Can a Credit Card Company Freeze My Bank Account on My Pension?

Question from Sue, Can a Credit Card Company Freeze My Bank Account on My Pension?

Answer from AI:

In the United States, credit card companies can take legal action to collect unpaid debts, which may include freezing your bank account. However, there are specific protections in place for certain types of income, such as pensions.

Understanding Bank Account Freezes

A bank account freeze, also known as a garnishment, occurs when a creditor obtains a court order to seize funds from your bank account to satisfy a debt. Here are the general steps involved:

1. The credit card company files a lawsuit against you for the unpaid debt.
2. If the court rules in favor of the credit card company, they receive a judgment against you.
3. With the judgment, the credit card company can request a garnishment order to freeze your bank account.

Protections for Pension Income

Federal and state laws provide protections for certain types of income, including pensions. Under federal law, most pension benefits are protected from garnishment by creditors. This means that funds directly deposited from a pension into your bank account are generally exempt from being frozen.

Federal Protections

The Employee Retirement Income Security Act (ERISA) provides protections for private pensions, making them generally exempt from garnishment. Additionally, Social Security benefits, which often supplement pension income, are protected under Section 207 of the Social Security Act.

State Protections

State laws may offer additional protections for pension income. These laws vary by state, so it’s important to understand the specific protections available in your jurisdiction. For example, some states have laws that protect public employee pensions from garnishment.

Steps to Take if Your Account is Frozen

If your bank account is frozen, and you believe it contains protected pension income, you can take the following steps:

1. Contact Your Bank: Inform your bank that the funds in your account are from a protected source, such as a pension.
2. File an Exemption Claim: File a claim of exemption with the court that issued the garnishment order, providing evidence that the funds are protected.
3. Consult a Legal Professional: Seek advice from an attorney who specializes in debt collection and consumer protection law to help navigate the process.

When to Seek Legal Advice

If you are facing a bank account freeze or garnishment, it is crucial to consult with a legal professional. An attorney can provide personalized advice based on your specific situation and help you understand your rights and options.

Additional Resources

For more information on garnishment and protections for pension income, you can refer to the following resources:

• Consumer Financial Protection Bureau: Bank Account Garnishment
• Social Security Administration: Section 207 of the Social Security Act

Remember, while this information provides a general overview, it is not a substitute for professional legal advice. Always consult with a qualified attorney to address your specific legal needs.