Capitol One locked my husband's account and took 100% of the money, it that legal?

Question

We had had some medical difficulities and we were paying off credit cards one at time, $400-$700 per credit card per month as spreading small payments across many credit cards wasn't getting us anywhere. Today, my husband's bank account was locked and ALL funds withdrawn. I understand that they can garnish wages but wipe an entire account clean of over $2000? I thought there was some protection against that and there was a cap of 25% or something. I have 2 small kids with needs and 2 weeks until he gets paid again.

Answer 1

I think when you owe the bank the money, it has the right to take it. It's only when you owe a different bank or company money that they can't just take it like that.

I would get in touch with the bank and arrange a meeting to discuss this. Tell them that you are trying to pay off your debts and having difficulty. They should relent and offer you some sort of payment plan. Hopefully they will be merciful, especially with Christmas coming up.

Answer 2

Here's the lay of the land. When a creditor has a judgment against you, there are a few standard ways the creditor can collect: liens filed against the property, wage garnishment and bank levy.

Most creditors immediately execute a lien against your property (i.e., your home) because eventually they will get their money. What happens is that the judgment lien will continue to accrue interest until the property is sold. At that time, the lien will be paid in full before ownership of the property can change hands.

If a lien is not possible, creditors will attempt a wage garnishment against your earnings. Technically, a wage garnishment is a legal procedure through which some portion of a person's earnings is required to be withheld by an employer for the payment of a debt. Here's what this means: After state and federal taxes are withdrawn from your paycheck, what's left is known as your "disposable earnings." In general, the creditor may then garnish up to 25 percent of these disposable earnings. The creditor doesn't garnish from your bank account, however; the amount is withheld by your employer.

The law also sets the maximum amount that may be garnished in any workweek or pay period, regardless of the number of garnishment orders received by the employer. For ordinary garnishments (i.e., those not for child support or any state or federal tax), the weekly amount may not exceed 25 percent, no matter how many creditors you have.

The loophole to a wage garnishment order is if you quit your job. Creditors believe that individuals will not quit their jobs simply because of wage garnishment orders, since they will still be making 75 percent of their paychecks (after taxes withheld). What's interesting is that while people under wage garnishment often do want to keep their jobs, and while employers are not allowed to terminate an employee because of a wage garnishment order, sometimes that's exactly what happens. I have seen employers find "another reason" to terminate an employee, which suspiciously followed receipt of the wage garnishment order. Why? Employers are people, too. Some feel that a person with bad credit is a risk in other ways, and this inclines them to find ways around the law.

Finally, the creditor may know where you bank and will issue a levying order to your financial institution. This process varies from state to state, but in general, a creditor can levy your account down to zero.

Usually a creditor will do a "skip trace" (which means they search out your location -- residence or employment) to find out where you live and then call the banks in that area. At that point, the creditor will obtain and serve a writ of execution on the bank. While a bank won't give out your personal information, once the writ has been served, the bank must withhold funds held at that bank. Your account gets drained to the limit of the levying order and, after a 21-day holding period, the creditor gets the money.

Quite often, a debtor files bankruptcy to avoid any or all of these events from occurring. Now that the creditor has your bank account information, you either must contact and negotiate with the creditor directly -- or live without a bank account.

Answer 3

I don't believe there is a cap and the statement you sign when you apply for a credit card states that they can do this. If you have any other credit cards out there, you might want to sign up with Genus Credit Services. It's free and can get you out of a mess fairly quick. It will reduce your credit payments and put you back on the road to recovery without going through bankruptcy. I did it. Best of all, it's free.

Something you can do right now for money is to cancel the large checks that you have sent out to the creditors. There is a fee, but hey, they already took money from you. Charge on the card for the next couple of weeks. Borrow from a close friend. I know it sucks to do this, but do what you have to do.

The bottom line is that you work on fixing the credit stuff before bankruptcy.

Good Luck

Answer 4

was the bank account a capital one bank account?
if you owed money on a capital one credit card and also had a capital one bank account then they could close the account. i believe that they would have transferred whatever money was in the bank account to pay off a portion of the outstanding credit card payment.

if your bank account was with a differant financial institution then that's a whole other story and you may want to contact someone at your bank to explain what happened there and why.

the best thing to do to avoid similar situations is always make the minimum payments. of course making minimum payments will not lead to paying off debt but it will keep the credit card company from coming after you and putting that info on your credit report.

good luck and i truly hope everything works out soon.

Answer 5

I really don't see how they could lock your bank account and pull out all the funding without any sort of legal proceeding, which would require both you and capital one to go to court. As far as I know, the only ones who can lock down your account without going through the judicial route is either the IRS or law enforcement agencies. So, one of three things relates to this issue: 1.) you left out a large and significant part of the story: 2.) this is a fake story to garner sympathy: 3.) an illegal operation has passed, one that I doubt a legitimate company such as Capital One would perform, in that you could own their butts in court if they tried it.

Just my two cents.

Answer 6

I would call up capital one, and ask them why they did it, also they might of been able to take your money if you or your husband signed any kind of paper work. If that is the case then next time make sure you read everything they make you sign, including the small print because that is usually the kind of thing they do so that they can do things like what they did to you. You should not use credit cards because they don't care about anyone but themselfs making money, even if that means taking all of yours.

Answer 7

Is the credit card secured by the savings account? If yes, then I believe they have the right to cover outstanding late payments and perhaps even the full balance (similar to foreclosing on a home or repossessing a car). But, they should only be allowed to use the savings money if the payments are behind. Also, check the fine print on your credit card agreement - it very well may answer the question for you.

Answer 8

You could consult an attorney, but I understand that this is legal in some states. If you still have your credit agreement, it should be outlined on that.

Also, when other companies buyout old credit or card companies, they usually send you a new agreement with the bill to notify you of new credit and collection procedures. If they didn't do this, you may have a case.

Answer 9

Your best bet would be call a lawyer and ask someone over the phone. Most lawyers are willing to answer a few questions free of charge because it ensures them your business if you like what they say. Start making some calls!

Answer 10

Federal laws states that a creditors can only garnish up to 65% of your monthly income. That however does not pertain to levies on bank accounts.