When a bank levy hits a debtor’s bank account, the next question which will be asked is how often can a creditor levy bank account. This question will definitely pop into the head of the debtors so as to know if to stop any form of money deposit into the levied account.
In a bank levy, most time the debtor won’t be notified about it. He or she will know only if a debit transaction fails, or probably the bank calling to inform you that a sum amount of money was removed to pay a creditor.
Once you hear about your bank account being levied by a debtor, what next is to know how often can a creditor levy bank account especially if you know that the maximum balance in your bank account is insufficient to pay the creditor.
Honestly, you can go haywire because of this.
Once your account is levied, the bank will automatically freeze your account. This will restrict any form of a debit transaction from occurring.
How often can a creditor levy bank account
A creditor can levy a bank account several times in the case that the debtor’s account balance is insufficient to pay the creditor the money owed.
Again, a creditor can levy several bank accounts of a debtor in order to receive the money owed by the debtor. This is the case if the account balance in the debtor’s account is insufficient to pay the creditor, and the creditor will look for every means to get his or her money back.
Some do think that a creditor has no power to levy all of the debtor’s bank accounts, but that is not true. Once the account balance in the debtor’s account is insufficient to pay the creditor the money owed, the next step a creditor will do is to levy other accounts of the debtor.
This also goes with the question of how often can a creditor levy bank account.
Once your account balance is insufficient, the creditor will levy your bank account multiple times until the money is paid completely. However, if the funds in your bank account are sufficient, then the creditor will levy your bank account just once.
Bet you now have understood and know-how often can a creditor levy bank account.
Who can put a levy on my bank account
A creditor can put a levy on your bank account. First, the creditor must obtain a court judgment order before proceeding to levy your bank account for the debts you owed him or her.
Mind you, the IRS will levy your bank account without a court order. It is only the IRS that can levy a debtor’s account without a court order.
Apart from the IRS, any other creditor must obtain a court order which will be used to levy a debtor’s bank account. Once the court order is obtained, the creditor will take it to the debtor’s bank to begin the process of levying the account.
The only person that can levy a bank account is the creditor. The creditor can person, business or an organization.
How does creditor levy bank account
A creditor will levy a bank account by first winning a judgment against the debtor in the court, and getting a judgment court order. With a court order, the creditor has the ultimate right to levy or garnish a debtor’s bank account.
Once the creditor gets the court, what follows next is to proceed to the debtor’s bank. Mind you, the creditor must have known the debtor’s bank name before going to the bank. It is not difficult to find out the bank which a debtor is banking, using your complete name and address a creditor will detect your bank.
There are other ways that creditors use in detecting a debtor’s bank without the debtor giving it to them.
As the creditor forwards the court order to a debtor’s bank, they will grant his or her request and start processing the request immediately. During this time, the debtor won’t be informed or notified about the levy until the process is done.
Bank will immediately freeze the debtor’s bank account in order to prevent the debit transactions from occurring, and also have funds to pay the creditor from the debtor’s bank account.
POINT TO NOTE
If there are exempt funds in your bank account, the creditor won’t touch the money. That is to say, that bank can only pay the creditor nonexempt funds from a debtor’s bank account.
Exempt funds are funds that cannot be touched by a creditor or the debt collector, and they include the followings;
- Public Assistance (PA)
- Supplemental Security Income (SSI)
- Social Security
- Social Security Disability (SSD)
- Veterans benefits (VA)
- Child Support
- Spousal Maintenance
- Workers Compensation
- Unemployment Insurance
- Railroad Retirement benefits
- Black Lung benefits
- Public and private pensions
These types of funds can never be touched by a creditor no matter how much you owed. However, if the money in your bank account is nonexempt, then a creditor can wipe the entire funds in your account.
In some states across the country, there’s a rule on bank levy or bank account garnishment. A state might give a rule that prevents creditors from wiping out a debtor’s bank account. This rule is to protect the debtor from running out of money and to have some funds to meet its living expenses.
Once a creditor puts a levy in your bank account, you as a debtor should try to know if there’s a rule that prevents creditors from taking all the money in a debtor’s bank account in your state. With this, you will be left with the stated amount for your living expenses and you can withdraw that very amount from your bank account even though it is frozen.
We are still on the topic of the post, how often can a creditor levy bank account. Now let’s see how you will know when your bank account is levied.
How do you know if you have a bank levy
You will know it your bank account is levied only when a debit transaction fails or your bank calling to inform you that this very amount of money was paid to a creditor from your bank account.
This is a good question, how do you know if you have a bank levy.
Most times, creditors don’t inform or give a notice to a debtor about a levy, this is to prevent the debtor from claiming bankruptcy or withdrawing all the money in his or her bank account. Normally, when you hear that a creditor is coming up with a bank levy against you, what you will do is to transfer all the money in your account to another account immediately.
The creditor will be left with nothing.
This is why they resort to not informing or notifying the debtor about the action until the whole process is complete. In some cases, the creditor will now inform the debtor and request if they can sort things out amicably.
While in many cases the creditor will request from the bank to pay him or her the debt owed without informing the debtor. And the truth is, the bank must grant the creditor’s request as long as the creditor has a court order against the debtor.
So you can only know that your bank account is levied when you try to make a withdrawal, send money from your account, or pay bills (debit transaction) and it fails. You call the bank to know why it happened, that’s when you will be informed of the levy.
But once a creditor files you in court about the debt you owed him or her, you should know that the next step the creditor will do is to immediately levy or garnish your bank account.
Once a creditor takes you to the court, you should endeavor to sort things out with the creditor. Any time any day the creditor will come after your bank account or even your wage. Some might think that there’s no way a creditor will find out the bank they are banking with, but you will be shocked when they do.
You will be wondering and thinking how the creditor gets to know the bank you’re banking with and your bank account information.
We are now in a modern world and also modern banking, getting to know a debtor’s account is not difficult as long as the creditor has your name or probably knows some information about you.
Can creditors levy your bank account?
Absolutely yes. Once a creditor obtains a judgment court order against a debtor, the creditor will use the order to levy the debtor’s bank account.
It can also be called bank account garnishment or a garnishee order.
What is garnishee order?
This is an order which is a legal procedure by which a judgment creditor obtains control of funds in the hand of a third party (garnishee) who owes money to the judgment debtor.
You can also say that a garnishee order is an order of the court obtained by a judgment creditor, directed to attach the money of his judgment debtor which is in the hands of a third party.
Once a creditor obtains court order against the judgment debtor, the creditor has the ultimate right to garnish or levy the debtor’s bank account. This is usually the last resort creditors take in order to have the debtors the debts they owed.
Remember, I said IRS is the only body that can garnish or levy a debtor’s bank account without obtaining a judgment court order from the court. Other businesses, organizations, or individuals must obtain a court order before they can levy a debtor’s bank account.
If you don’t a creditor to levy your bank account, once the creditor takes you to court and win the case, you should immediately try every possible means to pay your debts or request the creditor to give you more time in paying the debts.
As long as the creditor is given the court order against you, the next action he or she will take is to garnish or levy your bank account, and your bank must grant the request and process the account garnishment without informing you about it.
That’s all I have to say on this topic on how often can a creditor levy bank account.
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I do hope to have perfectly answered the question of how often can a creditor levy bank account. However, I recommend always contact your account manager or probably your lawyer if you find yourself in this situation.