February 08, 2021
Summary: Having a levy put on your bank account can put you in a precarious position. Find out how long the levy will stay on your account and what you can do about it.
Bank levies are a tool used to give creditors power when you fall behind on your payments. The bank levy is put into place by the creditor filing a legal document with the court. This allows them to withdraw money directly from your bank account to pay off a debt that you owe.
Before the levy is issued, the creditor must go to court. In court, they will receive a judgment for the money owed, which will give you a period to respond. If you do not, the bank levy will be placed on your account. Although it can be a frustrating situation to be in, it does not mean that you do not have options.
Having a levy on your bank account means that it will be there until you can pay back what you owe to the creditors that put it there. This means that it can exist on your account even if you do not have money in it. When your account reaches $0, the creditors can return to collect when more money has been deposited.
Creditors can continue to attempt to take money from your account when it comes to a bank levy. Levies take precedence over other bills. This means if you are attempting to pay other bills and a levy is collected, your account might overdraft.
When an overdraft occurs, a poor financial situation may go from bad to worse. Insufficient funds in your account will almost always lead to more fees from both your creditors and fees from your bank. This will leave you with less than you had before if anything at all. And it will be even more difficult to catch up!
Although they may seem similar, a levy is different from wage garnishment. Levies describe when a creditor freezes your bank account. This is always in an attempt to collect the money that you owe.
Wage garnishment occurs when a creditor pulls money directly from your paycheck to satisfy a debt. Despite this, there are limits to the amount of money a creditor can take from your paycheck. While wage garnishment is severe, a bank levy is considered worse. This is because the creditor can reach into your account and pull money whenever they want until you have repaid your balance.
There are a few ways in which you can stop a bank levy. Often, these various methods will require a substantial amount of proof. But it's possible!
Options to stop a bank levy include:
Sometimes, there is no way out but to pay a levy and attempt to move on with your life. The best course of action is to avoid a levy on your bank account altogether. If a credit or debt collector is threatening you with a bank levy or legal action, file your response and make a defense fast!
SoloSuit makes it easy to respond to a debt collection lawsuit.
How it works: SoloSuit is a step-by-step web-app that asks you all the necessary questions to complete your answer. Upon completion, you can either print the completed forms and mail in the hard copies to the courts or you can pay SoloSuit to file it for you and to have an attorney review the document.
"First time getting sued by a debt collector and I was searching all over YouTube and ran across SoloSuit, so I decided to buy their services with their attorney reviewed documentation which cost extra but it was well worth it! SoloSuit sent the documentation to the parties and to the court which saved me time from having to go to court and in a few weeks the case got dismissed!" – James
Here's a list of guides for other states.
Being sued by a different debt collector? We're making guides on how to beat each one.
Need more info on statutes of limitations? Read our 50-state guide.
Need help managing your finances? Check out these resources.