Can credit card companies tap into bank accounts to collect debts?

As Jim has stated, they can if the accounts are with the same bank. It is usually covered in their "terms of agreement"

They can place a freeze on a persons bank accounts prior to obtaining a "judgment" from the courts. This is usually the first sign that one is about to be sued in court to collect.

However, there are rules regarding this, there are some types of funds that are considered "exempt" from debt collection under state or federal law. The rationale behind these laws is to allow people to preserve the basic necessities for living. Exempt funds remain exempt when deposited in checking, savings or CD accounts so long as they are readily available for the day to day needs of the recipient and have not been converted into a "permanent investment."

Although it varies by state, exempt funds would typically include:

Most government benefits, including Social Security, unemployment insurance, veterans' benefits and public assistance

A percentage of your earned wages, which varies by state

Alimony or child support payments, and other payments for the support of a dependent

Proceeds of the sale of property which is exempt from collection, such as a homestead exemption

Disability or unemployment benefits from your employer

Workers' compensation

Retirement benefits, such as pension or annuity payments

Life insurance benefits due to the death of an insured or for wrongful death claims

Payments due to personal bodily injury, in an amount that varies by state

Proceeds of guaranteed student loans

Hope this helps answer your question.

This Site Might Help You.

RE:

Can credit card companies tap into bank accounts to collect debts?

What can credit card companies legally do to collect on their cards?

All of that information is in your cardholder agreement but generally speaking unless you have a credit card and a checking account with the same bank then they cannot dip into your bank account. Here is some more detail on what exactly can and cant happen when you do not pay your credit card debt:

Yes, if they take you to court and get judgment awarded to them, then they pursue other options to collect it. At this time, they are also less likely to put you on a payment plan with lower payments when they could garnish your check for 25% (not sure if that's universal, but it applies in GA) and get what's owed to them quicker. They can also garnish your bank account. If you make payments to them out of your checking account or the get your previous payment info from the credit card companies, you have given them the key to your money. They don't even need a bank account number, just your name/SSN and the bank name. Any accounts that your SSN is linked to they an freeze. I have seen elderly parents call livid because they had their child on the account in case of an emergency and their accounts were wiped clean. In GA they place the hold up to 30 days and can do it multiples times on the same account until they collect all that is owed to them.

So word of advice, NEVER give your bank account to the collection company (mail in a money order or do western union, but NO checks) and then if you do provide it to them or the original creditor, be sure to not default because they have all your info already.

As I know it they usually try to collect on it and if you don't or won't set up a repayment plan or pay them then they take you to court and at that time you could appear in court and try to set up a repayment plan which the judge approves or not and then there's additional interest, court costs and fees and attorneys fees added to that. If you don't set up a repayment plan then, then they will attempt to garnish your wages which is a pain in the but for them so the next step is they will attempt to find out what assets you have and put a lien against them which means when you try to sell them up pops the judgment and your judgment would be paid first before you receive any money from the sale of that car, boat or house. They "can" make you sell any one of those just to get their money. And because your debt continues to draw interest and stuff on it it can really add up fast to become a big debt and they really want their money, so if you're living under the roof of your parents then they can even go after your parents for that debt and put a lien on what they owe, in this state (FL) at least, so you want to get that debt paid off quickly. The answer to that is to get a second or third job. Depending on how high the bill is they could put a hold on your savings account (because that's an asset) although I don't know if they would do that to a checking account or not.

PayPal can do that.

Here's something to think abt: Even if they are not allowed to tap into ur bank acct to collect debts, a collector can run a credit check and see how much is ur balance on other accts and ask u to use that credit card to make ur overdue payments. They can see how much money u have.

Another thing to think abt: U can try to arrange payments with the collection agencies to pay for ur debt. Usually the collection agency has a retrieves the flat amt of the money that u owe. That wld mean, no interest...

They are not supposed to do that without your permission, however, I had one credit card company drain my bank account after I gave them the account number to withdraw one payment, and I had a heck of a time getting that money back. The credit card company claimed it was an accident.

They would need a judgement from a court in order to garnish your bank account. Some states don't even permit this such as Texas and North Carolina. Also, they can sue you if its a large amount usually 5K>. Otherwise they will bother the hell out of you with collection calls.

Only if your credit card is with the bank where you hold your bank account - otherwise no. If you owe money & do not repay they will hassle you until you make an arrangement. If you ignore them you will end up with bailiffs at your door.

if you have a Account in the Same bank, then they legally do that, But if you don't have a Account in the bank, Credit card provider bank, then they can't.