Threats, phone calls, letters, scare tactics – all methods of creditor harassment a bill collector may use to try to collect the money that you owe. Before you know it, you go to an ATM machine and try to get cash and then, Boom! Your bank account is frozen. A creditor may freeze your bank account in an attempt to obtain payment for a debt. They may freeze up to two times the amount of money you owe, and you will be unable to access this money. Any additional money that you deposit may be frozen as well. A freeze on your bank account can mean that you have no money to pay your rent, buy groceries or even pay for electricity or gas. Also, when you owe money to a creditor and are not making payments, the creditor may pursue a judgment in order to garnish your wages. You may not even be aware that this is occurring. Instead, you may get your paycheck one day and notice that money is missing! In New York, a creditor may garnish 10% of your wages in order to collect on a debt. Your employer has no choice but to comply with wage garnishment when it is ordered. This, coupled with other actions creditors may take (harassment, repossession and freezes on your accounts) can make your situation seem entirely helpless.
A lawyer can help if your bank account has been frozen or stop wage garnishment. If this was due to a default judgment (wherein the creditor sued you in court for the money you owe, but you did not show up, the judgment would be awarded to the creditor by default) your lawyer may be able to help you contest this so the freeze on your account is lifted. Your bank will not give you notice before freezing your accounts. Once the bank receives the notice from the creditor, your funds will be frozen. You will need to take action to remedy the situation.
By law, the creditor is supposed to notify you that they have filed a lawsuit against you, and then that judgment has been passed. Their failure to do this may help your attorney in going to court to unfreeze your account.
If you are facing overwhelming debt and see no way out, a Chapter 7 or Chapter 13 bankruptcy may be the right option for you. When you file for bankruptcy, all creditors are immediately prohibited from contacting you or taking any action against you to collect the money they are owed – and this includes freezing your bank account. Additionally, your debt may be discharged (as in a Chapter 7 bankruptcy) or you may be able to work out a payment plan (as in a Chapter 13 bankruptcy.)
Chapter 7 or Chapter 13 bankruptcy may be the answer to stop angry creditors, unfreeze your bank account and stop wage garnishment. Once you file for bankruptcy, creditors must stop seeking payment for the debts you owe. You are immediately protected from threatening phone calls, garnished wages and frozen bank accounts. In a Chapter 7 filing, your debts are discharged. In a Chapter 13 filing, you work out a payment plan that works with your income and expenses, and your debt is discharged after the payment plan is successfully carried out.
An attorney at our office may be able to help if your wages have been garnished. By reviewing your unique situation, we can see if bankruptcy is the right option for you, and whether Chapter 7 or 13 would be more beneficial. Because we have extensive experience and knowledge in this area, we can help you make the right decision – that will help you secure a better financial future.