Dear Debt Adviser,
A creditor levied my bank account. How can I get them to lift the levy off my checking account?
I know it’s upsetting to have someone reach into your life and drain your financial reserves. It feels like a personal violation. Although it is always a shock, it shouldn’t have been a surprise. Having a bank account levied is usually the end of a long collections process that occurred over several months. A creditor cannot just decide to take money from your account. They must prove to a court that you owe the money, and then get a court-ordered judgment to access your funds. If you think the levy is in error — not your debt, beyond the statute of limitations, etc. — or if you never received notice of the hearing, inform the bank and get an attorney.
- Don’t add money to a levied account.
- Contact the creditor directly.
- Consult an attorney.
That said, if it is your debt and due process was followed, the short answer to your question is: You must pay what you owe the creditor to stop the levy. However, you probably would not be in this position if you had the money to pay.
The biggest problem for you is that a levy means a creditor can legally take all the funds from your account, up to what you owe. They can get additional levies for the remainder owed until the balance is paid in full. That can leave you with no income to satisfy your other monthly obligations.
You don’t say how old you are or the source of the account’s funds. In many states, money from Social Security, child support and welfare payments, among others, are exempt from a levy. You can file an exemption claim if this is the case.
You may want to look into opening a new account at another bank. That way you can write checks and you won’t have to keep your money in a mattress. If you have money directly deposited into your levied account, you might have that suspended for now. If you are depositing money into the account yourself, simply stop for the time being.
Your bank will have the name and contact information for the creditor if you don’t. Contact them and let them know you are willing to pay on what you owe. Most creditors in this position tend to be unsympathetic. But you may have a shot at working something out, especially if you owe them more than is in the levied account. You won’t know until you try.
The bank usually has to wait 21 days after a levy is received before surrendering your money. During this gap you may want to contact an attorney, preferably one who will give you a free consultation on your options, including bankruptcy. You can usually find free or low-cost help by contacting your local bar association or the folks at Legal Aid.
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