What Is the Meaning of Freezing a Bank Account?
If a creditor takes you to court and wins a judgment, certain remedies will be made available to collect the money you owe. One of these techniques is a bank levy, which freezes your bank account. A levy also means that all or part of the funds in your account will be seized.
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No Access
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When your bank account is frozen, you won't have access to it. You can make deposits into the account but won't be able to withdraw any money. The bank must release all or a portion of the funds in the account to the creditor. Any payments that come out of the account automatically will be returned unpaid. Outstanding checks will not clear, and you could get a returned-check fee.
Levy After Levy
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After collecting the money in the bank account, the creditor can file another bank levy, which freezes the account again. This can be done as often as necessary until the past-due debt is paid.
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Two Account Owners
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When a bank account has two owners, neither will have access to the account even if one owner has nothing to do with the legal action and the judgment.
Exceptions
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Certain types of income are not subject to a bank levy, such as disability income, workers' compensation, unemployment benefits, welfare payments, child support payments and Social Security payments. You may have to prove to the court that your sources of income are exempt from the bank levy.
Warning
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An account holder is never aware when a bank levy is going to take place until it happens.
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