How to Stop a Bank Levy for Debt Collections

The Internal Revenue Service defines a levy as the legal seizure of a debtor's property to satisfy a debt. This property can include your bank account, in which all funds (except child support) deposited into your account are subject to the levies. A bank levy applies to the funds you have in your account at the time the levy is issued. Therefore, the issuing institution must issue separate levies each time it wants to put a levy on your account. A levy is usually a last-resort method to get you to pay the debt. Therefore, you can take certain steps to stop the levy.

Instructions

1

Contest the levy, if applicable. When a creditor goes to court to obtain a judgment against you, the court sends you a copy of the filed paperwork. The paperwork includes instructions on how to file an answer so you can present your case to the judge. You must file the answer in the time frame listed on the paperwork. Take any necessary supporting proof with you to court. For example, if you do not agree with the balance owed, bring proof of any payments you've made thus far. Notably, the IRS can put a levy on your bank account without a court order. In this case, follow the appeal instructions on the IRS levy notice.

2

State that you are undergoing hardship if the levies are stopping you from affording the basic necessities of life, such as food and paying the rent or mortgage. You must show the judge proof of your income and expenses when claiming hardship. For IRS wage levies, complete Form 433-F, Collection Information Statement. The issuing institution can temporarily stop collection until your situation improves.

3

Contact the issuing institution and inquire about a payment plan. Most likely the bank levy was issued because you did not take steps to resolve your delinquent account. The institution may be willing to stop future levies and put you on a payment plan that allows you to repay the debt over time.

4

Pay off the debt in full. You can pay off the debt in a lump-sum payment or let the bank levies run their course until the debt is paid off. Before you make a lump-sum payment, see if the creditor will accept a settlement, which may let you pay off the debt for less than what you owe.