You get a letter or a call from your bank telling you that a creditor has levied on your account. The funds are frozen. Not only will checks bounce if they have not already cleared, but what will happen if you put more money into the account? What if you have direct deposit for your paycheck, and you are getting paid tomorrow? Will that money be frozen too?
Well, the answer is, it depends. The amount of a bank levy is not the amount of money that happens to be in the account when the court officer shows up; it is the amount on the writ of execution he is holding in his hand.
When It's Safe to Deposit More Money
So let's say a creditor gets a judgment against you for $5,000. By the time it pays the fees and costs for the levy and gets a writ of execution to do it, the balance is $5,500.
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If you had $6,000 in the account at the time of the levy, then only $5,500 is frozen, and the remaining $500 is available for withdrawal. You could safely put more money in.
Even if the amount of money in the account is not enough to satisfy the judgment, you may still be okay. Let's say you had $3,000 in the account to satisfy the $5,500 judgment, and that gets levied. The creditor is going to want to take out that $3,000 to get paid, and as such, is not going to want to wait to see if you deposit more later and send the court officer back to the bank. They are going to make a motion for the turnover of those funds in the account now.
When Further Deposits Are At Risk
The problem comes in when there is less than $1,000 in the account, as against that $5,500 judgment. Under the law, you are entitled to protect personal property from creditors up to $1,000. This is called an "exemption." They may wait to snag more money to get the levy balance above the exemption, so that they get some money even if you object. If your $1,500 paycheck hits the bank after the levy, that too could be frozen, bringing the levied funds to $2,500 on a $5,500 levy, thus giving the creditor at least $1,500 (unless another exemption applies).
Therefore it is very important that you find out from the bank two things:
- the account balance at the time of the levy; and
- the total amount on the writ.
This will tell you if it is safe to deposit more money into the account.
So What Do I Do?
Just because your bank account has been levied does not mean that the creditor can keep all of the money. As I mentioned above, you may have defenses that could be raised before a judge that would prevent them from taking some, or all, of the money. Check out my free NJ Bank Levy Survival Kit to learn more!
Want more information on how to fight back with your creditors? Then download my free book, The Biggest Secrets Your Creditors Don't Want You to Know. Become empowered and protect your rights!
If you live in Burlington, Camden, Gloucester, Salem or Cumberland County, have had your bank account levied, owe more than $8,000 on the judgment, and want to retain me to negotiate a deal with the creditor, call my office right away at 856-432-4113 or contact me through this site to schedule an appointment in my Woodbury office. The consultation is $200, but that fee will be applied to my retainer should you hire me. The sooner you take care of it the better!
But if this bank levy is a sign of a bigger problem with creditors, and you are thinking that you might have to file bankruptcy, then download my free book, Am I In Too Deep? A Guide to Knowing When You Need to File Bankruptcy in New Jersey.
You can also take the quiz to the right to find out more!
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