When you fall seriously behind on payments, creditors will employ numerous strategies to collect what you owe. Creditors or collection agencies may eventually sue you and obtain court judgments that permit them to implement bank levies. Bank levies allow creditors to siphon funds from your accounts to satisfy delinquent debts.
Our Gilbert, AZ bank levy lawyer can help you stop these damaging collection actions before you are locked out of your accounts. Our team at D.M. Bankruptcy Law Group, LLC has over 20 years of collective experience and has successfully handled over 1,500 cases. We are committed to helping Arizonans overcome seemingly insurmountable financial difficulties and can help you leverage bankruptcy and other relief options to secure a fresh start.
A bank levy is the act of a creditor taking money directly from one or more bank accounts to collect on a debt. Creditors can only implement bank levies when they receive court judgments – obtained through collection lawsuits – that you do not pay.
When a creditor levies your account, your bank will freeze funds and lock you out. You will be able to see your funds in the affected account, but you will not be able to access them. This “freezing” process occurs because there is a legal process for getting funds to the creditor. Your bank will confirm that the creditor has the legal right to levy the account before proceeding, but you will be unable to access your money in the meantime.
You may not receive any advance warning of an impending bank levy. Your creditor is not required to inform you that they intend to levy your account. Your bank is not necessarily obligated to inform you that a levy is in progress, either. This can lead to stressful situations where you suddenly find you are unable to access your account.
If your account has been frozen and your creditor has a legitimate bank levy against you, you will most likely not be able to recover a grand majority of the funds in the impacted account. This can be an especially devastating outcome: In the state of Arizona, creditors are required to only leave $300 in each levied account as “exempt funds.” This means that you could get paid on Friday and have $3,000 in your account, but if the account is levied over the weekend, you may only have $300 left by Monday.
Creditors can also continue to collect on a bank levy until the underlying debt is satisfied. This means that if there are not enough funds in the account on the creditor’s first try, they can circle back and siphon away more funds on a second, third, or fourth attempt.
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The good news is bank levies are typically a last resort. Creditors and collection agencies will generally not go to the trouble of suing you until they are confident that there is no other way to collect on a debt. Though creditors do not have to inform you of their intentions to levy your bank accounts, you will receive ample notice of an impending collections lawsuit.
If you are informed that you are being sued as a result of your failure to pay a debt, immediately contact our Gilbert, AZ bank levy attorney. If you legitimately owe the debt, your accounts are likely in danger of being levied, and your wages could also be garnished.
Bankruptcy can help you discharge unsecured debt, including credit card and medical bills. If you can discharge the underlying debt of an existing or imminent bank levy, the levying cannot occur. Even if you cannot discharge the underlying debt, bankruptcy can give you the time, resources, and flexibility you need to reorganize your finances and satisfy the debt.
If at all possible, you should file for bankruptcy before your creditors are able to obtain a court judgment against you. Our Gilbert, AZ bank levy lawyer at D.M. Bankruptcy Law Group, LLC can help you explore and implement all available relief options. We can guide you through the bankruptcy process and will do everything possible to prevent your accounts from being levied.