When you owe money, creditors may use a bank levy to collect. They can’t get you to pay, but they can try to take money from your accounts. By using a bank levy, creditors have your assets frozen and paid to them so you can’t spend the money.
Bank Levy Basics
A bank levy happens when a creditor demands funds from your bank account. The account is frozen for a few weeks so you can settle any disagreements, and the creditor gets paid if you cannot get the bank levy released. Creditors can empty your bank account, causing you to bounce checks and rack up bank fees.
Who Levied the Account?
The IRS is often responsible for a bank levy. If you owe taxes and have been unable to reach an agreement with them, they will seize property and assets however they can. Other creditors can also use a bank levy to collect what you owe. All they need is your bank information and a valid judgment against you.
A bank levy usually ends when a debt is satisfied.
However, there may be other options. If you reach an agreement with your creditor, declare bankruptcy, or successfully appeal to have the levy released, you’ll get access to your cash again. Communicate with your creditors or get legal help if you want to end a bank levy.
You can also limit how much is taken in a bank levy. Money that comes from certain sources (government benefits or child support, for example) may not be available to creditors using a bank levy. However, you’ll have to prove that the funds are protected.