Bank Levies

What is a bank levy? Before this question can be answered, let’s first rewind the clock a bit to determine how a creditor can levy an individual’s bank accounts.

The usual scenario is as follows: a debtor may or may not owe money to a creditor; therefore, before a creditor or his legal counsel can attempt to collect on a debt, the creditor must first make good-faith attempt to collect on the debt.

The usual course of action is to first send the debtor written notices. These can initially take the form of a friendly “reminder” by the original creditor. (Anyone you owe money to is a creditor.) Should there be no response from the debtor, the next course of action is for the creditor to take more aggressive action. This usually includes the creditor hiring an aggressive collection agency or selling the debt to a debt buyer. It is at this stage in the process where the creditor’s agent starts pelting the alleged debtor with harassing calls. Once the debt is sold to a debt buyer or assigned to a third party, the goal of the third party is to take whatever steps are necessary to get the alleged debt paid. It is an alleged debt because at this point, there is no proof that the debtor owes the amounts claimed. This could happen for a number of reasons, e.g. they have the wrong person (e.g. this could happen with common names, such as John Smith), the wrong amount, or mistake--the alleged debt was previously paid—but not correctly noted to the file.

If the alleged debt is not paid after numerous attempts to contact the debtor for payment, the creditor then proceeds to the next step—filing a lawsuit in a court of law. The normal course and required course of action is after filing the lawsuit, the creditor’s Legal counsel takes steps to personally serve a copy of the Summons and Complaint (and all other documents provided by the Court Clerk at the time of the court filing) on the alleged debtor. If the alleged debtor does not timely respond to the lawsuit, then the creditor has the right to ask the judge to enter the alleged debtor’s “default.” This means that the court is legally authorized to “enter the default” and thereafter the judge confirms and approves the amount requested. The form used to confirm the amount owed is called a “judgment" and the creditor is now known as the “judgment creditor.”

For many consumers reading this material, they know very well that the road leading up to the judge entering the default is heavily corrupted by the creditor and his associates in order to circumvent and break the law, in order to stomp over the debtor’s legal rights—both outside and inside a court of law. Refer back to this website for further reading on deceptive collection practices as these related issues will not be discussed in this section.

Finally, once the creditor has a valid judgment, he is then free to collect payment on the amount claimed in his Complaint from the debtor. For the majority of debtors, there are three primary ways a creditor can collect on the debt owed:

  1. Wage Garnishment

  2. Lien on Real Estate

  3. Bank Levy

So back to the original question: What is a bank levy? It is a process where a creditor, after obtaining his Judgment, obtains a “writ of execution” from the court. The writ authorizes the creditor to then go after the personal property of the debtor to pay the debt owed. The creditor delivers the writ of execution to the sheriff with instructions that he seize “levy” the personal property. In most cases, the creditor wants liquid funds if the original debt owed is to a bank for amounts owed on credit-cards. In these cases, the creditor instructs the sheriff or marshal to withdraw the funds from the judgment-debtor’s account and transfer it over to the creditor for payment towards the debt.

It is important to note that if a judgment-debtor timely submits a Claim of Exemption form to the sheriff, there is a good chance that the funds will be returned to the debtor.

While the creditor can also levy other personal assets, they will not be discussed here as the most common form of levy is the bank levy.

How Can Ms. Garrett Help?

Ms. Garrett is available to provide a for-profit consultation. Click Here for a more detailed outline of services provided. During the paid consultation, Ms. Garrett will do the following:

  • Explain the legal significance of the legal paperwork;
  • Provide an overview of the bank-levy process;
  • Identify and explain important dates and deadlines;
  • Explain the pros and cons of challenging a bank levy;
  • Help the judgment-debtor understand their various legal options—to include the pros and cons in connection with filing bankruptcy, debt settlement and submitting a Claim of Exemption form; and, finally;
  • Evaluating the judgment-debtor’s risk in connection with bankruptcy and wage garnishment.

If you wish to set up a consultation, Contact Ms. Garrett.

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