Here’s the question for today, if my bank account is levied can i open a new account?
Once you got to know that your bank account is levied or garnished, it can be very frustrating. On the other hand, if you have sort things out with your creditor, your bank account wouldn’t have been levied. Once a creditor obtains a judgment order from the court, they have the right to garnish or levy a debtor’s account.
This is the only last resort which creditors use to get their money from their debtors. As you know that once a creditor takes the judgment order to your bank, your debit transaction will be frozen or restricted. This is to prevent the debtor from draining its bank account and to also use the medium to pay the creditor the money owed by the debtor.
If you’re in this type of situation, the worst thing you can do is deposit money into the account. Definitely, you won’t have access to it especially if the operating balance in your bank account is insufficient to pay the creditor.
This now goes down to this question, if my bank account is levied can i open a new account. So this is our main topic of this article, but there are some related topics I will also touch. They include the followings;
- Can a creditor levy more than one bank account
- What happens when a levy is placed on your bank account
- Is a bank levy a one-time thing
- Will I be notified of a bank levy
If my bank account is levied can i open a new account
Yes, you can open a new account to avoid a direct deposit going into the account. There’s no law that states that a debtor can’t open a new account if the old bank account is levied. However, you need to be extra careful so as prevent the creditor from getting your new bank name. If the money in your old bank account is insufficient to pay the debts owed to the creditor, the creditor still has the right to put a levy on your new bank account.
So if you’re planning on opening a new bank account, you can go ahead and open the account but make sure that the creditor won’t be aware of the new account.
If a debtor has three bank accounts, a creditor using a court order has the right to levy or garnish the three bank accounts as long as it will be enough to pay the debts owed to him or her by the debtor. Some people might think that the creditor can only levy or garnish a single bank account of a debtor, but that is all wrong.
As long as the money in the debtor’s bank account is insufficient, the creditor or the debt collector has the right to levy other bank accounts owned by the debtor.
Why I’m stressing out this is because of the main topic of this article, if my bank account is levied can i open a new account. You can do that, open a new account but make sure that your creditor won’t get to know about it. Else it will also be garnished or levied just like the old account.
Can a creditor levy more than one bank account?
Absolutely yes, a creditor can levy more than one bank account if the debtor’s single bank account is not sufficient to pay the debts owed to the creditor.
This goes the same with the question on if my bank account is levied can I open a new account. Like I said, if you have multiple bank accounts, the creditor using the court order has the right to levy all your bank accounts. This is usually the case whereby you owed the creditor a huge sum amount of money and a single bank account won’t be enough to pay the debts.
Using the judgment order, the debt collector or the creditor can levy all your entire bank accounts.
Honestly, this can be very frustrating and same time annoying, and many a time there’s nothing you can do other than getting a lawyer and sorting out with the creditor about the payment.
Exempt funds and Limits
Like I said in my previous post, there are funds that a creditor cannot touch, no matter how much you owed the creditor, also there limits as to how much a creditor can take from a debtor’s bank account.
This varies from state to state, and if the state you’re living in has a limit that prevents a creditor or debt collector from taking all the entire money from a debtor’s bank account. This was introduced to ensure that a debtor has funds for his or her living expenses.
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
You can read more on Funds that cannot be touched by a creditor or debt collector.
What happens when a levy is placed on your bank account?
Once a levy is placed on your bank account, your bank will freeze your account from debit transactions until all the debts owed to a creditor or debt collector are paid in full or complete.
The debtor can deposit money into the account, but will not have the access to withdraw the money, sending it to someone, paying bills, etc. That is to say that debit transactions will be restricted from the debtor until the debts are paid, or things are sorted out with the creditor.
If you feel that your account was wrongfully levied or garnished, please don’t hesitate to contact your lawyer to fight the creditor. As long as you believe that the creditor is wrong in levying your bank account, you should get a lawyer to fight the case.
People do this, and I have seen some quite number of persons winning the case. Though you must have a clear conscience that you don’t own the creditor or your account was wrongly levied or garnished.
Is a bank levy a one time thing
A bank levy is a one time thing if you don’t go on to have debts piled in your account. Once you paid off your debts to the creditor, you have no business and the levy will be removed from the bank account.
As long as you have lots of debts to pay, be rest assured that your creditors will come after you and in this case, a bank levy isn’t a one time thing.
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Will I be notified of a bank levy
In most cases, you won’t be notified of a bank levy. Reason being that if a creditor notifies a debtor of a bank levy prior to applying the levy on the debtor’s account or garnishing the account, the debtor will act fast and remove the entire money in his or her account.
This usually makes the creditor or the debt collector prefer not to notify or to inform the debtor about the levy until the bank is done applying the levy on the debtor’s account.
Most banks don’t notify the person about the levy, it is when the person sees a sum amount of money removed from his or her account and inquiring from the bank as to why this happened, that is when they will inform the person about the levy on the bank account by the creditor.
Once a creditor wins a judgment order against you, the creditor can choose to let you know about the levy or probably keep silent until the bank has frozen the debtor’s account. Then the creditor might inform the debtor about the levy.
Bank levy usually knocks debtors off guard cause they won’t be notified or informed prior to the bank levy being imposed on their bank account.
If your bank account is levied, prevent any form of direct deposit from entering into the account cause you won’t have access to withdraw the money or do a debit transaction on the levied account. This guides you this the question of if my bank account is levied can I open a new account.
How does a levy on a bank account work
This is how a levy on a bank account work. A creditor or a debtor collector will first file a case against you in court, because of the debt you owed him or her. Immediately the creditor wins the case against you. The court will issue the creditor a judgment or court order.
The court order is what the creditor will use to levy or garnish your bank account.
As the creditor gets the court order, he will in turn forward the court order to the debtor’s bank. Immediately the bank will start to process the order as requested by the creditor. After the process is completed, the bank will impose a levy on the debtor’s account or garnish the account.
As the debtor’s account is garnished, the account will be frozen and the debit transactions will be restricted.
If the funds in the debtor’s account are sufficient enough to pay the creditor or the debt collector, the bank will pay the creditor the debts owed to him without informing or notifying the debtor. Afterward, the bank or even the creditor will inform the debtor about the transaction and the levy.
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That’s all I have to say on this topic if my bank account is levied can i open a new account. To be on the safer side, always endeavor to pay your creditors or sort things out with them before come after your bank account.