Can a Creditor Take Child Support Money to Satisfy a Levy?

State governments across the country consider child support money a domestic support obligation for debt purposes. This gives child support payments the highest priority when multiple creditors place levies on a debtor's bank accounts or personal property. This debt priority is also the province of other government creditors, including the Internal Revenue Service.

Bank Levy Definition

A bank levy is a creditor-initiated seizure of a debtor's bank account or personal property for the payment of a delinquent account. Most creditors, including mortgage lenders and credit card companies, need to win a lawsuit against a debtor to execute a bank levy. Other creditors, including government tax agencies and domestic support departments, don't usually need to win court approval to levy a debtor's bank account or personal property. Federal and state laws do require a government agency using a levy to inform the debtor in writing and give the debtor an opportunity to appeal the levy.

Priority of Creditors

The court assignments priority to creditors when multiple judgments or orders exist claiming a portion of a debtor's bank account or property. Federal and state government entities, including the IRS and departments of child services, sit at the front of the line in terms of priority. This means that if a collection agency tries to execute a levy on an account where a child support claim also exists, the court must award payment for child support before the collection agency may recoup any cash from the account.

Secured Creditor Levy

The levy of a secured creditor, including a mortgage company with a deficiency judgment or a business creditor, must take a back seat to an existing order for child support with a state government agency. A secured creditor will receive payment on a levy before an unsecured creditor, making it more likely that the secured creditor can recoup the majority of a debt owed. If child support payments take all the funds remaining in the account, then the secured creditor must look to the debtor's other assets and personal property to recoup a loan. This may require a new lawsuit and another trip to court.

Unsecured Creditors

An unsecured creditor, including a credit card company or medical bill collector, receives payment after all other creditors. This is because an unsecured creditor takes the most risk in extending a personal loan to a consumer. An unsecured creditor attempting to exercise a levy or lien on a debtor's bank account or property will receive payment last if multiple orders exist. The unsecured creditor that wins a judgment first receives payment for any other unsecured creditors but only after and government creditors or secured creditors receive payment.