Bank Levy

Bank Levy

When your bank account is limited and all your money is seized by the bank, it is called Bank Levy. It can happen for many reasons of which unpaid taxes and unpaid debt are the most common. The IRS often sends out a number of notices and finally seizes the amount you own them if they don’t get any response. Bank levy is one of the methods used by the IRS to recover the money. There are various other methods which are used to recover the funds owed to it.

A Bank Levy does not occur instantaneously. In majority of the cases it is the creditor who is trying to force a debtor to pay a debt. In the case of taxes, the IRS uses Bank Levy if you fail to respond to their letter stating that you owe taxes and you don’t reply to their requests or fail to pay the debt. Your account will be limited and they will take up the amount which you owe them.

The bank account can be any type of account i.e. savings, checking, etc. Majority of the levies occur in US but sometimes offshore accounts can also be seized by the IRS or other creditors. All your money will be seized once a bank levy is made on your account. In case there is not enough funds in you account, all the balance would be removed and your account will remain limited until you pay the debt. This can be a very difficult situation. Filing for an exemption is very helpful in such cases and you should do it under the guidance of an expert.

Generally bank levy is used by the IRS but other creditors can also use this method to receive payment for their debts. For example, the creditor can go for bank levy if you have a judgment against you for a credit card debt. Laws differ from state to state so in majority of the cases certain types of money in your account are excluded which include welfare payments, social security payments, VA benefits, child support, etc. You have 30 days to contest the bank levy if the creditor has placed it on your account. You should contact the court and know how to file for an exemption as soon as possible if bank levy occurs. It is very important to do this as you have a limited amount of time.

Bank levy is not a single event, it can occur multiple times. It can be requested by the creditor as many times as he or she wants until the amount you owe him/her is paid off. Customers are charged a penalty which can be over 100% by many banks if they receive a levy. A point to be noted here is that all the checks which were written before bank levy will bounce because your account is limited. You cannot also withdraw the money but can deposit it in many cases. If you have your employer deposit money in your account in cases of bank levy that money will also be seized as well.

If the IRS or a state ta agency have placed a bank levy on your accounts, call today and speak with a IRS Tax Attorney today before its too late.