Originally published: February 12, 2021 -- Updated: May 16, 2022

UPDATE: As discussed below, wage garnishment is generally not allowed in Texas except for a few types of debts. However, this does not mean that creditors cannot take action to collect debts from a person. In fact, the garnishment of a person’s bank account may be effectively the same as garnishing their wages. By understanding the types of actions a creditor can take, a debtor who is facing this type of situation can determine their best options for receiving relief from their debts. 

If a creditor obtains a judgment against a debtor requiring the debtor to pay the debts that are owed, the creditor may then ask for a turnover receiver. This type of court order will be sent to a person’s bank, and the bank will freeze the debtor’s bank account. This will prevent them from withdrawing any money from the account. Some or all of the funds in the account may then be seized by the creditor.

Life can be unpredictable. Life can be messy and complicated. And, sometimes, the worst things that can happen to us are completely out of our control. But what do you do when the messy, unpredictable, and complicated lead to financial problems? How do you turn things around and regain control of your financial future? The answer really depends on where you are in the debt collection process. While some may be able to find a viable bankruptcy alternative, others may need more aggressive action. The following information may be able to help you in determining your best course of action for settling debt with creditors.

Creditor Harassment with No Negative Actions

If you have only just started being hounded by your creditors and have not yet received any notice of wage garnishment, tax or property liens, bank seizures, home foreclosure, or any other negative actions against you, you may be able to negotiate a repayment plan with your creditors. But, because not all creditors are willing to work with consumers, and because they have no incentive to actually help you, it may take the assistance of a skilled attorney to resolve the matter before things escalate.

Liens, Levies, Wage Garnishment, Foreclosure, and Other Negative Actions

If matters have already started to spiral out of control and you are facing negative actions, such as a tax lien or levy, wage garnishment, home foreclosure, vehicle repossession, or bank account seizure, resolving the issue can be a little more complicated. In some situations, a lawyer may be able to assist you with a negotiation that can keep you from further actions. If, however, the process has already begun, your only option may be to file bankruptcy.

Whether you are planning on filing for bankruptcy or simply need assistance in developing a budget, credit counselors can provide you with the tools and resources you need. Unfortunately, not all credit counselors are created equal. In fact, some can leave you worse off than when you started, which makes finding an experienced, reputable credit counselor absolutely essential for your financial future. The following tips can help you find the one most suited for your needs and preferences and improve your chances of finding the financial empowerment you are looking for.

Know Why You Need a Credit Counselor

Each credit counseling agency and provider has an area in which they are best equipped to help their clients. With this in mind, it is critical that you first know why you need credit counseling. To find the answer, consider your goals and examine your current financial situation. If you are filing for bankruptcy, then you will also want to ensure you find a credit counselor that is approved by the United States Department of Justice since those who are not accredited will not be accepted by the courts.

Check and Verify Credentials and Qualifications

While credit counselors that are listed on the Department of Justice’s website most likely carry some of the highest levels of certification and meet some of the most stringent government standards, it is necessary that you check and verify the credentials and qualifications of all other credit counselors. The National Foundation for Credit Counseling and the Financial Counseling Association of America are both renowned agencies that ensure the quality of certified professionals, but the Council of Accreditation is also a reliable accreditation held by qualified credit counselors. You may also wish to check the agency’s rating with the Better Business Bureau to determine if they have any major complaints from other consumers.

When you file for bankruptcy, you are granted an automatic stay on most of your debts. Essentially, this means your creditors cannot contact you or attempt to collect the debt. What happens, though, if the creditor keeps calling and harassing you through the mail, at your work, or at your home? Rest assured: you can enforce the protections that bankruptcy offers.

When Contact Is a Genuine Oversight

All creditors know (or should know) that a bankruptcy filing means they must cease all contact with you, as the debtor. As such, most who violate this rule have simply done so due to an oversight. Perhaps they did not remove your name from the system properly, or they have not received the paperwork yet that notifies them of your filing. In any case, it is important that you not overreact or panic during the initial contact from a creditor. Instead, simply inform them that you have filed for bankruptcy and politely refer them to your attorney.

If the contact was made by phone, document the date and time of the call, the agent’s name and extension number (if applicable), and the creditor’s name and phone number. If the contact was by mail, copy or scan the mailing (after you have written a response that indicates your bankruptcy filing and your attorney’s number). This information gives you proof of contact and ensures you can take action if the contact continues or escalates.

Making the decision to file for bankruptcy is not an easy one. For the most part, bankruptcy is entered as a last resort when no other options have worked to help you get out of debt. Once you enter into the bankruptcy process, your creditors -- or the people you owe money to -- are no longer permitted by law to continue to try to collect on your debt. This does not stop some creditors -- some continue to try to collect on debts. More often than not, when a creditor contacts you after you have filed for bankruptcy, it is a simple mistake. In some situations, creditors may continue a second or third time to collect on your debt -- this is when you may be able to take legal action against your creditor for illegal harassment.

The Automatic Stay

The moment you file your bankruptcy case, something called the automatic stay goes into effect. The automatic stay is a federal injunction that prohibits creditors, collection agencies and government entities from attempting to collect on most debts. The automatic stay prevents creditors from: