Bank Levy

What is a Bank Levy?

A bank levy is a legal procedure that affords creditors the right to debit funds from your personal or business bank account. In some situations, your account gets frozen and the bank is then required to send funds to the creditor that you owe.

A creditor cannot force you to make payments, however, a bank levy is collection option available to creditors to assist them in recovering bad debt.  A bank levy occurs when a creditor bypasses you and demands funds from directly from your bank account.  All the creditor is required to do is send your bank proof of any legal judgments against you in order to levy the funds from your account.

Typically, you are aware that you owe the IRS, Department of Education, your State or have a judgement that could result in a levy, but you may not be notified by your bank that a levy is in progress. You always have to ability to dispute a levy, either to prevent it from happening or to reduce the amount that the creditor is attempting to levy. By failing to take action, you will risk having all the funds in your account taken which can cause a financial avalanche of problems.

Finding out who levied your account

There are several different creditors that may be responsible for a levy. The most common creditors are:

  • Internal Revenue Service
  • Department of Education (Student Loans)
  • Private Lenders
  • State Department (Child Support)

How to deal with a Levied Account

A bank levy will stay in place until the funds needed to satisfy the debt have been recovered.  If your bank account does not have the funds when the levy occurs, the creditor will continue to try until they are able to recover the debt owed.

The good news is that there are ways to prevent a levy to your bank account.  Tax Champions will use several approaches to reduce or prevent a bank levy. Call us today for your free consultation 1-800-518-8964.

 
 
 
 
 

Walter Wotman, CPA

Founder & Managing Partner

Walter Wotman, CPA is the author of "Tax Champions Guide to Tax Resolution." Amazon #1 Best Seller in the Personal Finance category. He is one of America's most experienced tax negotiators with over 35 years of experience helping thousands of clients settle difficult back tax issues.
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