detweiler.

"The collection industry still generates more complaints to the FTC than any other industry," she says.

Detweiler also recommends talking to an attorney, which doesn't have to be expensive and can help you understand your rights and obligations. "If you have a good case, an attorney may be willing to take your case on a contingency basis," Detweiler says. "It's worth it to at least get a free initial consultation."

Avoid judgments at all costs. Judgments are valid for years and often for decades. They can be renewed if you don't pay the debt or declare bankruptcy, says Labrador. And they will land on your credit report.

Throughout the debt collection process, the best strategy may also be the simplest, says Brennan. "I advise consumers to play by the rules," he says. "If you owe the debt, pay it. If you can't, try to work out a plan to pay it back over time and get it in writing. And when creditors step over the line during the process, don't be afraid to find an attorney who will step in on your behalf."

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