Yes they can. But only after certain procedural steps are taken. In other words, a creditor cannot simply walk into your bank and demand that the teller drain your account and hand it over to them.
When you have an agreement with a creditor (whether it is a credit card, medical services, payday loan, etc.), the contract you sign spells out the particulars of the agreement. Included in this agreement is what constitutes a breach of the contract. This is usually in the form of non-payment. So if you are unable to make monthly payments on your loan, the lender will start calling you crazy, send you nasty letters, and even threaten to sue.
Eventually, the creditor will file a lawsuit based on a breach of the contract. But there are certain procedural requirements that must first be done. To begin with, you must be properly served with a summons. This document is typically presented to you (or someone above the age of 18 who can take it on your behalf) at your home or place of work. The summons will give the court date and time, and should also provide all the documentation regarding the suit against you.
If you do not show up to court on the designated time and place, then a Default Judgment will rendered against you. This will then allow the creditor to move forward with three main remedies: 1) a wage garnishment; 2) a lien against your home; or 3) a bank levy.
If the last option is taken by the creditor (again, only after they have received a judgment in their favor), then a proper notice of levy must be sent to your bank. This notice will inform your bank of the fact that a judgment against you has been won by the creditor, and that it should put an immediate freeze on your accounts. The freeze has the effect of shutting down the account, making it impossible for you to access any money that was in the account at the time of the freeze.
But the bank is also required to hold the funds for a period of time (typically thirty (30) days). This is described as the “return date.” If nothing has been done before this time, the bank cannot return the funds to your account. It must release the funds to the creditor.
However, one option at this point would be to file a St. Louis bankruptcy. In such a situation, so long as you file your bankruptcy petition before the return date, the bank will not release the funds to the creditor, and your account will be unfrozen (making it available to you again). And depending on which chapter of bankruptcy you file, your unsecured creditors (credit cards, medical bills, payday loans, etc.) will be wiped out completely.
The affordable St. Louis bankruptcy lawyers at The Law Office of Jennifer Alter-Rieken have been assisting people with their debts for over ten (10) years. We have two locations: in the Central West End, at 1 North Taylor, St. Louis, MO 63108; and in the Twin Cities of Festus / Crystal City, at 1000 Truman Blvd (Highway 61/67), Jefferson County, MO 63019. The initial consultation is free of charge. So contact us today to learn more!!