Bank Levy – When Creditors Start Looking into Your Bank Account
Sometimes, because of financial mismanagement or just plain and simple misfortune, you may find yourself over your head in debts. This can be either from unpaid debts or even unpaid federal and state taxes. The point is that you have been remiss in your financial obligations that your creditors will simply have to look for ways to get paid. One of these methods is called a bank levy or, in more common language, frozen bank account.
What Happens in a Bank Levy?
If you owe your creditors and you are having a difficult time repaying your debts, they may obtain a court order to issue to your bank to have your bank account frozen. Technically, you will no longer be able to access your bank account because this right has shifted from you to your creditors. You can still deposit money into your bank account; unfortunately, you will not be able to withdraw it. The money in your bank account will be used to pay off your debt to your creditors.
Why is it Levied?
It is important to understand that creditors cannot freeze your bank account or apply a bank levy without a court ruling or judgment. As such, it is often very critical to act fast if you know that your creditors have already initiated a motion to have your bank account frozen. It is generally a good idea to talk with your creditors and have a more amicable settlement to repay your debts. This is also something the creditors don’t want to do but it is something that they have to as a way to pressure individuals to meet their financial obligations.
Will You Get a Headstart?
Banks are mandated by law to freeze bank accounts immediately upon receipt of a judgment levy notice. That is why it is often too late for people to realize that their bank accounts have been frozen simply because they can no longer make ATM withdrawals or even make online or POS payments. Take note that your creditor or its licensed debt collector is required by law to give you ample notice that they have already initiated a lawsuit against you and that they have already obtained a judgment in their favor. Waste no time before your creditors serve this bank levy notice to your bank.
What Can You Do?
If the first time you realized that your account has been frozen because of a bank levy order was when you attempted to complete a bank transaction, act fast as you are given only 10 days to file an exemption claim. You may need to hire a lawyer for this so you will have a better chance of having your bank account unfrozen. If this is already too late, then your best recourse is to have the judgment vacated.
Getting a bank levy can be a traumatizing and humbling experience for many individuals. For many, it serves as an important reminder of maintaining responsibility for one’s finances. For some, it may be an injustice especially if no notice was ever served.