Can a Collection Company Levy My Bank Account?

When you are past due on money owed to a collection agency, it can use several methods to try to collect that money from you. One option is a bank account levy. The collection agency cannot randomly levy your accounts, however. A specific process must be followed.

Bank Account Levy

The bank account levy is a process in which the collection agency or creditor simply takes money out of your bank account. With this process, the creditor does not have to leave a certain amount of money in your account after the levy. This means your account could potentially be emptied through this process. The creditor could also take certain amounts from your account at regular intervals until the debt is paid off over time.

Lawsuit

Before the collection agency can levy your bank account, it must file a lawsuit against you in local civil court. You will be served by the court and expected to appear on the court date. On the court date, the collection agency attempts prove you owe the debt in question, and, if the collection agency provides sufficient proof, the judge issues a judgment against you. You typically will have some time to pay the judgment before further actions are taken.

Writ of Execution

Once the collection agency obtains a judgment against you, it can request a writ of execution. The writ of execution is an order that allows the creditor to enforce the judgment. The writ is given to the local sheriff to help enforce it, and the sheriff and creditor will contact your bank. Once this order is given to the bank, the creditor can take money out of your account, and the bank must comply.

Fighting a Levy

When you are facing a bank account levy, you have a few options to combat it. For example, you could contest the lawsuit if you have evidence that you should not have to repay the debt. You could also file for bankruptcy. When you file for Chapter 7 bankruptcy, an automatic stay is entered that prevents your creditors from enforcing any judgments against you. Whether you can recoup money already levied depends on the bankruptcy laws of your state. A third option is simply to have no money in your bank account and not use the account.