Bank Levy Process

A bank levy is similar to a wage garnishment. If you fail to pay a debt, your creditor can take you to court and try to win a judgment against you. If the judge awards a judgment and you still don't pay the judgment amount, the creditor has the option of using a bank levy to collect what you owe. In a wage garnishment, the creditor can require your employer to extract a percentage of your income to pay the creditor the amount owed. In a bank levy, your creditor compels your bank to take assets you hold at the bank and give them to the creditor. These assets can include money in your accounts, but also such things as property in your safe deposit box.

Writ of Execution

After receiving a judgment, your creditor can ask a judge for permission to use more aggressive measures to collect the debt if you don't pay. The names of various authorizations to collect money from your bank account vary by state. It may be called a writ of execution, writ of attachment or writ of garnishment of property. Your local court may also require the creditor to make a formal application for this authorization. This step presumes the creditor has already found your bank, which by itself can be a time-consuming process and may involve detective work by the creditor.

Serve Bank

The creditor hires a process server or enlists the services of the appropriate law enforcement agency to take the writ of execution to the bank. The writ contains instructions regarding the types of assets the bank must relinquish to the creditor, and that typically includes the funds in your account up to the amount of the judgment and interest owed. These writs are valid for one extraction only. If the writ isn't properly served or there isn't enough money in the account at the time the creditor serves the bank, the creditor must return to the court and obtain another writ.

Waiting Period

Once the creditor serves your bank, the bank freezes the money in account. This is your chance to respond to the levy and challenge the right of the creditor to take the money. The holding period varies from state to state, but common time frames are 21 to 30 days. If you don't respond, the bank can take what is in the account and send it to the creditor to satisfy the judgment.

Exempt Funds

Social Security, financial aid and child support are a few examples of monies that are safe from bank levies. If you can prove the money in your account came from these sources, you can force the creditor to return the money. This typically involves a court hearing in which you provide evidence. At this hearing you may be asked to disclose under oath where your other financial assets, such as bank accounts, are located. You may be able to claim a personal exemption up to a certain amount. Talk to an attorney or qualified financial professional to help you decide how to proceed.