Wage Garnishment Rules About Frozen Accounts
Many creditors will get a bank garnishment or bank levy if you refuse to make payment arrangements regarding your past due debts. Your account will be frozen and the money will be taken from the account. The best way to stop this is by contacting the creditor as soon as your account becomes past due and make pay arrangements. A bank levy is one of the final steps a creditor will take to get you to pay.
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Trial Date
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When you have not paid on your debt in a long time, a creditor will go to court and have it issue a writ of summons, which states something like, "You are summoned to appear for trial at the date, time and location shown on this notice." A trial will be scheduled which you should attend. If you do not attend, the creditor will be awarded a default judgment. If you do attend but you have no valid defense the creditor will still be awarded the judgment. There are still opportunities to contact the creditor to make pay arrangements. If you call the creditor as soon as you receive the notice to attend trial and make payment arrangements, you will not need to attend court. You can also call the creditor after it receives judgment and offer to make payments.
Judgment/Bank Levy
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If you do not contact the creditor after it has been awarded a judgment, it can now do a bank levy, which means all of the money or a portion of the money in your bank account will be frozen. Once the money is frozen you will not have access to the account. The money will be turned over to the court registry and it will turn it over to the creditor who has the judgment.
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Joint Owners
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Whenever an account has joint owners, neither owner will have access to the account when it has a bank levy. Even if the other owner is not the person being sued by the creditor, he still will not be able to take funds from the account.
Exemptions
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There are certain funds that are exempt from a bank levy. If the money in the account is from welfare payments, child support, VA benefits, workers' compensation, Social Security, unemployment benefits or in some cases from a pension, it is exempt. There will be cases where a creditor will get a bank levy anyway. When this happens you should contact the court and find out how to go about filing an exemption, which will stop the bank levy from going through. You may be required to prove that the money in your account is from one of the exempt sources of funds. These laws can vary from state to state.
Considerations
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When a bank levy is in place, money can still be deposited into your bank account but no money can be taken out. Creditors can file as many bank levies as necessary until the outstanding debt is paid in full.
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