A levy is a garnishment order, usually from a civil court, although the Internal Revenue Service and other tax agencies can also issue bank levies. Garnishment freezes a debtor's bank account, allowing a debt collector or tax agency to take money from the account. . Levies and garnishment are not possible in consumer debt cases until after the debt collector obtains a judgment in court.
Protection
The Fair Debt Collection Practices Act, places restrictions on the behavior of debt collectors as they attempt to collect debt. The act makes it unlawful for debt collectors to threaten a lawsuit unless they really intend to sue, and they cannot threaten to take money from a debtor's bank account without having obtained a judgment and garnishment.
Lawsuits
Lawsuits, judgments and garnishments occur at the end of a long debt collection process. A debtor defaulting on a credit card account because of nonpayment may not face a possible lawsuit for several months or even a year. However, in some instances legal action can occur much sooner. Usually a credit card company sells or assigns the debt to a debt collector after the account is about six months behind. The debt collector steps up collection efforts and may eventually file a lawsuit.
Defense
Defendants in debt lawsuits usually try to settle the case if they have the means to do so. There are few suitable defenses for a debtor in a debt lawsuit, making it difficult to beat a debt collector in court. The amount of a possible settlement depends on what the debt collector is willing to accept. A debt collector willing to file a lawsuit may insist on receiving say, 80 percent of the balance in a settlement, but may accept less. SmartMoney.com reports debt collectors usually will settle for 20 to 75 percent.
Actions
Settlements are possible even after the start of garnishment. People facing garnishment usually stop putting money into the account. They redirect direct deposits such as payroll checks to another bank account or onto a prepaid debit card. This creates some leverage for the debtor because at this point the debt collector cannot collect money from the original bank account.
Advice
An experienced consumer affairs attorney can offer advice on debt lawsuits and garnishment. The attorney can negotiate settlements and represent the debtor in court on other debt lawsuits, if necessary. People facing levies because of tax issues should consult a tax attorney.
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