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Can My Bank Account be Levied?

Can My Bank Account be Levied?

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Mark Cappel
UpdatedJun 7, 2024

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?

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 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 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.



Did you know?

If you are struggling with debt, you are not alone. According to the NY Federal Reserve total household debt as of Quarter Q1 2024 was $17.69 trillion. Student loan debt was $1.60 trillion and credit card debt was $1.12 trillion.

According to data gathered by from a sample of credit reports, about 26% of people in the US have some kind of debt in collections. The median debt in collections is $1,739. Student loans and auto loans are common types of debt. Of people holding student debt, approximately 10% had student loans in collections. The national Auto/Retail debt delinquency rate was 4%.

Collection and delinquency rates vary by state. For example, in Georgia, 18% have student loan debt. Of those holding student loan debt, 9% are in default. Auto/retail loan delinquency rate is 6%.

Avoiding collections isn’t always possible. A sudden loss of employment, death in the family, or sickness can lead to financial hardship. Fortunately, there are many ways to deal with debt including an aggressive payment plan, debt consolidation loan, or a negotiated settlement.



AAnonymous, Dec, 2018

Hello, Me and my husband live in Delaware, and we have a joint CD account in Illinois and Delaware. Can a creditor levy the money from the Illinois account? I know that Delaware law doesn't allow a joint accounts to be levy if the creditor have a judgment against the one spouse only. Is it the same for Illinois?

DDaniel Cohen, Dec, 2018

I can't give legal advice, only an attorney can properly do so. Here are a couple of thoughts, with the understanding that I am not giving you legal advice.

No bank levy can take place until a judgment is issued against you. Once there is judgment in a specific jurisdiction, say Delaware, a levy can only take place in that state. To come after an account in another state, a process has to take place called "domestication." In your situation, the creditor would file paperwork in Illinois, demonstrating that they have authority to levy you via the judgment in Delaware.

If the judgment is against one spouse, it seems prudent to remove that spouse from any account and have them in the name of the non-debtor spouse.

mmichael philips, Aug, 2018

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.

DDaniel Cohen, Aug, 2018

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.

mmichael philips, Aug, 2018

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?

DDaniel Cohen, Aug, 2018

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.

mmichael philips, Aug, 2018

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.

DDaniel Cohen, Aug, 2018

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

TTracy Academia, Sep, 2014
Can a California creditor levy a bank account in New York?
DDaniel Cohen, Nov, 2014

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.