Can I Fight An Account Levy?
Choosing to file bankruptcy has consequences. However, there can also be consequences if you do not file bankruptcy. One of these consequences is an account levy, an action that can take place months or even years after you have forgotten about your charged-off debt. If your debt is not discharged by bankruptcy, the creditor can reserve the right to levy your bank account long after the debt was charged off and collection efforts ceased.
How Can A Creditor Levy My Account If The Debt Was Charged Off?
Many people are surprised to learn that a creditor can levy an account without even notifying the account owner for a charged off debt. The reason that this is true is that if the creditor secured a judgment prior to charging off the debt, that judgment stands until it is discharged by bankruptcy. A “charge off” is simply an accounting transaction for the creditor and has no legal bearing on the status of a judgment. Therefore, if the creditor has a judgment, it can levy your account at any time. Some creditors quietly watch and wait for you to deposit a lump sum, as you often do after an income tax return. Once the money is in your account, a creditor can swoop in, execute the judgment, levy the account and clear it out before you even know what is happening.
How Much Can A Creditor Levy?
A creditor can levy all of the funds available in your account up to the amount of the judgment. If you owe $5,000 and there is only $3,000 in the account, the creditor can take all $3,000 and you will still owe $2,000 against the judgment.
How Can I Stop An Account Levy?
One way to recover the money taken from a levy is to file for bankruptcy. If you file immediately, the funds taken may be exempt and the creditor may be forced to return them to you. A bankruptcy attorney can help you determine if this is the right option for you. You could also content the lawsuit, although once a judgment is entered and the statutory period has passed, this may not be successful. The bankruptcy attorneys at the Oswalt Law Group are ready to help you with levies, judgments and bankruptcy issues. Call us today for a consultation about your case and we will be happy to help you.