How Does a Creditor Levy a Bank Account?

Reasons

When a delinquent credit holder does not respond to a creditor's attempt to collect a debt, the silence may actually speak volumes. Ignoring a debt gives the creditor the green light to proceed with the credit collection process. It gives the impression that the credit holder has no intention of working in conjunction with the creditor to pay down the debt, or to pay the debt off altogether. And when a creditor has exhausted alternative ways of collecting the money owed to them, they can go into court to file a judgment to collect the debt.

After the creditor has been awarded the judgment, they have the legal right to attach a levy to any bank account held by the delinquent credit holder.

A levy is a legal seizure of money from bank accounts to satisfy a debt. When a levy has been placed on bank accounts by a creditor, they have the legal right to keep the levy attached to the accounts until full retribution has been met.

Process

In order for a creditor to file a levy against your bank account, they have to first know where your bank is located. However, this is not really difficult for them, because more than likely, they have your banking information and can see who extended credit to you in the first place. After they determine your financial institution, the creditor will administer a writ of execution on the bank. After the bank is served with the writ, they are legally obligated to seize the funds. Adding fuel to this financial fire, most banks charge a penalty for levies being placed on accounts.

If there is not enough money in the account to satisfy the debt, the account will remain frozen until the debt has been paid or some other debt repayment agreement has been reached.

In addition, if employer checks are directly deposited into the levied account, the money will go towards the unpaid debt, while return check fees steadily accumulate.

Remedies

Bankruptcy is not the only answer to a levy. When a bank levy has been placed on your savings or checking account, you will have up to 30 days to contest the levy. The money seized from accounts is held for 21 days before being handed over to creditors.

Some money is exempt from levies. For example, child-support payments cannot have levies placed on them, and a court hearing has to take place to determine if money placed in the account were actually child-support payments.

References

• Debtor and Creditor Laws