Ask Bill your personal finance question

Can My Bank Account be Levied?

What are the rules for account levy?

I purchased a car about 2 years ago and can no longer afford the payments. I am 2 months behind. I want to do a voluntary repossession. I can not, no matter how I look at my finances, afford this payment. I closed out a 401K plan I had with my employer, and used that money to purchase an older, used car. My question is, can they put a levy on my bank account? I believe that in the state of NC they can't garnish my wages, is that correct?

Read full question
Bill's Answer
4.5
/5.0
(8 Votes)

Man at ATM | Account Levy

A financial account levy — sometimes called an account garnishment, attachment, or account freeze — is the result of a court’s judgment or a government agency’s administrative action. A consumer should never be surprised by an account garnishment, as most states have civil procedure laws and agencies have rules requiring the consumer to receive a notice before the levy occurs.

The procedure for levying bank accounts, as well as what amount, if any, a debtor can claim as exempt from the levy, is governed by state and federal law. Many states exempt certain amounts and certain types of funds from bank levies, so a debtor should review his or her state’s laws to find if a bank account can be levied. See the Bills.com resource State Exemption & Consumer Laws for an overview of each state’s exemption amounts.

Receiving Notice of an Account Levy

An original creditor, or a collection agent that owns a debt account, has several legal means of collecting a debt, including wage garnishment and lien. But before the creditor can start, the creditor must go to court to receive a judgment. A court (or in some states, a law firm for the plaintiff) is required to notify the debtor of the time and place of the hearing. This notice is called a “summons to appear” or a “summons and complaint.” In some jurisdictions, a process server will present the summons personally. In others the sheriff’s deputy will pay a visit with the summons, and in others the notice will appear in the mail. Each jurisdiction has different civil procedure rules regarding proper service of notice. See Served Summons and Complaint to learn more about this process.

If a consumer does not answer the complaint, the court will award the creditor a default judgment. Depending on the state’s rules, the court may or may not notify the consumer of the judgment. After the creditor receives the judgment, it may chose to garnish wages, ask for an account levy, ask for a writ or replevin to seize the consumer’s personal property, or place a lien on the consumer’s real property.

To learn more, please read our collections advice Web page. If you are struggling with debt I encourage you to visit the Bills.com debt relief savings center to get no-cost, no-obligation quotes from pre-screened debt settlement service providers.

Your Question

You mentioned North Carolina. North Carolina has a 100% exemption on wages, and a $500 exemption for a bank account. The exemption amount is the amount the creditor must leave behind.

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

Best,

Bill

Bills.com

Get Debt Help!
4.5
/5.0
(8 Votes)

People also like to Read

Brad Stroh

Debt Relief Options | Compare which debt relief option is best between Consumer Credit Counseling Services and Debt Settlemen... Read more >>

Brad Stroh

9 do-it-yourself debt solutions, including how to stop a collector's calls, validate debt, dispute an error in your credit re... Read more >>

Mark Cappel

Get Out of Debt Free | The lowest-cost method of getting out of debt for free is bankruptcy. You have other options, too, and... Read more >>

Daniel Cohen

Review your debt consolidation options. Find the right way to pay off your debt. Pay attention to debt consolidation reviews ... Read more >>

Mark Cappel

Learn about credit cards. Find low interest credit cards. Understand how to use credit cards to boost your credit. Make sure ... Read more >>

14 Comments

Recent Best
1500 characters remaining
  • MP
    Aug, 2018
    michael

    It is certainly possible for a CA creditor to levy a bank account in New York. The creditor would first need a judgment against the debtor. The bank levy would be enforced consistent with NY collection laws, which protects the first $1,920 in your account from being taken. Protections are higher for certain types of exempt income that is deposited into the account.

    0 Votes

    • 35x35
      Aug, 2018
      Daniel

      Most definitely a judgment from a creditor can be obtained against a consumer in another state. The creditor needs to either sue the consumer in the state in which the consumer resides or take a judgment obtained in a different state and domesticate the judgment.

      0 Votes

  • MP
    Aug, 2018
    michael

    Hello, I recently was awarded a Judgment for Unpaid wages In a North Dakota small claims court. The debtors business resides in PA, and I am wondering how to proceed with a levy of their bank account. (I have their banking info). Will I follow PA or ND procedures for the Levy?

    0 Votes

    • 35x35
      Aug, 2018
      Daniel

      You need to domesticate the judgment in PA before you can enforce the judgment. That means filing paperwork in PA that demonstrates the judgment you received in N. Dakota is valid. You are then limited by the standards of Pennsylvania collection laws.

      0 Votes

      • MP
        Aug, 2018
        michael

        Daniel, I just wanted to say thank you for your prompt reply. I searched google for the answer without luck, the information you provided was a huge help. Thank you again.

        0 Votes

        • 35x35
          Aug, 2018
          Daniel

          My pleasure. Thank you for taking the time to express gratitude. 

          0 Votes

  • TA
    Sep, 2014
    Tracy
    Can a California creditor levy a bank account in New York?
    0 Votes

    • 35x35
      Nov, 2014
      Daniel

      It is certainly possible for a CA creditor to levy a bank account in New York. The creditor would first need a judgment against the debtor. The bank levy would be enforced consistent with NY collection laws, which protects the first $1,920 in your account from being taken. Protections are higher for certain types of exempt income that is deposited into the account.

      0 Votes

  • DC
    May, 2014
    Danielle
    Fair Oaks, CA
    I went to go pay for my dinner this evening only to have my card decline and when I checked my bank account my direct deposit funds are on hold. I never received any notice in the mail or by any noticed served. Nothing just days before my rent is due. I am panicking. Please any advice.
    0 Votes

    • BA
      May, 2014
      Bill
      First, call your bank or credit union to ask for the name of the creditor that has the account garnishment/account levy. This might be a simple case of mistaken identity you can clear up with a few phone calls and faxes.

      Second, if there is a judgment filed against you, then consult with a lawyer who has consumer law experience. You indicated you reside in California. If you cannot afford a lawyer, contact Law Help CA or another California pro bono program for no-cost legal advice.
      0 Votes

  • ML
    Mar, 2014
    M.
    We live in AZ and before we got married my husband had a credit card go to collections. Garnishments out of his checks are one thing but we are worried about them getting access to the bank account. I own the account and he's only P.O.A. Now that we're married can they access my account? Hoping its safe since all this was before me.
    0 Votes

    • BA
      Mar, 2014
      Bill
      If your husband's social security number is associated with your account, then your account could be levied. If he has only a general power of attorney, then your account should not be at risk.
      0 Votes

loading...