Once you default on a payment to a creditor, they then have their legal rights to pursue means of collection from you. When you have something secured, such as a house or a car, if you ignore their repeated attempts of collection, the creditor can simply come and take back what was theirs in the first place; but what if it’s for a credit card or other unsecured debt? Many people have the misconception that the credit card companies cannot do anything to them personally and are just “out” on the money that is owed to them. Wrong!
Once you default on a credit card, the credit card company will send you to a collection agency who will attempt to collect the debt. When they cannot collect the debt after several attempts they will “charge off” the debt and send your account to an attorney (if they choose to, not all defaulted credit cards are sent to attorneys). The law firm may make several attempts to collect the debt as well and, after not being able to collect on the debt, they will file a civil complaint with the court for a judgment on the debt; meaning that it is court ordered that you pay that debt back.
Once the judgment is against you, the attorneys for the credit card company will send you something called a Notice of Right to Have Exemptions Designated. At this time you will list your personal property and attempt to protect it from the creditors whom are suing you. Your personal property in this matter would consist of homes, vehicles, bank accounts and such. Most people will either fail to fill out the paperwork or do so improperly. If not completed correctly or if all of your property is not protected, you will receive something called a Writ of Execution which allows the sheriff will come to seize any unprotected assets. So what does this have to do with your bank account? If you did not properly exempt your bank accounts the sheriff will contact your banking institution(s) and have your account(s) frozen.
Filing bankruptcy will take care of the debt of the judgment but does not automatically take care of any repercussions of the judgment. In the example of a frozen bank account, your bank account would not be unfrozen simply from filing a bankruptcy; the sheriff who ordered the account to be frozen must take additional steps. The sheriff must receive proof of your bankruptcy filing and contact the banking institution and order the account to be unfrozen. That could take several days which means you could go days without access to money within your bank account.
Although a creditor must take several steps to freeze a bank account – they are able to freeze a bank account after they obtain a judgment if the proper steps are not taken to ensure your property is protected.