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.

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Filing Requirements for Oklahoma Judgments

If a debtor defaults on his debt, the creditor can sue him for the amount of the debt plus attorney's fees. Once the creditor wins his case, the court enters a judgment against the debtor, and the creditor can then ask the court to enforce the judgment by garnishing the defendant's wages or levying his bank account. Debtors should attempt to avoid judgments if possible. In Oklahoma, creditors have a certain period of time to enforce a judgment after filing.

Statute of Limitations

As of June 2011, Oklahoma creditors must file lawsuits enforcing judgments against debtors to within five years of the date the court entered the original judgment. If a creditor files a lawsuit after the statute of limitations expires, the debtor can ask the court to dismiss the suit on the grounds that the statute of limitations expired, and the creditor will then be unable to proceed with the lawsuit.

Judgment By Confession

If an Oklahoma debtor does not plan to contest a lawsuit regarding a debt, she can either appear in court in person or submit a signed affidavit to the court stating that she agrees that she owes the debt and giving the court the relevant facts about the debt, such as the amount she owes. The court then enters a judgment by confession against the debtor and can enforce the judgment using the same procedures as any other judgment.

Filing Foreign Judgments

If a creditor wants an Oklahoma court to enforce a foreign judgment -- a judgment entered in any other U.S. court or court of another country -- the creditor must file a copy of the original judgment and an affidavit stating the debtor's last known name and address. The court must then mail a notice to the debtor at his last known address informing him of the filing of a foreign judgment and the name and address of the creditor and the creditor's attorney, if applicable. Following 20 days after filing the notice, the court may begin proceedings to enforce the judgment.

Consideration

A 2003 amendment to the Oklahoma statutes regarding judgments states that the statute of limitations on enforcing judgments begins when the court clerk enters the judgment rather than when the court decrees the judgment. Thus, it is unclear whether judgments decreed by the court but not yet filed are enforceable, and in theory if for some reason a judgment is never filed, the court may not be able to enforce it.

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How Much of an Impact Does a Paid-in-Full Negative Account Have on Your Credit Score?

Your past credit history as shown on your credit report has a direct impact on your credit score and lenders use this score to assess your creditworthiness. The credit agencies Equifax, Experian and TransUnion all use credit scoring systems based on models developed by the Fair Isaac Corporation. Credit agencies do not deduct a set number of points when you fall behind on your debt payments and neither do the agencies reward you by adding a set number of points to your score when you settle the debt. Consequently, a paid-off negative account affects some people's scores more than others.

Deductions

Credit rating agencies can deduct points from your credit score for a number of reasons. You do not lose points for falling behind on your debt payments until you have missed your payment date by more than 30 days. Thereafter, the credit agencies dock your score again once you become 60, 90 and 120 days late on your payment. Lenders usually report debts as assets because the interest payments generate profits for the lender. Lenders reclassify seriously delinquent debts as nonperforming assets and these debts are charged off or written off, which means the lender no longer counts these debts as assets. When a lender charges off a debt, your credit score drops again.

Scores

Credit scores range from 300 to 850 and the better your credit history, the higher your score. Credit bureaus recalculate your credit score every time a lender or other party makes a credit inquiry. At that time the bureaus award you points for positive activity such as timely payments and deduct points for late payments and charge-off debts. Major negative events such as charge-offs have more of an impact on your score than minor positive events such as paying your bills on time. Since credit scores cannot fall below 300 or exceed 850, an individual account has less of an impact on your score if you have a multitude of accounts. If you have just one credit account then falling behind on that debt has a huge impact on your score.

Paying Debts

When you pay off a seriously delinquent debt, the creditor or collection agency that owns that debt has to report the debt as having been paid. Credit agencies view the settling of an old debt as a positive step in the right direction and in conjunction with other positive credit activity, this action could cause your credit core to rise. However, credit agencies do not expunge bad debts from your credit report just because you finally decide to settle the account. The record of your late payments and and a record of the charge-off remain on your credit report for seven years.

Considerations

Lenders rather than credit agencies provide you with credit. A lender can extend credit to you regardless of your credit score. However, rather than just checking your actual score, lenders usually review your entire credit report. If you have delinquent debts, then prospective lenders have to contend with the fact that your other creditors' debt collection efforts could impact your ability to pay any new debts that you take on. Clearly, you pose less risk to a lender if you have settled all of your past-due debts than you do if you attempt to take on new debt while you have collection agencies chasing you for old debts. Therefore, paying off a debt can help your chances of getting new credit even if paying the debt does not have a huge impact on your actual credit score.

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How to Check My Credit for Free Online

Credit can affect your ability to secure employment, loans and insurance. Inaccurate or fraudulent information on your credit report could have an adverse affect on your credit standing. According to the Federal Trade Commission (FTC), consumers are entitled to order a free credit report once annually. Annual Credit Report, which is run by the three major credit reporting bureaus (TransUnion, Experian and Equifax) offer free credit reports online.

Instructions

1

Visit Annual Credit Report's website. According to the Federal Trade Commission, Annual Credit Report is the only authorized source for obtaining a free credit report online (which is your right by law).

2

Keep your personal information close. For example, to verify your identity, you might be asked the exact amount of your car payment (right down to the penny). You may also be asked to confirm the lender for debt obligations such as credit cards, mortgages and other loans.

3

Complete the questionnaire. Annual Credit Report requires that consumers verify their identity. You will be asked several questions, which are multiple choice. After answering the verification questions, you can review and print your credit report instantly.

4

Review your credit report. Look for inaccuracies, such as accounts you don't own or inaccurate late payments. Circle inaccuracies and follow up with the reporting bureau. All three credit bureaus (TransUnion, Experian and TransUnion) have dispute forms located on their websites.

5

Print the credit report for your records. Keep the report in a safe place (such as a locked cabinet). After ordering a credit report online, you won't be able to access it again (for free) for another 12 months.

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The Truth About Credit Counseling

Credit counseling agencies have a background and education in tackling financial management problems, but they are not magic. Some people are in too deep for them to help. Other people can be helped, but turning their finances around will require some painful choices and austere living conditions. There are several potential drawbacks to consumer credit counseling, but a good agency can help you make tough calls to get you back on your financial feet.

Some Agencies Are Better Than Others

Some agencies will charge you fees the minute you walk in the door, push you into a debt payment plan through which they consolidate your debts, and then forget to pay the bills. Those are the credit counseling agencies you want to avoid. Other agencies are nonprofit. They give you the first counseling session free. Their counselors have to go through a certification program and aren't sales people. They will look at your entire financial picture and either help you devise a budget, suggest a debt management plan or suggest bankruptcy or debt settlement. To find those agencies, look to the Association of Independent Consumer Credit Counseling Agencies or the National Federation for Credit Counseling.

It Won't Always Be Pleasant

According to the AICCCA, a credit counselor must not only ask about your income, living expenses and debt, but also "identify and explore the root cause" of your financial problems. That could be an uncomfortable conversation. Also, if you sign up for a debt management plan, the agency will help you construct a pretty strict budget. As part of that budget, you pay the agency a certain amount each month to pay your unsecured debts. They sometimes negotiate down fees and interest. For this the agency charges about $50 under AICCCA and NFCC guidelines.

It Doesn't Always Work

According to the NFCC's numbers, a third of consumers can handle their debt after one session; a third are in too deep because of gambling addictions or other problems and have to be referred to social services; and another third enroll in debt management plans, but 45 percent of those drop out.

It Can Hurt Your Credit Score

Any time you negotiate a debt or fees and interest down, it can hurt your credit because it signals to other creditors that you might not pay a debt as originally agreed. So while getting out of debt by paying your bills will ultimately help your credit more than bankruptcy or debt settlement, the tactics to help you that credit agencies use could hurt you in the short run.

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The Difference Between Credit & a Loan

When you need to borrow money, you have the optional of taking out a personal loan or using a credit card. If you own a home, you may be able to open a line of credit on the equity of the house. Whether you take out a loan, use a credit card or open a line of credit depends on your needs and how you'll be able to repay the borrowed money.

Revolving vs. Fixed

Revolving loans include credit cards and lines of credit. Usually, you will have a limit on your credit card. You can borrow up to the limit at any given time or can choose not to use any of the credit line. With a credit card, you must repay at least a minimum amount each month. Fixed loans include personal, auto and home equity loans. With a fixed loan, you borrow a lump sum at one time. You then make regular monthly payments for a set amount of time, until the loan principal and interest are paid in full.

Interest Rates and Repayment

The interest rate on a loan is usually lower than that on a credit card. As of 2011, the average rate on a credit card was 14.41 percent, according to Bankrate, compared to 5.15 percent for an auto loan and 6.80 percent for a fixed student loan. Repaying a loan may prove easier than repaying a credit card, as you set an amount to repay each month and that amount should make the principal decrease. If you pay only the minimum due on a credit card, very little is applied to the principal each month, and it can take years and years to reach a balance of zero.

Line of Credit

If you own a home and want to make improvements to it or need to borrow money for another purpose, you have the option of opening a line of credit on the equity of the home. If your home's equity is worth $25,000, you can open a line of credit for that amount, but choose to borrow only $10,000 or $5,000 or whatever your current need is. You have a certain number of years during which you can borrow from your line of credit, then a certain number of years during which you must repay what you borrowed. You will pay interest only on the amount you end up borrowing, not on the initial amount of the credit line.

When to Use Credit Vs. When to Take Out a Loan

Whether you use a credit card or get a fixed loan depends on the size of the item you are purchasing and the interest rates available to you. For instance, if you need to borrow $1,000 to pay for a new stove, it's prudent to use a credit card only if you can pay it off at the end of the month or if you have a zero- or very low-interest-rate card, on which you will make regular, on-time payments until the $1,000 is paid off. If your card has a high interest rate and you won't be able to repay the amount in full by the due date, you should consider a fixed personal loan.

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How to Answer a Credit Card Lawsuit Summons

A summons to appear in court is a legal document that you must answer within a specified period of time. Failure to respond to a credit card lawsuit summons forfeits your right to argue your case in court and can adversely affect your credit rating --- in some cases, for 12 to 20 years or more. Regardless of how you feel about your ability to defend yourself against the statements of complaint made against you by a creditor or the attorney representing the creditor, it is always best to answer a credit card lawsuit summons and request a final ruling from a judge.

Instructions

1

Read the summons carefully. Look for the name of the creditor who is suing you and the amount of time you have to respond to the summons. Typically, you have 20 days to respond to a credit card debt lawsuit before a court issues a default judgment, which grants your creditor the right to collect damages through wage garnishment and other collection practices.

2

Go to the courthouse listed on the summons and pick up a notice of appearance form from the county clerk. Fill out the form at the courthouse with your full name, mailing address and signature. Copies must be sent to the attorney representing your creditor, which may require a nominal fee.

3

Provide an answer, which is a written response to the complaint made against you, the defendant, by the plaintiff, your creditor. As the defendant, you must defend yourself against each complaint and declare an answer. You can disagree with the statements in the complaint or declare you do not know if the statements in the complaint are true or not.

4

File your answer, which protects your right to argue the case in court and to be notified of further proceedings related to the case. Pay the filing fees as required by your county or city.

5

Appear in court to argue your case. Enter supporting documents into evidence. A judge will issue a ruling in favor of you, as the defendant, or the plaintiff.

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