How to Avoid Bank Levies From Creditors

The best way to avoid creditor levies is to address the debt you owe before the creditor takes you to court. A creditor may not ever levy your bank account before obtaining a judgment from the court. If the creditor files a legal suit against you, you must be notified of the court date so you may have an opportunity to appear in court to defend yourself. If you have already been to court with the creditor, or the creditor has already obtained a judgment, there are still actions you may take to protect your bank account funds.

Instructions

Before Judgment

1

Take phone calls from the creditor to discuss payment arrangements. If the creditor contacts you by phone, do not ignore the phone calls. Talk to the collection agent and discuss a payment plan or date you can fully pay the balance by. If you cannot fully pay the balance within a reasonable amount of time, starting a payment plan is the best option. As long as you make payments as agreed, the creditor may not sue you in court.

2

Respond to letters from the creditor. If the creditor notifies you in writing of the debt, call the creditor using the phone number information provided in the letter. Keep notes of your conversation, including the date of your phone call and the name of the agent with whom you speak. Request a payment arrangement for an amount you are comfortably able to afford.

3

Settle outside of court. If you receive notice that the creditor plans to take you to court, contact the creditor or creditor's attorney to discuss payment outside of court. Creditors must have you served with legal documents if they plan to take you to court. If you settle outside of court, the creditor still appears in court on the scheduled court date to tell the judge an agreement to pay has been made. You do not need to appear, but a default judgment is issued against you and may appear on your credit report. The creditor may not levy your bank account when you make payments as agreed.

After Judgment

4

Contact the creditor for a payment arrangement. It may be more difficult to obtain a payment arrangement after the creditor receives a judgment, but it is not impossible. Creditors have the right to levy your bank account when a judgment has been obtained, but may approve a payment plan instead. The best course of action is to contact the creditor directly and discuss the reasons a levy would harm you. Offer a solution that is affordable for you and will still get the balance paid in full.

5

Consider filing bankruptcy. If the creditor issues a bank levy, in most cases all the funds in your account are sent to the creditor as payment towards your debt. After a judgment is issued, a creditor may continue to levy your account until your entire balance is paid. Continuous levies may cause you to be unable to pay other expenses, forcing you to become bankrupt. A creditor may not issue any levies after you file for bankruptcy. In addition, the debt you owe the creditor may be discharged through the bankruptcy.

6

Move your bank account. If a creditor issues a bank levy against you and continues to tap your account, you may open an account at a new bank or switch to operating on a cash-only basis until the debt you owe the creditor is resolved. However, moving your bank account to another bank may provide temporary relief, and ultimately increase collection efforts in other areas. A creditor with a judgment against you also may garnish your wages or file a lien against your personal property. If you stop using the bank account the creditor levies, it's still a good idea to contact the creditor to make voluntary payment arrangements.