A lender can garnish your bank account? I didn't know that

[NNN0LHI]

http://www.chicagotribune.com/classified/automotive/sc-ym-0314-marksjarvis-20100314,0,7603366.column

What to do when you can’t make car payments

Gail MarksJarvis

March 14, 2010

Q I feel like I can no longer afford to make my car payments. How much will it hurt my credit to turn my car back in?

C.Y., Bolivar, Pa.

A If you turn your car in, you will not be free of the debt. Your lender will continue to hold you responsible and probably seek repayment. That could mean garnishing your wages, said Chicago bankruptcy attorney Donald Leibsker.

Garnishing means some of your pay would automatically be taken out of each check and sent to pay off the car loan. It's a legal process, and the lender could also garnish your bank account.

[SoxFan]

1. They generally need a court order before they can do this

The IRS and federally guaranteed student loans have more leeway, and can go to town without a court's permission.

[lonestarnot]

5. In the form of judgment.

An that's not legal advise. :)

[sharesunited]

2. They need to sue and get a judgment, but attachment of bank accounts is available to them.

[JCMach1]

11. Not in all states...

[lonestarnot]

3. That is why bk protection used to be offered.

[stray cat]

4. its their money

[Grand Taurean]

6. Only with a court judgement.

Though if Sarah Palin had it her way, they could do so without a court order.

[Elmo39]

7. Not in PA

The only entity that can garnish wages in PA is the Government, ie child support or student loans. Car loans credit card payments etc Cannot attach your wages. They can get a judgement or put a lien on your property and repo the vehicle. You will still owe them the $$$
I am in the bankruptsy process right now.

[Donnachaidh]

8. welcome to DU Elmo! n/t

[Grand Taurean]

10. Welcome to DU.

I live in PA, so interesting to hear this.

[dixiegrrrrl]

9. What they can LEGALLY do and what they actually do

may be 2 different things.
Example: Legally, income from Soc. Sec. cannot be grabbed by creditors.
But, there are stories on the web of people's bank accounts being grabbed by creditors
who have automatic deposit of their Soc. Sec. checks.
Rules vary from state to state.
I sure would be researching what my state allows.

[hobbit709]

12. That depends on what state you're in.

In TX all they can garnish your wages for is nonpayment of child support, nonpayment of taxes and student loans.

[MercutioATC]

13. Check the terms of your loan.

Depending on the state, there may be language that allows the lender to garnish your bank account (without a court order) if you default.

[TexasObserver]

14. Depends on the laws of the state.

Garnishment of wages is not allowed in some jurisdictions, and even in those where it is allowable, there are limitations.

Garnishment of wages, even where allowed, usually requires that there be a FINAL JUDGMENT entered by a court of competent jurisdiction, one that meets the requirements of state law. And even that garnishment usually requires that the party with the judgment seek some court approval for the garnishment order.

In garnishment, the order is served upon the employer of the judgment debtor - the person whose salary they're attempting to garnish. Upon getting the order, the judgment holder serves it upon the debtor's employer.

If your employer is served with garnishment papers, they must follow them. However, if you quit that job and get another one, the judgment creditor has to find you and go get a whole new garnishment order against the new employer.

If a person does not pay a consumer debt, they will likely not have their wages garnished. Many defaulted consumer debts are never pursued beyond the use of aggressive bill collectors, who mainly send threatening letters and make any deal they can to get the debtor to send money.
--------------------------

I do not attempt to address the ability of government to garnish wages by administrative process, or for enforcement of child support. I also do not address the area of "pre judgment garnishment," which is both rare and unlikely in any consumer debt.

[SoCalDem]

15. How odd.. It would seem that if they take the vehicle back,

the ONLY additional thing they should be able to "take" from the client would the amount they "lost" on the resale of the repo-ed vehicle..not the full amount of the loan.. The full amount of the loan is paid and you then OWN the vehicle.. If they take back the vehicle, re-sell it, and still expect you to pay off the loan for the "ghost-vehicle", that should be illegal..

[NNN0LHI]

18. According to the article they sell the repo for pennies on the dollar at auction

And then the person who defaulted is on the hook for the difference in what they sell it for and what is owed.

I think the article gives an example of a car with about 9 grand owed on it going for 3 grand at auction. The person would be on the hook for the 6 thousand dollar difference.

Don

[SoCalDem]

19. adding insult to injury

buyer beware..indeed..

[old mark]

16. It depends on what state you live in - it is not legal in PA. nt

[Edweird]

17. Well, if it was widespread, it would eliminate debt collectors wouldn't it?

I don't think it's very common.

[cbdo2007]

20. This is why Dave Ramsey says never send creditors your checking information....

if you don't plan on paying them.

Some people will call in and say "These creditors say I owe $15,000 but if I give them my checking account info they'll just take out a one time $250 processing fee and then not worry about the rest."

Dave calls scam because he knows that once they have the checking info they can wipe out the account up to the amount they are owed.