What is a Bank Levy?

What is a Bank Levy?

A bank levy is when your bank account is frozen and all or part of the monies in your bank account is seized. Bank levy’s can happen for many reasons, however the two most shared are due to unpaid taxes and unpaid debt.

A bank levy just doesn’t happen closest; usually it is the consequence of a creditor trying to force a debtor to repay a debt. clearly in the case of taxes, if the IRS has sent you a letter stating that you owe taxes and you either refuse to pay the debt or don’t respond to their requests by either making a repayment plan or trying to work with them towards repayment, a tool they will use is a bank levy. They will freeze your accounts and seize any money in your account up to the amount that you owe.

The bank account can be almost any kind of account (e.g. savings, checking, etc) and while most levy’s occur in the US, the IRS or other creditors can sometimes go after off shore accounts. Once a bank levy is made on your account, any money that is in the account will be seized. If there is not enough money in the account, all money will be removed and your account will usually keep frozen until the debt is paid off.

It should be noted that while the IRS are usually the ones that use this method the most, other creditors have used this method to receive repayment for their debts. for example, if you have a judgment against you for a credit card debt, the creditor can file for a bank levy to be placed on your account. While state laws differ, in most situations certain monies in your account are exempt including welfare payments, social security payments, VA benefits, child sustain, etc. If a bank levy has been placed on your account by a creditor, you usually have 30 days to contest the levy (in the case that monies that were seized are exempt). If a bank levy occurs, you should contact the court to find out how to file for an exemption closest.

It should be noted that a bank levy can occur quite frequently and it is not a one time event. A creditor can request a bank levy as many times as he or she would like to until the debt is paid off. Many edges charge a penalty to their customers if their bank account receives a levy. This amount can be over $100 each time. It should be noted that any checks that have been written before the event that have not been cashed will bounce, because your account is frozen. It should also be noted that withdrawals can not occur, but in many situations deposits can. So if you have received a bank levy and have your employer place money into your account, this money will be seized in addition.

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