Can I Set Up Another Checking Account With a Bank Levy in Place?

When a person owes money to a creditor, particularly to a government creditor, then he may face aggressive actions by that creditor to collect the unpaid sum. Among the tools in the creditor's toolkit is the bank levy, a levy placed against the debtor's bank account. This levy will freeze the bank account and allow the creditor to withdraw money from the account. A debtor can, however, open a new account.

Bank Levy

When a person has a bank levy placed against him, this means that the person cannot withdraw all or a portion of the account. In addition, the creditor who placed the levy will likely withdraw money from the account to help pay off the debt. This levy, however, is not reported to ChexSystems, the company that monitors checking account holders for banks considering opening accounts for new customers.

Opening a New Account

When a person attempts to open a new account, the bank to which he is applying will generally check with ChexSystems, which keeps track of account holders who have abused previous accounts, such as by overdrawing from them. Because bank levies are not reported to ChexSystems, the new bank will have no knowledge that the previous account was levied. This means that a levy will not interfere with you opening a new account.

Effects on Debt

Even if a bank knows about the levied funds, it may not care, as this does not impinge upon its bottom line. However, the creditor and the court that authorized the debt may take issue with you opening a new account. If a judge has placed a restriction on you opening a new checking account or has asked you to inform the court if you do open one, you need to abide by this.

Considerations

The only restriction to opening a new account would be if you do not have sufficient funds to open the account. Many banks require a minimum amount to be deposited in the account before a person opens it up. If you do not have sufficient funds available to you because they are in the levied bank account, this may present a problem, as they cannot be transferred.