Updated on 20 May 2015.
Whether a debt collection agency can claim money from your bank account depends on the type of debt you have.
In most cases the decision to issue payments or freeze your accounts can only be taken by your bank; whether they do this depends on who you owe money to.
If you've fallen behind on credit card or loan repayments with a bank that you also have savings or current accounts with you need to be careful.
Banks can invoke something called 'Right to Set-Off' and this means they can take money out of any savings or current accounts that you have with them and put it towards your unpaid debts.
They can do this without your permission, and while they are meant to leave you with enough money to live on there's no hard and fast rule about how much!
Mortgages are treated a little differently so your bank can't simply withdraw the money you owe them from your accounts and use it towards your mortgage arrears.
However, they can withdraw an agreed overdraft facility and demand repayment at any time; they could also choose to lower your overdraft limit after money has been paid into your account.
It's a good idea to keep your current and/or savings accounts with a bank that's completely separate to the one you owe money to.
Care is needed as some banks are linked even though they operate under different names.
To protect yourself you need to keep your current account and savings with a bank or building society that isn't associated (it needs to have a separate FCA licence).
You can use our FSCS guide to find out which banks and building societies are linked and our current account comparison and savings account comparison to find suitable accounts with an unconnected bank if you need to.
Lenders and creditors that you don't bank with need to apply to the courts and get permission to take your money before they can access to your bank accounts. They can either do this directly or via a debt collection agency.
This isn't an easy process and requires several separate court applications before your accounts can be frozen - this is likely to take weeks or months rather than days.
Initially the lender needs to apply for an interim third party debt order. If granted this forces your bank to freeze your account and ring fence the money you owe.
The next step is for them to apply for an order to obtain information - this means you will be called to court and made to give details about your bank accounts under oath.
Finally, they need a full third party debt order before they can take money from your bank account. This can only be granted at least 28 days after the first interim third party debt order - at your final court hearing.
For more information on the different stages of court applications and what you can do to stop a lender freezing your accounts visit the Citizen's Advice Bureau website.
Written by Martin at money.co.uk
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