A creditor with a court judgment can sometimes freeze or take money from your bank account through a levy. Many funds are protected, but you usually have to act to keep them.
Why accounts get frozen
- A creditor obtained a judgment and served a levy or garnishment order on your bank.
- The IRS or a state agency issued a levy for taxes.
- Child support enforcement.
- Suspected fraud or a bank compliance review.
Protected money
Federal benefits such as Social Security, SSI and veterans' benefits are generally protected from most creditors, and banks must review recent deposits of these benefits when they receive a garnishment order. States add other exemptions, such as limits on wages or a basic amount of cash. Mixing protected and unprotected money can make it harder to prove what is exempt.
What to do
- Read any notice from the bank or court and note deadlines.
- Ask the bank for the order and who issued it.
- File a claim of exemption with the court if the money is protected, using the form the court provides.
- Request a hearing and gather proof such as benefit letters and pay stubs.
- Contact legal aid or a consumer attorney quickly.
Prevent problems
Keep exempt funds in a separate account and keep records of income sources. Respond to lawsuits so a default judgment does not allow a levy.
Frequently asked questions
Can a creditor empty my account without notice?
In many places a creditor needs a judgment first, and many states require notice, but timing can be fast, so act quickly.
How long does a freeze last?
It depends on the order and how fast you file an exemption claim.