When a creditor takes money from a bank account when the debt is already paid, how do you get that back?

Question

My husband had an outstanding credit card debt, that a creditor filed against our tax returns for, for the last several years.

A few months ago, a different collector bought the debt, and emptied our bank accounts. When we contacted them about it, they told us the debt it was for and we explained that our tax return had been used several years in a row to pay that debt. We were told they bought it as a valid debt and they were going to persue it.

We contacted the IRS, and were given statements of the amounts paid. The other creditor was OVERPAID by $1,000.00. They then turned around and sold the debt to a different company.

We have sent the new creditor the paperwork from the IRS....but it has made no difference. They said they would look into it....but didn't. All they did is buy time, to hit our accounts again, and completely drain them!

How can we stop this from continuing and how can we get this money back? HELP!

Rhonda

It was our State Tax refunds that were taken. (Michigan)

We assumed they needed a court order too, but we just recieved notice in the mail instead of a refund check, on who it went to. (Providian National Bank Collections)

We have never gotten any type of court paperwork, that showed anything was filed in court to get this. We assumed they filed a lein with the state, showing an outstanding debt. We did not dispute it, figuring we did owe it to them.

But now, a different attorney has taken funds from our band accounts. When we called them, they needed proof that the prior debt was covered....we got the records of the tax returns released to pay it, and the totals...and sent them copies....they said they would look into it.....it just bought them time though....because they hit our accounts again, today, and emptied them. We still have never seen any type of court paperwork saying it was ok to do so. We are not sure how they are doing it. So we are seaking advice.

Answer 1

Stay away from those betrayer banks, except for very small amounts to keep them, like around $100 or $500 if you're a millionaire.

Your money is not safe there, and neither is your "safety" deposit box.

It's as though they consider that you don't have any rights, other than being subject to their rules and those of "the system."

Answer 2

A couple things that need clarification, but I'll try to answer anyways.

First, I am going to suppose that there is a judgment rendered against you. I am also going to suppose that you live in a state where it is legal to levy income tax returns.

Based on those two suppositions, I would wonder why at the time the bank levy took place, you didn't file a claim of exemption and take your documentation regarding the debt being paid before a judge? But, that is in the past, and you need to deal with the present.

Step one... if possible, at all, hire counsel, immediately. Injunctions are more than likely going to need to be filed to stop any further levies, and it would be best handled by an attorney.

Step two... close this account if you can, and move to another bank, entirely. Some jurisdictions allow levy without having the exact account information and only need the debtor's social security number. If you leave this account open, or continue business with this bank, you are leaving the door open for them to take your monies again.

Step three... be prepared, this is going to be an uphill battle. The way I read it, there are actually going to be two entities that you will have action against. The original creditor for selling a resolved debt, and the purchasing agency for continuing with legal action against you after having been given evidence of the account having been resolved. Don't expect a quick and easy fix.

Best of luck

Answer 3

Well generally a creditor can not hit your bank account for an outstanding debt without a judgement. I'm confused as to how exactly they would be able to do this.
I would immediately go to the bank and dispute the debt against your account, which would at least suspend the transaction. That should get their attention. If you have indeed paid the debt and having it paid via a tax return is a really bad way to do it, since in theory you should not get a refund, it should net to zero if you are withholding properly. I am amazed that anyone was allowed to be paid in this manner I have worked with the IRS for many years and never heard of this.
I would contact the original debtor and inform them of the situation and that you will be forced to file legal acion against them should they not contact the new debtor and settle the claim. This is very messy and I can see why the new debtor would try to get their money. I am curious as to exactly how they got your bank account numbers to withdraw the money.

Answer 4

There does seem to be some missing information. But from what it sounds like you had Collection Agency A take your tax returns(which makes it sound as if it is not a regular debt) for a debt that you owed and you actually overpaid them by $1000. You then are saying that Collection Agency A sold the account to Collection Agency B and say that Collection Agency B took additional money out.

Now, these might not be your case, but here are some things to consider.

A company can not legally take money out of your account without a court order. So CA(A) and CA(B) would have had to have court orders in order to do this. In some cases if CA(A) got the judgement they could still sell the account to CA(B) and CA(B) can continue to collect the remaining judgement amount. If they are doing this without a valid court order this is illegal.

It also could be a case that what you think you owe them is not what was actually owed. For example if you think the debt was $10,000 and the IRS paid them $11,000 you would feel that they were overpaid by $1,000. However, if you had a judgement against you they could be charging interest and that $10,000 could actually be about $16,000 so in reality you may actually owe them an additional $5,000. These are just example amounts as it all depends on the interest allowed in your state and the length of time it has been. You will need to send in a request by certified mail to CA(A) and CA(B) and find out how the payments were dispursed. This will tell you each payment you made and any interest that they applied.

If after this the numbers still do not match then you should seek legal advice and possibly start a suit against them. Just be sure to have all of your communications with them as well as any documentation you sent them in order to possibly help your case.

Answer 5

I do very much agree with each of the contributions from OC1999 and William, as above, as well as with their recommendations.

Be that as it may, you have to immediately advise your bank to disregard, that is, not honor any check from the alleged collection agency, unless there was a court's judgement. Should your bank turn down your request, then it will be appropriate for you to close your bank account with it as quickly as possible.

Secondly, file a law suit immediately at a local court seeking damages, while ensuring that all records of payment and to whom it was paid are available to tender to the court as exhibits.

If the above could be followed, you should be able to win the case outrightly, except if there were more material facts that were not disclosed in your question.

In the meantime, best wishes!

RICHARD

Answer 6

Well, since its under 5,000 dollars I would go to my local court house and file a small claims against the company that took the 1000 from you.

Also, I would write to the state attorney General and let them know what happened. You should write to the states where the company that you owed and the debt collector is located.

Just for good measure I would file a complaint with the BBBOnline.

Answer 7

How does the new creditor have your banking information YIKES!

The bank should be able to BLOCK all unauthorized drafts out of your account. You should also be able to report that withdrawal as an unauthorized transaction with your bank.

I would defintely start there. Dont count on the creditor to do ANYTHING.....they got what they want.

I would began immediately to limit access to that account....even closing that account if necessary.

Helps?

Answer 8

sue them

First of all ask them since they PURCHASED the debt
who gave them permission to take out of your bank account?
They HAVE to explain and show how they came up with
the amount and give you a copy of the Contract THAT YOU SIGNED that OBLIGATED YOU to PAY THEM and NOT
the original creditor. www.creditinfocenter.com

Answer 9

What kind of debt is this? I was under the impression that only things like child support, student loans, and money owed to the government could be taken from Federal income tax returns.

Answer 10

creditors cannot take money out of your accounts unless there was a court decree to do so. and if there was you need to be notified first. if they were not authorized to take money out i would see an attorney about not only suing the creditors but the bank that gave them the money.