Can A Creditor Take Money Out of My Bank Account?
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The short answer is yes. A bank account levy can be used for collection. The creditor can find your bank and put a bank levy on your bank account if they have received a judgment against you. If a creditor tries to collect a debt and the debtor is unwilling to respond to or communicate with the creditor, the creditor has reason to believe that the debtor has no intention to work with the creditor to pay down or off the debt. Only after the creditor has exhausted all means of collecting the money owed, the creditor can file a judgment against the debtor with the court to collect a debt.
After award of the judgment, the creditor is legally entitled to levy the debtor’s bank account. With the levy, the creditor can seize money from the debtor’s bank account. However, a bank account levy is a one time move to take the current amount at the time of the levy. Each subsequent levy requires a separate order.
In most cases, the creditor can easily find the debtor’s financial institution. The creditor will then issue a writ of execution to the bank. After the bank is served with the writ, it must seize the funds. To make matters worse, most banks charge fees to impose levies on accounts. Depending on the amount in the account, the creditor’s debt can either be completely fulfilled or if the funds are not sufficient, the account will remain frozen until the debt has been paid.
If the debtor has direct deposit for the levied account, the direct deposit will go directly towards the creditor to pay for the debt. Checks associated with this account should not be issued after the account has been levied, as return check fees will be charged.
The debtor can object to a levy within 30 days of a placed levy. The seized funds from levied accounts are held for 21 days before they are actually handed to the creditor. If you can prove that the funds in your levied bank account were actually child-support payments or other exempt funds, you will be refunded the sum of any exempted funds. In most cases you will have to file with your local court to prove money in your account is exempt from being taken.
