“Expert verified” means that our Financial Review Board thoroughly evaluated the article for accuracy and clarity. The Review Board comprises a panel of financial experts whose objective is to ensure that our content is always objective and balanced.
Bankrate is always editorially independent. While we adhere to strict , this post may contain references to products from our partners. Heres an explanation for . Our is to ensure everything we publish is objective, accurate and trustworthy. Bankrate logo
Founded in 1976, Bankrate has a long track record of helping people make smart financial choices. We’ve maintained this reputation for over four decades by demystifying the financial decision-making process and giving people confidence in which actions to take next.
Bankrate follows a strict editorial policy, so you can trust that we’re putting your interests first. All of our content is authored by highly qualified professionals and edited by subject matter experts, who ensure everything we publish is objective, accurate and trustworthy.
Our banking reporters and editors focus on the points consumers care about most — the best banks, latest rates, different types of accounts, money-saving tips and more — so you can feel confident as you’re managing your money. Bankrate logo
Bankrate follows a strict editorial policy, so you can trust that we’re putting your interests first. Our award-winning editors and reporters create honest and accurate content to help you make the right financial decisions.
We value your trust. Our mission is to provide readers with accurate and unbiased information, and we have editorial standards in place to ensure that happens. Our editors and reporters thoroughly fact-check editorial content to ensure the information you’re reading is accurate. We maintain a firewall between our advertisers and our editorial team. Our editorial team does not receive direct compensation from our advertisers.
Bankrate’s editorial team writes on behalf of YOU – the reader. Our goal is to give you the best advice to help you make smart personal finance decisions. We follow strict guidelines to ensure that our editorial content is not influenced by advertisers. Our editorial team receives no direct compensation from advertisers, and our content is thoroughly fact-checked to ensure accuracy. So, whether you’re reading an article or a review, you can trust that you’re getting credible and dependable information. Bankrate logo
Having a bank levy placed on your account can be stressful and frustrating. A levy allows creditors or the IRS to seize funds directly from your bank account to pay off unpaid debts and taxes. With a levy in place you won’t be able to access or withdraw money from your account.
Fortunately, there are steps you can take to stop a bank levy and regain access to your frozen funds. Here’s what you need to know about bank levies and how to get one lifted from your account.
What is a Bank Levy?
A bank levy, also known as a garnishment, is a legal process that allows creditors to seize money from your bank account. There are a few ways a creditor can place a levy:
-
Court Order Most creditors must sue you and win a court judgment before levying your bank account The court order allows them to freeze your account and take funds
-
Government Agency: The IRS and state tax agencies can levy your account without a court order if you have unpaid taxes. You’ll receive advance notice before they freeze your account.
-
Child Support: State child support enforcement agencies can also place levies without a court order to collect past-due support.
In all cases, your bank receives notice before complying with the levy and freezing your account.
How Does a Bank Levy Work?
Before your account can be levied, the creditor must take specific legal actions:
-
Send collection notices and call about the debt. If you don’t pay, they may assign it to a collection agency.
-
File a lawsuit and win a court judgment. This gives them the right to collect on the debt.
-
Request a court order to levy your bank account. The court notifies your bank, which then freezes your account.
-
Withdraw funds from the frozen account to pay off the judgment. A levy can remain in effect for several pay periods until the debt is satisfied.
How to Stop a Bank Levy
If your account has been levied, you have options to stop the bank levy and regain access to your funds:
-
Pay off the debt – Satisfying the debt in full will get the levy lifted right away. Make payment arrangements if you can’t pay in full.
-
Settle for less – Your creditor may agree to settle for a portion of what you owe. Get this deal in writing.
-
File hardship exemption – Prove the levy is causing significant financial hardship. This can get it reversed.
-
Correct errors – If the debt isn’t yours or the amount is wrong, provide proof to get the levy stopped.
-
Claim exemptions – Certain funds like Social Security and disability benefits are exempt from levies. File a claim to keep them.
-
File bankruptcy – Bankruptcy stops most levies and wipes out many debts. Consult an attorney to see if it could help.
-
Wait out statute of limitations – If the debt is too old to be legally enforced in your state, you may get the levy lifted.
-
Appeal the judgment – You may successfully fight the underlying judgment if proper procedures weren’t followed.
-
Open new account – Open an account at another bank and transfer your direct deposits. Move automatic payments too.
-
Get professional help – Consult credit counselors or lawyers experienced with bank levies for guidance.
How to Prevent a Bank Levy
To avoid having your account levied in the future, take these proactive steps:
-
Review debts in collections and determine if they are valid. Dispute any errors.
-
Pay off debts or set up affordable repayment plans before things escalate.
-
Respond promptly to all collection notices to resolve debts before a lawsuit.
-
Maintain detailed financial records so you can prove hardship if your account is levied.
-
Separate exempt funds like benefits payments from other money in your accounts.
-
Consider consulting a credit counselor if you are struggling with debt. They can help you manage it.
-
Build up emergency savings so you have a buffer if creditors freeze your accounts.
Having your bank account levied can be jarring, but being proactive and understanding your rights is key. If your account is frozen by a creditor, act quickly to settle debts, claim exemptions or file appeals. With persistence and prompt action, you can get a bank levy lifted.
What to do about an account levy
If your account has been levied, you may be able to fight the account levy or quickly resolve it.
Review the debt
If a levy has been placed on your account, you need to fully understand the debt you owe.
Ideally, you should review the debt before the court hears the lawsuit. Creditors sometimes make mistakes. The amount claimed could be incorrect — or even someone else’s unpaid debt.
If you don’t believe the debt is yours or think the amount is incorrect, send a debt validation letter via certified mail. The letter should state that you dispute the debt’s validity and would like documentation to verify it.
If you have already paid off the debt, find proof that supports your case. This can be a letter, receipt or statement you received once you made your last payment.
In addition, look to see if you have been the victim of loan identity theft. You may be able to stop the levy by proving that the funds went to someone else. To file an identity theft report, submit a theft complaint to the Federal Trade Commission (FTC) via IdentityTheft.gov or by calling 1-877-438-4338.
How to stop a bank levy or wage garnishment?
FAQ
Can you stop a levy on your bank account?
This is called bank levy. You can ask the court to stop the bank levy if the money is protected (exempt) from collections. This is called a Claim of Exemption.
Can you negotiate a bank levy?
A settlement involves negotiating with the creditor to pay a reduced amount of the total debt, often in a lump sum, in exchange for clearing the debt. This option can prevent a bank levy and save you a significant amount of money. To initiate a settlement, contact your creditor and explain your financial hardship.
How long does it take to reverse a bank levy?
In most states, a bank levy can last for up to 21 days, but it can be extended if the creditor obtains a court order. Unpaid balances can look like child support payments or credit card balances to a private creditor, but another common unpaid liability could be to the federal government in unpaid taxes.
How can I protect myself from bank levy?
To Avoid an IRS Bank Levy, Keep Separate Accounts for Exempt Funds. You can keep a separate account for money that is protected by law. This way, if an attachment occurs, you can easily prove the account only holds exempt funds.
How do I stop a bank levy?
One way to do this is to open a new bank account. You should also stop using the account with the bank levy against it. If the bank still accepts direct deposits, those funds could be subject to the bank levy, too. Creditors can continue to levy your bank account until your debt balance is paid in full.
How can I remove a bank levy from my bank account?
To remove a bank levy from your bank account, the most straightforward way is to pay the money you owe if the debt amount is accurate.
Can I stop a bank levy if my account is frozen?
You have only 10 days after your account is frozen to file an exemption to stop a bank levy*. A lawyer can increase your chances of doing so*. If you share a bank account with a spouse who doesn’t owe money to a creditor, he or she will also be subject to a bank levy if you fail to pay your debt.
How do I end a bank account Levy?
Negotiate with the creditor. One option to end a bank account levy is attempting to negotiate a settlement or installment agreement with the creditor or collection agency. If you can come to an agreement, they might agree to release the levy. File an exemption claim.
How do I fight a bank account Levy?
Fighting a bank account levy isn’t easy. While you could try to do it on your own, your best bet is finding a local attorney familiar with this type of law. You may have cause to contest the creditor’s lawsuit. A lawyer can also represent you in any discussions with creditors moving forward.
What should I do if I owe a bank levy?
If you owe the money and there’s an active bank levy on your account, you can take one of the following actions. The fastest way to stop a bank levy is to pay the balance in full. Once you pay the balance, the creditor can no longer levy your account, but unfreezing your account may take extra time.