Advice on Bank Levies by Judgment Creditor

I have a judgment against me for which my bank account is levied every month. How can I change this arrangement?

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Bill's Answer: Resident Expert

I understand how frustrating it must be to endure these repeated bank levies, especially when you have offered to make voluntary payments to this creditor. Unfortunately, since this creditor has obtained a judgment against you, it has the legal right to levy your bank accounts to enforce its judgment.

Depending on your financial situation, it may also be able to garnish your wages and place liens on any property you own, including your home. Since the creditor is repeatedly taking money out of your bank account, the simplest solution to this problem may be to change banks; changing your bank should prevent the creditor from taking any more money out of your current account since that account will no longer be open. Your creditor will not have your new bank account information, as you will have never made payments from the new account, so changing your account may offer you relief from the repeated levies you have been experiencing. Unfortunately, this solution may only be temporary, as the judgment creditor may find your new account by communicating with banks in your area or by demanding the information from you through a court order. These steps will take time though, so changing your bank may at least provide you with some temporary relief while you pursue a more definitive solution to your financial troubles.

To learn more about California’s laws related to the execution of judgments, I encourage you to visit the resources Collection Laws and Statutes of Limitation and California Collection Laws.


Because this creditor expressed resistance to your efforts to resolve this debt voluntarily, you may want to consider filing for bankruptcy protection, as bankruptcy may be the only definitive way to prevent any further collection activity by this creditor. There are two basic types of consumer bankruptcy: Chapter 7 and Chapter 13.

In a Chapter 7 bankruptcy, also called a liquidation bankruptcy, a bankruptcy trustee will examine your assets, and if you have any assets which are not exempt, sell those non-exempt assets to repay your creditors. Once your non-exempt assets have been sold to pay your creditors, all remaining unsecured debts will be discharged by the bankruptcy court. Many people who file for Chapter 7 protection are able to keep all of their property because they have no non-exempt property. Each state has its own schedule of exempt assets, so you should consult with a qualified bankruptcy attorney in your state to find out if Chapter 7 is a workable solution for your situation. An attorney will also be able to tell you if you qualify to file Chapter 7 under the new guidelines enacted by Congress in 2005.

A Chapter 13 bankruptcy, also called a “wage-earner’s bankruptcy,” allows you to propose a plan to repay creditors over time — usually five years. Your monthly payment amount will be based on your monthly disposable income as defined by the bankruptcy code. After you have made payments to your creditors for five years, any remaining unsecured debts will be discharged. Chapter 13 is commonly used by debtors whose assets exceed the exemptions offered by state law. It is also used by many consumer debtors who do not qualify for Chapter 7 relief under the means test, which went into effect in 2005 with the Bankruptcy Reform Act.

If you are considering filing bankruptcy, you should consult with an attorney to find out if bankruptcy will benefit your financial situation. I encourage you to read more about bankruptcy at the bankruptcy information page.

I hope this information helps you Find. Learn & Save.



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Comments (45)

Mark J.
Chicago, IL  |  July 12, 2013
When it comes to debt collectors levying bank accounts after they have obtained a Judgment against the you know if certain states do not allow any kind of levy for collection? I heard Delaware is the only state where bank accounts cannot be levied by collectors (except on IRS cases). Please shed some light and share your thoughts on this.
July 15, 2013
No state exempts an unlimited amount of funds in a checking, savings, or similar account from account levy. However, it is illegal to levy some funds traceable to Social Security or other federal benefits, such as the VA. See the page Collection Laws and Exemptions for All States to learn the account exemptions for each state.
Kuba S.
March 16, 2012
Hi bill My wife settle her debt with creditor about 6 years ago but we cannot find that letter of agreement Anyway in 2006 we lived in NY and in 2007 we moved to NJ and today my account got frozen because of that debt that they say was never setteled. We were not aware of that debt, we never received any letters and today surprise. What should i do to get my money back? Its weird because my wife gets credit cards and loans with no problem so if the were any collection or court order/ judgement on her credit she would never get any card or loan How this can be possible?
March 16, 2012
You should have received a notice of the lawsuit filed against you. Consult with a lawyer in your state of residence immediately to learn if you can vacate the judgment that lead to the account levy.
Kuba S.
March 16, 2012
I was reading a lot now and someone stated that they can send letters to old address and get the judgment. Also why they would frozen more than they had to? When i called my bank they told me levy was for $1300 and they frozen $2400? Thank you for quick response.
March 17, 2012
Civil Procedure is a set of state and federal rules created to make a level playing field for the plaintiff (the party filing a lawsuit) and the defendant. One of the most important parts of Civil Procedure is the concept of "notice." Notice is giving your opponent a fair and clear signal of what you send to the court regarding the case. The rules of civil procedure are clear — if you do not give your opponent notice, then you break the rules.

Here, if you never received notice of the action filed against you, how could you respond? If your opponent used an incorrect address to notify you of the summons and complaint, and you were unaware of the lawsuit, then you could not represent your side of the case when it came to trial. That is why I suggested in my earlier response that you consult with a lawyer to discuss filing a motion to vacate the case.

Regarding the account freeze, your lawyer will research your question, and explain (or not) the reason for the unexpected amount. My guess is the court awarded the plaintiff the balance due on the account plus costs.
David W.
Westminster, CO  |  March 02, 2012
I just had my paypal acct garnished and cleaned out how long do I have to contest long are they require to hold the money before releasing it to the creditor...what state do I do all this in? Thanks for any help...David
March 03, 2012
How long you have depends, in part, on who is levying your account. For instance an IRS levy freezes funds in a bank account for 21 days, before the funds are remitted to the creditor. The length of time is different for state tax authorities and for judgment-creditors. Speak with a lawyer in the state in which you reside to get more information.
Ryan R.
Chicago, IL  |  February 18, 2012
The state of Michigan levied my bank account for a debt that is almost 10 years old. Is that legal? I have called and tried to set up payment arrangements but they wont accept what I am offering. I owe 3k and I offered 300 a month for 10 months. This debt is not taxes. Its from an old court case when I was 19. This just doesn't seem legal to me.
February 18, 2012
Court judgements are valid for 10 years in Michigan, and may be renewed. Since I am not a lawyer, I recommend that you speak to a local attorney for legal advice.
Jerry S.
Northville, MI  |  January 04, 2012
Our son receives social security disability. Is he able to open a bank or credit union account that cannot be levied due to judgments by creditors.
January 04, 2012
See the resource May a Creditor Garnish Social Security Benefits? to read a discussion of the issue you raise in your question.
Barb C.
Aurora, CO  |  November 11, 2011
I live in Colorado. Can I sieze bank account funds in order to satisfy a judgment I have against an individual?
November 11, 2011
Yes. Consult with a Colorado lawyer to learn how.
Jeanne C.
Milford Twp., PA  |  September 16, 2011
I have been unemployed for 20 months. My unemployment checks have run out so I am not receiving any income. I co-own a house with my grown son. I had a little money from my 401K in an annuity which I had to take out to continue to live on so we don't lose the house. I have a joint checking account with my son which we use to deposit and pay the mortgage payment every month. I began looking for help to pay my bills since the unemployment rendered my income to less than 50% of what I was making previously. I found the only help available to me that I could work with was a Debt Settlement Company. I recently received a summons for a court appearance from one of my creditors (GE Money Bank). The attorney for the Debt Settlement Company told me they might freeze my bank account since in PA they can't garnish wages. Will they be able to freeze my joint account with my son? I have read that income from unemployment and pension accounts can't be frozen. Would the money from my 401K annuity be exempt? The only money I have left in my bank account is from the annuity. I thought to put my money in another bank and have it linked to my joint account with my son. Will this make the money safe? My Debt Settlement Company is going to seek a settlement with GE Money Bank as soon as possible since I have some money in there to work with right now but that might now go through before I go to court. I'm worried about what to do or say in court. I would appreciate any feedback on this problem. Thanks.
September 16, 2011
Joint accounts create more trouble than they are worth. Close all joint accounts, and open separate accounts at the same bank or credit union. Use that institution's transfer mechanism to move funds between the two accounts.

Generally speaking, Social Security, unemployment, and pension benefits cannot be garnished. However, in many states, once the funds arrive in a financial account they are ripe for account levy, subject to the consumer's state laws.
Lisa S.
Sun City, CA  |  August 01, 2011
My husband and I reside in California. I have a Judgment against me for attorney's fees for a patent lawsuit which I lost by default because I could not afford an attorney. They have levied my (separate) bank accounts although there was less than $20 in them and I am not employed. How long does an individual levy last? How frequently can they levy? Daily, weekly, monthly, etc.? I am concerned that they will go after my husband's accounts or garnish his wages or that they will try to seize our cars or personal belongings, because we are in a joint property state. Is there any way to protect his accounts and wages? Can they seize a car if it has a loan on it? They will not set up a payment plan and won't and never have discussed it with me. Can I somehow force them to work out a payment plan? Is bankruptcy my only option? Thanks for your help.
August 02, 2011
When a bank account is levied, the general process is for the bank to freeze the funds in the account, up to the amount of the levy, then remit the funds. A judgment-creditor can keep on levying accounts, as far as I know, as often as it wants to, potentially aiming to hit your account at a time when a paycheck is likely to just have arrived.

The judgment-creditor doesn't need to work at a payment plan with you, even if it makes sense to do so. You should consult with a bankruptcy attorney. You can see if that is the best solution for the judgment debt and also best ascertain the chances that California being a community property state puts your husband's income and assets at risk.

A car that is worth less than what you owe on it, can't be seized by a judgment-creditor. Its claim is in second position to the lien-holder that financed the car.
Elizabeth M.
Fort Wayne, IN  |  May 02, 2011
I have a joint bank account with my fiance`. He doesnt work and i do. He owes child support to Oklahoma and we live in Indiana. They put a levy on my bank account, and are threating to put a levy on my home and car. Is there anything i can do to prevent us from loosing everything we have. He pays his obiligated amount for child support to Oklahoma. Since they put that levy on my bank account im negative 16,247.87 in my checking account.
May 02, 2011
Joint accounts create more problems than they solve, as your anecdote illustrates painfully. For the benefit of other readers, I suggest people who need to share funds open separate accounts at the same bank or credit union. Use that institution's online banking function to transfer money between accounts electronically when necessary.

Consult with an Indiana lawyer who has experience in consumer law to learn your rights and liabilities regarding your vehicle and home. If the vehicle is titled in both your name and your spouse's name, it is at risk for a lien. If the home is jointly titled, it also is at risk. Again, consult with a lawyer to learn your rights and what steps you can take to insulate your property.
Lisa S.
Atlanta, GA  |  January 05, 2011
Are bank levies legal in all states?
January 06, 2011
Bank levies are legal in all states. Not every state allows any creditor with a judgment to levy bank accounts. For instance, in Delaware, a credit card company or debt collector cannot levy a bank account. The IRS,a state tax authority, or a collector for back child support, alimony or delinquent federal student loans could levy a bank account in any state.
Cheryl C.
Jefferson Borough, PA  |  January 07, 2011
what about Pa levies???? ssi,veterans ,dpw income only
January 07, 2011
A creditor with a judgment against you can a bank levy in the State of PA. The creditor does not know where the funds in your account came from. The creditor is only concerned with whether or not you have funds in your account that can be used to pay them. Some forms of income are exempt from bank levies, such as welfare payments, worker's compensation, unemployment benefits, Social Security, child support and VA benefits. If your only sources of income can't be levied from a bank account, speak to your bank and have a notation made that all the funds in your account come from exempt sources. Do not co-mingle any other funds in this account or you could put even the funds from the exempt sources at risk. That means that if your grandmother gives you $500 for your birthday, you should cash it and hold the money yourself or open a separate account for your non-exempt funds. The non-exempt funds account could certainly be lost to you in a bank levy.
Steve K.
San Jose, CA  |  January 15, 2011
Bill I moved to Singapore 1 year ago. I had quiet a few credit card debts and chose to ignore them. Now I have received a levy notice at my sister's address. I am concerned and need some advice. Can the creditor levy anything against my sister's addresse? I have very little money in my bank account( so I am not worried ) but can they go after my 401k or foreign bank accounts? It did say that I had to file an exemption against all my assets(only have 401 k) to be exempt(but I did not). Can you give me some advice?
January 17, 2011
The US does not have any notion of feudal debt bondage that ensnares an entire family. If your family possesses real or personal property titled in their names, and not yours, they have no legal liability for your debts. In all jurisdictions I am aware of, 401(k) and other retirement accounts are exempt from judgment. As you mentioned, however, you need to tell the court which of your accounts are exempt. It is always a good idea to respond to a court's request for information. Put another way, it is a bad idea to ignore a judge. I am assuming the deadline passed for filing the exemption. Consult with an attorney in the US state where you resided formerly to ask how to proceed if the deadline passed. If the deadline has not passed, then file for the exemption.
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