Understanding a Bank Account Levy

If you owe a debt to someone and can’t pay them back, you know how stressful this can be. Being hounded by creditors and debt collectors puts you in a difficult position and you may be wondering about your options. You may consider starting a payment plan, attending debt counseling, or in some cases, filing for bankruptcy. 

According to the U.S. Bankruptcy Court, in the southern district of Florida alone there were 7,385 people who filed for Chapter 7 bankruptcy in 2021. While bankruptcy might be the last resort option, there are steps your creditors can take against you if you don’t act. 

One major move they can make is implementing a bank account levy against you. To learn more about this or to have any of your tax questions answered, call me at Zuckerman Law, LLC. My office is in Fort Lauderdale, Florida, but I’m able to help clients throughout South Florida including Miami, Boca Raton, North Miami Beach, Sunny Isles, Hollywood, and Aventura.

What Is a Bank Account Levy?

When a creditor is owed money from a debtor, they may be able to impose a bank account levy (also called a bank levy) which means that money is taken directly out of the debtor’s account without their permission. This option is not available to all creditors, and there are certain steps they must take before the levy will be granted. The creditor must first file a lawsuit against you in court and the judge must grant them a money judgment. Typically, once a levy has been approved, the debtor will have the option to challenge it or pay back the debt before the money is taken, but in other cases, they may not even be notified that the levy is in place. The funds that are taken from the account will then be used to directly pay off the outstanding debt.

Who Has the Right to Levy My Bank Account?

Most, but not all creditors, have the right to pursue a bank levy. Many credit card companies will not be able to pursue a bank levy, but others who have gone through the required court channels can levy your account. This could happen with both private and public creditors and can include student debt, personal debt, medical debt, and even back taxes. The IRS and the Department of Education have the ability to levy your account without first seeking court approval, but they are required to give you 30 days' notice of the levy.

Steps to Take If Your Bank Account's Been Levied

The best thing you can do for yourself if you find out your account has been levied is to contact a local tax attorney. An experienced lawyer can educate you on your options and look into your specific case to help you dispute the levy. You’ll generally only have 10 days to respond, so it’s essential you act swiftly to avoid having your money taken from you. Your attorney may be able to find errors in the court judgment, help you negotiate with your creditors, argue that you’ll endure financial hardship if the levy is in place, or they can advise you on your other options, one of which may be bankruptcy. Filing for bankruptcy is not the solution for everyone, but it will stop all collections and may be a better choice depending on your circumstances.

Personalized Legal Counsel

If you’re in the Fort Lauderdale, Florida, area and are concerned about mounting debt, or you have reason to believe your bank account will be levied by a creditor, reach out to me at Zuckerman Law, LLC. For over 30 years, I’ve dedicated my practice to helping clients just like you sort out their tax and debt concerns so they can move on with their lives.