To "levy" a bank account means to seize the money in the account to repay a debt. While credit card companies can do this if you owe them money, they must first win a lawsuit against you to do so.
Credit Card Collections
After you miss a payment, your credit card company may start calling you. These calls usually become more frequent as your account slips further into delinquency. After about six months of no payments, your credit card company charges off your account as a bad debt and turns your account over to a collection agency. The collection agency sends you letters and calls you about the debt. If you don't pay the account, either the credit card company or the collection agency may file a lawsuit against you.
Court Judgment
Once your credit card company or its collection agency wins a lawsuit against you, it has the right to collect its judgment. This usually means that it can seize your assets, including any money in your checking account. A credit card company can't, however, just take money from your account without your permission or a court order.
Protecting Your Funds
If your bank account contains funds that are exempt from seizure, such as unemployment, Social Security or retirement funds, you need to inform your creditor, the court and your bank of this so that your creditor doesn't seize or freeze these funds. It can be difficult to protect your exempt funds if all of your money is in one account, so it's a good idea to have separate accounts for your exempt and nonexempt funds.
Collection Agency Threats
According to the federal Fair Debt Collection Practices Act (FDCPA), it's illegal for a debt collector to make false or empty threats against you. If a debt collector tells you that it's going to garnish your wages or levy your checking account without first getting a court judgment against you, that collector has broken the law. Report the collection agency to your state's attorney general, as well as to the Federal Trade Commission. You may also be able to sue the collection agency for damages.
Prevention/Solution
Never ignore credit card debt or communications from credit card companies and collection agencies. If you can't settle your bills or work out a payment plan, talk to a credit counselor or a bankruptcy attorney about your options.
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