Bank account levy

Here in Minnesota, creditors can levy your bank account after they get a judgment against you.

• A bank account levy means that the creditor takes the money in your account to pay for your debt
• They can do this to accounts at Credit Unions, and to accounts at traditional banks as well
• Some banks, such as Wells Fargo, will even let creditors levy retirement accounts, like IRAs

How can you avoid bank account levy?

The best ways to protect yourself against a bank account levy are to:

• Ensure that you have no money in your bank accounts to be levied
• Ensure that your name or Social Security number is not associated with anyone else’s bank account

Creditors can levy any account with your name on it, even if the money is not yours.

What else should you do?

Make sure that you:

• Don’t have direct deposit of your paycheck
• Don’t rely on your bank account for bill payment
• Ask your employer for a paper check, and then cash that check either at the bank where it is drawn, or at Walmart, where they charge about $3
• Use cash and money orders to pay for everything

When should you empty your bank account?

• The moment to empty your bank accounts is when a creditor gets a judgment against you

You may not get notice that your bank has been levied until your money is actually frozen, so the best way to protect yourself is to make sure that no money is in the account to be frozen.

What if a creditor does levy your account?

Don’t despair yet; you may still be able to protect your money.

Many types of money are protected (exempt) from levy here in Minnesota.

These include:

• Social Security
• IRAs and 401(ks)
• 75% percentage of wages for 20 days after the wages are paid

After the creditor levies your bank, you must prove to your bank and to the creditor that the money is from one of these exempt sources.

As soon as you find out about the levy, ask your bank or Credit Union for a garnishment exemption form.

Many banks are willing to help you with these forms if you need help, and you need to include all of the documentation required.

This includes:

• 60 days of bank statements
• Other financial documents

Remember:

• Without these documents, you can’t prove the money is exempt, and you may lose it
• If you do not prove the exemption quickly, then the bank will turn your money over to the creditor, and it will be much more difficult to get your money back

How does filing for bankruptcy help?

As you can see, a judgment gives creditors lots of power over you.

Filing for Chapter 7 bankruptcy or  Chapter 13 bankruptcy stops creditors from getting judgments, and voids any judgments that creditors already have.

If someone is pursuing a judgment against you, then you should talk with an attorney. An experienced Minnesota bankruptcy attorney will offer a free consultation to explain how they can help you.

Bankruptcy is often cheaper than other types of law because bankruptcy lawyers can specialize to bring down costs.

This article is written for informational purposes, does not create an attorney-client relationship, and is not legal advice. If you have a judgment against you, then you should speak with an experienced Minnesota bankruptcy lawyer about the best way to move forward.

WHAT TO DO NEXT

If you’re in worring about a bank account levy, then filing for Chapter 7 Bankruptcy or Chapter 13 Bankruptcy in Minnesota could be the answer. Why not not speak to us now at 612.824.4357 to find out?

We’ll give you all the help and advice you need.

Alternatively, fill out our free Bankruptcy Evaluation Form to see if filing for Chapter 7 Bankruptcy or Chapter 13 Bankruptcy in Minnesota is right for you.

We’re looking forward to helping you.