Can a Collection Agency Seize My Assets?

Garnishment

One way in which a collection agency can seize your assets is through garnishment. Depending on your state's laws, a collection agency can either garnish your wages, your bank accounts or both. Should the company opt to garnish your wages, it can seize only 25 percent of your pay after taxes or 30 times the federal minimum wage, whichever amount is greater.

When a collection agency seizes your bank accounts, it serves your bank with a copy of the court-ordered garnishment giving it the right to intercept your funds. Although debt collectors face a state-mandated waiting period before they can seize your bank accounts, collection agencies do not face financial limitations when garnishing bank balances and, depending on how much you owe, can seize all the money your account contains.

After receiving a judgment, a creditor can attach a lien to your real estate by filing the lien with the Land Records Office in your county. Once the county records the lien, it encumbers your ability to refinance or sell your home without first paying off the original collection account, plus fees. Property liens are not restricted to real estate. If you own your own vehicle, a collection agency can also place a lien against your car title.

Certain benefits you receive and assets you hold are exempt from commercial creditors, even if the creditor in question has a court judgment against you. Social Security, unemployment and child support are just a few examples of income that a collection agency can neither intercept nor withdraw from your bank account without your permission. Certain assets you hold, such as your 401k plan, are also exempt from seizure by a collection agency.

Collection agencies frequently threaten to file lawsuits, but lawsuits are almost always the final method the company uses to procure payment. Because filing a lawsuit costs a collection agency money, the company would far rather collect the debt from you voluntarily than via a lawsuit. While you can't stop a company from suing you, you can reduce the likelihood of a lawsuit by either working out a payment plan with the collection agency or simply paying the company what you can afford on a regular basis.