BooksWhen a creditor obtains a judgment against you, there is a potential they will levy your bank account or garnish your wages. This makes an already difficult financial time exponentially more frustrating.

What Is A Bank Levy?

A bank levy is when a creditor with a judgment is given access to—and takes—your existing funds in a bank account in order to satisfy the court-ordered amount you owe them. The creditor must follow the rules surrounding Service of Process throughout all steps in the lawsuit but the end result is they reach into your bank account for the funds.

What Is Wage Garnishment?

Wage garnishment is different from a bank levy in that your wages are being directed from your employer to the creditor. While wage garnishment is less common and typically reserved to priority debt such as money owed to the IRS or the North Carolina Department of Revenue, the result is the same—you lose access to your funds.

What Are My Options?

Contest the lawsuit: If the lawsuit is in progress, you will be served with notice of a chance to appear before the court to dispute the claim of the creditor. In the alternative, you will be served with a Notice Of Right To Have Exemptions Designated. This form is your chance to exercise your right to protect certain funds and assets from creditors. The exemptions follow closely with the exemptions available in bankruptcy, so calling a Charlotte bankruptcy attorney is a great place to start if you’re under deadline to complete this form and submit it to the court.

Stop Using The Account: If your bank account is levied, you can simply switch banks or start cashing checks outside of banks. While there may be some fees and frustration associated with this, regaining access to your money is what’s most important. If you continue to deposit funds into the bank account, the creditor will continue to levy them until the debt is paid in full, per court order.

File Bankruptcy: A bankruptcy filing immediately freezes attempts by creditors to collect on a debt by way of the Automatic Stay imposed in bankruptcy. This Automatic Stay includes levied bank accounts. While there is a chance you can recover some of the previously levied funds, you can be guaranteed with the bankruptcy filing that the levy will discontinue while your bankruptcy case is active.

Won’t The Levy Or Wage Garnishment Return After Bankruptcy?

It depends upon the type of debt, but generally speaking the bankruptcy will discharge the debt associated with the bank levy or wage garnishment. Yes, even tax debt is subject to discharge if it meets the requirements in bankruptcy. You will be able to safely deposit funds into a bank account while the bankruptcy is in progress because of the Automatic Stay. After bankruptcy, the debt will no longer exist so the threat of levy or wage garnishment as to that debt is a non-issue.

Speak to an attorney now by calling 704.749.7747. Information is your most powerful weapon against the aggressive tactics of creditors and collection agencies. We are here to help.

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