Unless the collector is collecting a government debt, such as a defaulted student loan or unpaid taxes, the company must have a civil judgment against you before it can levy your bank account. The right and proper way to stop a bank levy is to successfully contest the judgment that created the levy in the first place. You don't mention which state you're in, but state laws vary on how long you have to contest a judgment after its filed.
If you're still within the time frame to contest the judgment, you'll need to have grounds to do so. Once again, acceptable grounds for this will vary by state, but in general you can contest a judgment for the following reasons:
- The original debt doesn't belong to you
- You had a death in the family, were hospitalized or have another valid reason for missing court.
- You were never notified of the lawsuit (improper service) and therefore couldn't defend yourself
- Clerical errors in the judgment paperwork
- The statute of limitations in your state expired before the lawsuit was filed
Of course, getting rid of the judgment isn't always an option. In that case, you have the legal right to open up a new bank account in another state, but there's no guarantee the debt collector isn't going to find it. Out-of-state and online banks are also subject to a collection agency's levy--but only if the debt collector knows where you bank.
Let's say you hypothetically stop using your current bank account and open a new one. It isn't going to take long for the debt collector to realize you've stopped depositing money into your account and have probably switched banks. If the debt collector can figure out where you're banking, it can simply serve the new bank with a writ of execution and levy the new account. If it can't figure out where you bank, it can get the information via a post-judgment interrogatory.
If the debt collector petitions the court for a post-judgment interrogatory, you'll be called back into court and forced to disclose the location of your hidden assets. In this case, they'll simply force you to tell them where you're banking. If you refuse, you could be charged with contempt and possibly even face jail time.
The collection agency could also decide that, if it can't get the money from your bank account, it will get the money by garnishing your paycheck. Unless you live in South Carolina, a debt collector with a judgment has the right to garnish a certain percentage of your paycheck. All the collector needs to know is where you work, and that's a lot easier to figure out than where you bank. Judgment creditors may also have the right to seize other assets, such as investments, and certain forms of property--depending, of course, on your state's judgment enforcement laws.
As far as your question about how collectors get their information goes, they can get information about you a variety of different ways. A post-judgment interrogatory provides the debt collector with whatever information it needs. Your credit report contains valuable information about you, such as your address, Social Security number, whether you're paying other creditors on time and, sometimes, your employer. Collection agencies have also been known to stalk debtor's social media profiles for information. If a collection agency can't find you, federal law says it can call your loved ones and ask for your location.And, of course, who could forget the age-old process of skip-tracing? You'd be surprised how easy it is for a collection agency to gather information about you.
Legally, I am not allowed to tell you how to avoid paying a judgment because I can't give a debtor advice on how to commit fraud. What I can tell you, however, is that a good attorney is worth his/her weight in gold here. Legal help is pricey, but hiring a lawyer is probably a heck of a lot cheaper than continuing to allow the debt collector to levy your bank account.
Hiring an attorney may be beneficial but it isn't a requirement. If you have valid grounds to contest the judgment but can't afford an attorney, you can file a motion with the court on your own. Just make sure that you read up on the legal process and your state's specific rules and procedures. You may also qualify for legal aid, depending on your location and your income.
Oh, one more thing: certain forms of income are exempt from garnishment. If you have exempt income in your bank account, the debt collector may seize it anyway unless you fill out an exemption form from your bank and officially declare the funds exempt. See Funds Exempt from Garnishment for more information on which forms of income are exempt and how to declare your exemptions in order to legally escape your bank levy.
Best of Luck,