Bank levies give creditors the power to seize money from your savings or checking accounts to satisfy a debt owed to them.
Creditors can levy your accounts as many times as it takes to recover the entire amount you owe.
It’s important to note that, with the exception of the IRS, creditors are required to sue debtors and obtain legal permission from a judge before levying a consumer bank account.
Immediate Actions You Should Take
If a creditor has levied your bank account, the first action you should take is to stop any additional funds from going into it. If you have the money, the next step is to contact the creditor and tell them you’re willing to pay some of what you owe.
This approach isn’t always successful, but if you owe more than what’s in the levied account, the creditor might work with you. If the first two steps don’t work, consult an attorney who can offer advice based on your individual situation.
How to Have the Levy Removed
Levies aren’t typically removed until financial actions are taken, but you should try to have it eliminated. First, get the levy paperwork from your bank and determine if the levy is on an appropriate debt. If it isn’t, gather proof of payment and provide it to the creditor. If it is on an appropriate debt and you’re behind on payments, try to work out a payment plan.
If you can work out a plan, making regular, on-time payments is the best way to get the levy revoked. As a last resort, if you’re unable to pay the debt, consider filing bankruptcy. Once the debt is removed from your credit history, the creditor will lift the levy.
Length of Time a Levy May Last
A levy can last weeks, months, or years. The amount of time a levy is in place depends on how fast you can pay back the money you owe and if you choose to file bankruptcy.
Whatever you do, don’t ignore it.
The sooner you address a levy, the sooner you can have it lifted and regain access to your bank account.
Long-Term Implications of a Bank Levy
A bank levy itself doesn’t affect your credit score, but the financial events related to the levy might. Since levies are only placed after you’ve missed several payments, your credit is in trouble long before the levy. The levy may make it impossible for you to make payments on other bills, which will further exacerbate your credit problems. Finally, in the worst-case scenario, a bank levy can force you to file for bankruptcy, an action that will have a negative impact on your credit score for several years.
A bank levy occurs due to unpaid debt or taxes. It’s a stressful burden to bear, but a levy doesn’t last forever. If your bank account is levied, it’s important to contact the creditor and attempt to work out a payment plan as soon as possible. If you can’t work out a plan, consider getting professional assistance to help you regain access to your accounts.