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?

I have a judgment against me that I cannot pay in full or the offered settlement. The firm is levying my account every chance they get which does not help. I tried to make payment arrangements but they tell me even if I send in payments they will continue to levy my checking account. What should I do next? I'm in California.

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Bill's Answer
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Bills.com Team
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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 Bills.com resources Collection Laws and Statutes of Limitation and California Collection Laws.

Bankruptcy

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 Bills.com bankruptcy information page.

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

Best,

Bill

Bills.com

43 Comments

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  • 35x35
    Mar, 2012
    Kuba
    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?
    0 Votes

    • 35x35
      Mar, 2012
      Bill
      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.
      0 Votes

    • 35x35
      Mar, 2012
      Kuba
      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.
      0 Votes

    • 35x35
      Mar, 2012
      Bill
      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.
      0 Votes

  • 35x35
    Mar, 2012
    David
    I just had my paypal acct garnished and cleaned out how long do I have to contest this...how 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
    0 Votes

    • 35x35
      Mar, 2012
      Bill
      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.
      0 Votes

  • 35x35
    Feb, 2012
    Ryan
    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.
    0 Votes

    • 35x35
      Feb, 2012
      Bill
      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.
      0 Votes

  • 35x35
    Jan, 2012
    Jerry
    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.
    1 Votes

  • 35x35
    Nov, 2011
    Barb
    I live in Colorado. Can I sieze bank account funds in order to satisfy a judgment I have against an individual?
    0 Votes

    • 35x35
      Nov, 2011
      Bill
      Yes. Consult with a Colorado lawyer to learn how.
      0 Votes

  • 35x35
    Sep, 2011
    Jeanne
    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.
    0 Votes

    • 35x35
      Sep, 2011
      Bill
      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.
      0 Votes

  • 35x35
    Aug, 2011
    Lisa
    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.
    0 Votes

    • 35x35
      Aug, 2011
      Bill
      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.
      1 Votes

  • 35x35
    May, 2011
    Elizabeth
    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.
    0 Votes

    • 35x35
      May, 2011
      Bill
      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.
      0 Votes

  • 35x35
    Jan, 2011
    Lisa
    Are bank levies legal in all states?
    0 Votes

    • 35x35
      Jan, 2011
      Bill
      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.
      0 Votes

    • 35x35
      Jan, 2011
      cheryl
      what about Pa levies???? ssi,veterans ,dpw income only
      0 Votes

    • 35x35
      Jan, 2011
      Bill
      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.
      0 Votes

    • 35x35
      Jan, 2011
      Steve
      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?
      0 Votes

    • 35x35
      Jan, 2011
      Bill
      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.
      0 Votes

  • 35x35
    Dec, 2010
    Lee
    I owned a hair salon, got behind on payments, and finally closed and received a default judgment. My bank account was levied and all funds were taken out. I still owe on the judgment. I received a interrogatories document and I talked to attorney for creditor before the bank levy. He told me to fill out the document listing assets, bank accounts, ectc. He told me we could work out a payment plan once this was filed. The next day I got the bank levy. After I submit documents, is it true that the creditor can only take 25% of my income/pay checks. Since I'm self employed and opened another salon, should I put the new salon in someone else's name? If I keep it in my name, can the creditor liquidate all my equipment?
    0 Votes

    • 35x35
      Dec, 2010
      Bill
      It is unfortunate the creditor's attorney lied to you and promised to "work out a payment plan" and then used the information you provided to levy your bank account. Perhaps from that attorney's perspective, the payment plan was emptying your account

      Despite this unsavory behavior by this attorney, you need to find a different attorney to help you protect the assets in your new venture. Consult with an attorney who has experience forming corporations. He or she will help you form a corporation that insulates you and the new venture from each other's liabilities.
      0 Votes

  • 35x35
    Oct, 2010
    Charlie
    My Lawyer made a agreement with a creditor lawyers and made such payment to them to settle even have it in writing. 2 weeks later the creditors lawyers imposed a levy on my checking account and took every penny, so know my lawyer tells me they broke the law and we need to sue them to get my 2g's back do thing sound hopeful cause i'm broke
    0 Votes

    • 35x35
      Oct, 2010
      Bill
      I would listen to your lawyer as he/she has already negotiated a settlement for your debts and knows the specific debt and contract laws in your state.
      0 Votes

    • 35x35
      Jan, 2012
      Eric
      I just had a levy served on my account, which caused my joint account to be completely exhausted. In Tennessee, what recourse is there for that innocent party. With a Chp. 13, does one get to keep their home and automobile?
      0 Votes

    • 35x35
      Jan, 2012
      Bill
      The facts in your question illustrate why I recommend against joint accounts. I realize that observation is not helpful to you now, but your sharing your experience here may help another reader avoid your predicament.

      I cannot find a Tennessee law that prevents a judgment creditor from levying a joint account. I hasten to add that my search was not exhaustive, and I am not trained in Tennessee law. Therefore, your wisest course of action is to consult with a Tennessee lawyer who has experience in consumer law.

      Ask your lawyer to review Tennessee Title 26 Execution /Chapter 2 Exemptions - Garnishment /Part 1 Exemptions, also known as the Personal Property Owner's Rights and Garnishment Act of 1978, and ask if the $4,000 account exemption applies to you in your situation. If so, you may be entitled to a refund of the amount levied from your account.

      Regarding bankruptcy, see the Bills.com resource chapter 13 bankruptcy to learn more about this form of bankruptcy.
      0 Votes

  • 35x35
    Feb, 2010
    Bill
    What I am about to write is for the benefit of other readers: If you are summoned to appear in court, do it. Here, Alex could have chosen to appear in court, and could have explained his or her situation to the judge. The judge may or may not have granted the creditor the judgment, but at least Alex would have had an opportunity to be heard. Because Alex did not appear, the creditor won by default, has a judgment, and can levy Alex's bank account, garnish wages, or put a lien on Alex's property. Filing for bankruptcy is an option. Contact your county bar association and ask them for the name of the local organization that gives pro bono (free) legal advice to low- and no-income people in the area. Make an appointment with that organization, and bring all of the letters and documents regarding your debt to that meeting. Learn your options then act accordingly.
    0 Votes

  • 35x35
    Feb, 2010
    Alex
    Hi I owe several credit cards, I am now divorced and a single parent on public assistance with a part time job. I received a notice to appear for arbitration from Chase after the 30 days to respond so the outcome was given to credit card company, I don't know if its a bank levy? I have closed all bacnk account except small credit union, what happens next? I am consirering Bankrupcy but I am waiting for bank response regarding non profit loan modification for home?
    0 Votes

  • 35x35
    Jan, 2010
    robert
    Thank you very much for the so much needed information. Robert
    0 Votes

    • 35x35
      Aug, 2011
      Penny
      How long does the first "notice of levy" freeze a bank account? Does take just what is in the account at the time or is it for a specific amount of days?
      0 Votes

    • 35x35
      Aug, 2011
      Bill
      My understanding is that the funds in the account, up to the amount of the levy, are frozen for 21 days in most jurisdictions, before being remitted to the creditors. I know this is the case for an IRS tax levy on bank accounts.

      Once the levy hits the account, only what was in the account that day is affected. If you deposit funds the day after, it is not snagged by the levy. Of course, the creditor can levy your account more than once, so other funds could be caught in a separate levy.
      Again, I am basing this on my knowledge of IRS tax levies, but believe them to be accurate. I suggest that you contact your bank and ask what its procedures are. If you find out anything different than what I am telling you, please report back.
      0 Votes

  • 35x35
    Jan, 2010
    Bill
    Either an attorney experienced in bankruptcy or consumer law will have the knowledge to handle your case. Regarding your first question, how quickly the process takes depends on the jurisdiction, the alacrity of the local courts, and how quickly the bank reacts to the court order. Typically, the process will take a matter of days. At this point, you have lost almost all of your leverage, unless you have resources that are not at the bank the creditor is interested in. Perhaps this goes without saying, but for the sake of other readers, a debtor has many, many more options to resolve debt early in the process before a matter is taken to court. Consult with an attorney about your case and see what your options are in your state of residence.
    0 Votes

  • 35x35
    Jan, 2010
    Robert
    I have been served an order of execution to have all my bank accounts frozen and then to garnish from them. How long will it take for this action to take effect once I am served with such documents? Can I hired an attorney to either stop and then negotiate a plan of payment. The Creditor will not accept any plans from me. What area of Law Practice would handle this case without having to file for Bankruptcy?
    0 Votes

  • 35x35
    Nov, 2009
    Bill
    Typically, it is a form completed by an attorney or paralegal that accompanies a judgment sent to a bank.
    0 Votes

  • 35x35
    Nov, 2009
    Charles
    What does a Bank Levie look like. Is this somethign prepared by the court or something I need to prepare? What should be included in the Levie? Thanks, Chuck
    0 Votes

  • 35x35
    Nov, 2009
    Bill
    Customer accounts exist in bank and credit union computers, and are not kept in specific branches.
    0 Votes

  • 35x35
    Nov, 2009
    Charles
    I have a judgment (California) and want to try and levy a bank account. Question: If I find the bank do I have to find the actual branch the account is at...or can I go to the main branch?
    0 Votes

  • 35x35
    Sep, 2009
    Mark
    You have several options to collect this debt. Because you mentioned being in California, I will cite California rules, but the general concepts are the same in other jurisdictions. First, you may consider selling the debt to a collection agent. You will get less than 100% of the amount in the judgment, but at least you will put the matter behind you. Second, you may want to consider a lien on the person's property. Third, consider filing a notice of judgment lien on the defendant's business with the California Secretary of State.
    0 Votes

  • 35x35
    Sep, 2009
    Richard
    The defendant has not paid me the judgment and 30 days passed with no appeals and no payment. The defendant is wealthy and owns a business. She appeared in court but did not explain why she refused to return money owed to me. She is plain difficult and stubborn. I know that she is wealthy and I also know that she pays everything in cash for parts at her place of business. However, she accepts credit cards and checks from consumers. The business check she gave me was to get me off her back. It bounced and I was charged bank fees. How can I find out about her personal banks in CA? She is snubbing the court judgment and making me do all the work. I know about her real property address but to levy it means to wait. She doesn't have a cash register at the business and she is the owner of a business that is unregistered which explains why she doesn't have a lot of customers but only loyal customers for years. She has 2 mechanics who are on salary. She also does other types of businesses with other partners but don't know where to get that information. Any suggestions? How do I find out about her personal banking accounts as the business account can be closed anytime.
    0 Votes