What Is a Bank Account Levy?

Learn how a judgment creditor can get to the funds in your bank account to pay down a debt.

By , Attorney · University of the Pacific McGeorge School of Law

A bank account levy occurs when a creditor (a person or business that is owed a debt) instructs a bank to withdraw money from an account without the account holder's permission. The creditor will apply the funds toward an outstanding debt of the account holder (also known as a "debtor").

Not all creditors have the right to levy a bank account. For instance, a credit card company cannot take your money without doing more (unless your bank issued the credit card—then you might be subject to a setoff). Specifically, the creditor must sue the debtor in court and win a money judgment.

Once the creditor wins a money judgment, the creditor becomes a "judgment creditor." A judgment creditor can use collection techniques to take funds when the debtor won't pay voluntarily. For instance, in addition to levying on a bank account, a judgment creditor can:

  • take funds out of a paycheck (wage garnishment)
  • force the sale of property, such as a car or home, or
  • instruct the sheriff to remove money from a cash register (till tap).

You should also be aware that certain creditors—such as the Internal Revenue Service—can levy a bank account without first going to court.

If you learn that your bank account has dropped due to a levy, and you need the funds for basic living expenses, you might be able to recover the money by petitioning the court—but you must act quickly. You'll likely have a matter of days to do so. For assistance, try contacting your local sheriff's office or the self-help office at your local courthouse.

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