Wednesday, October 24, 2007

Debtors Beware

Who, these days, isn't a debtor? If you're not, you're doing a great job and are very blessed. Well, we all are blessed. Just in different ways. Some are blessed with learning lots of lessons in trusting in God.

It's odd the things we learn as life goes on...things we wish we never knew. I just found out something from the experience of someone close to me (not myself, my husband or my kids). Did you know that if you owe a creditor, even if you think that bill has been paid but you're mistaken, that they can put a freeze on your bank account? Yep, it can happen. Do they warn you first? Oh no, that way you can remove the money first. So they catch you by surprise. It's a hold on your account so they can get you to call them and set up a payment plan. So don't panic if it we all did, because we didn't know. When someone puts a hold on your account, though, how do you buy gas to get to work or buy food for the baby while working it out?

You might ask: How did the creditor get the bank account information? The social security number. It's very simple. What's astounding is that it seems to be legal.

Are there any lessons to be learned from this, or anything we can do to prevent it? I know what some will say: Stay out of debt. All well and good, and a very good idea. And there are whole books written on the subject of staying - or getting - out of debt.

But since much of the population is 'in it' already, what about privacy? What about the sacredness of our bank account? Some answers to life's problems aren't cut and dried. You can have an account at more than one bank. Will they freeze both? I don't really know. I hope not. Perhaps you can be sure that everyone you've ever done business with knows whenever you move, so they can get in touch with you if they need to so you don't get surprises. Maybe you can skip direct deposit so that if someone attaches to your account, you will at least have some cash coming. Oh my. I've been preaching to one of my son's to get direct deposit, and we certainly have it. It's way more convenient than not having it, and also gives us free banking.

I guess most of all we should try to keep some cash on hand...for any emergency, how much depends on a lot of factors, including what we can afford to put aside and what we feel is safe to keep in a home. And we can keep on praying for ourselves and others in our crazy economy. Most of all, we can remember the lilies of the field and trust in the One who so arrayed them in glory like Solomon.

Editor's Later Note: The power of prayer is at work again! The person in this story received an expected but forgotten refund for something, on the very next day, which will buy them gas and food while they get this straightened out. Remember the lilies of the field!


diana said...

I had no clue they could do that!

Debt free is a great way to strive for. I am amazed at the debt load people take on to have school loans, wedding loans, house loans, car loans, etc. I always say have a small cheap wedding!

I wish housing was more affordable Thats another story!

Thanks for giving me something else to pray about...!!!I am always looking!

Sarah said...

Well, this is sort of true, Margaret Mary, but the way you write it, it makes it sound like if you miss a payment on your MBNA card you might wake up tomorrow with no access to your bank funds. That is simply NOT TRUE. I would hate for people to be scared about this and add it to the many other worries that come along with being a slave to a creditor master!

Regular credit cards, mortgage holders, and most other usual creditors canNOT "just" attach your bank account whenever they feel like it. A secured creditor can seize the asset that is held in security. An unsecured creditor MUST go through due process including suing, winning, and receiving a judgment.

It is true that certain (usually governmental) creditors such as the IRS can simply attach and empty your bank account without "warning" (though normally they would at least let you know you owe something first, but they are basically terrorists anyway so who knows what they WILL do).
Law enforcement can also freeze your assets during an investigation (they need to have something to base the warrant on, but it's pretty loose). A laborer who did work on your house, can put a lien on your property.

However, a mere credit card debt collector cannot attach any of your assets without first suing and receiving a judgment. Usually before going to the trouble of suing you, there have been NUMEROUS attempts on the part of the creditor to collect the debt, so I certainly wouldn't call that "no warning."

If someone has changed his phone number and moved to get away from the calls and letters, they shouldn't be surprised when they get sued and attached with "no warning."

So, in general, what you can do is keep in touch with your creditors, let them know if you are having financial issues, live on a written budget and try to squeeze out even the smallest amount of monthly payments to them. Dave Ramsey (who has worked with millions of debtors, often says that he thinks there is something in the collection system that gets confused if they are receiving ANY money (even a few dollars) so that you are VERY unlikely to get sued while you are sending small payments.

Also, keep your information on your credit report current so that creditors can contact you. If they have no way to reach you, that is a real good way to get sued without knowing it.