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California Debtor’s Rights – Bank Levies

bank lobby

You probably know that there are a handful of ways that someone to whom you owe money can come after you to collect it. Once the debt is set out in a money judgment issued by a California court, the judgment creditor has several options to force you to pay if you don’t pay as requested or settle it. One way involves getting money directly out of your bank account, called a bank levy—but it’s not as simple as asking your bank to give them the money.

To have a successful bank levy, the creditor must first have a court issue a judgment for the money they claim, in a specific amount. With that money judgment and some information about where you have a bank account, the judgment creditor can then begin requesting a bank levy to require your bank to take money out of your account to be sent to the creditor as payment on the judgment.

How A Creditor Gets A Bank Levy

Before a creditor can get money from your bank account, there are a few required steps. First, without a judgment from the court that you owe a certain amount of money, there is no way a creditor can get anything from your bank. The collection action in court is your first opportunity to consult with an experienced debtor’s rights lawyer to safeguard your rights throughout the process. Suppose the court finds that the debt is valid. In that case, the judge will issue a judgment that says you must pay a certain amount (which often includes the original debt plus interest that has accumulated since the debt has gone unpaid, plus collection fees that may include the cost of filing the action in court and lawyer’s fees, depending on the type of debt).

With a judgment issued by the court, the judgment creditor then has the essential tool to get money from your bank. The next step is to convert that money judgment into a court order called a writ of execution. It can be somewhat complicated for the creditor at this stage, as they must get a writ of execution in each county where they will pursue a bank levy.

Naturally, the creditor must know which bank holds your money. Often, creditors can find this information without too much trouble by referencing the account you used to make payments to them previously, for example, or by performing an asset search. Generally, the creditor must go to the branch where your account is located. However, a recent California law requires financial institutions to have a central address in the state to service all levy documents. Most major large banks now have a main address for the service of bank levies at an address in Los Angeles County so that creditors can file bank levies in one location to cover bank branches throughout California.

The judgment creditor then delivers the writ of execution to the county sheriff, where your bank is located. Typically, officers from the sheriff’s department do not go to the bank for the money, but rather the creditor will hire a process server to deliver the official documents necessary to carry out the levy to the bank for collection. At this point, if not before, you will receive a Notice of Levy explaining that the bank levy process is taking place. A skilled debtor’s rights attorney can help you understand your rights and obligations at this point in the process.

When the bank receives the levy documents from the process server, they are required to freeze the funds in your bank account—up to the entire amount of the judgment if you have that much in your account. In the ten days following the bank’s receipt of a Notice of Levy, bank employees will complete a Memorandum of Garnishee that explains how much money was obtained from your account and return it to the sheriff. The sheriff’s office informs the creditor of the money held at the bank, and then the sheriff forwards the funds to the creditor after the required waiting period has expired.

How Long Does A Bank Levy Last?

A Writ of Execution that precedes the bank levy is valid for just 180 days. Still, this is nearly half a year, and it gives judgment creditors the time they typically need to complete the process of garnishing money from your bank account, in many cases. Each Writ of Execution can only be used once, so a creditor who wants to pursue funds at multiple banks will need to go through this process numerous times to go after different bank accounts.

What Are My Options To Avoid A Bank Levy?

During the time after a creditor puts a levy on your bank account, funds in your account up to the amount of the judgment are frozen, and the bank will hold the money for 15 days. This is your opportunity to file a Claim of Exemption (COE). Working with a skilled debtor’s rights attorney, you can safeguard funds that the judgment creditor does not have a valid legal claim to seize. You are permitted to protect certain funds from the levy, including:

  • Workers’ compensation benefits
  • Social security income
  • Three-quarters of the income earned from your job in the 30 days before the levy
  • Veterans’ benefits
  • Disability benefits
  • Supplemental Security Income (SSI)
  • Student Loans
  • Unemployment payments
  • Distributions from retirement plans

California laws also let you protect the money you need for necessities for yourself and your family. You have a limited time to file a claim of exemption, however. It would help if you got good legal advice to ensure the proper forms are filed at the right time to protect your rights and the money you are allowed to hold onto when a creditor is trying to get money out of your bank account with a bank levy.

Get Legal Advice Today

Creditors are known for aggressively going after any money they can arguably make a legal claim for, so you must have an experienced debtor’s rights attorney on your side to protect your legal rights and keep some of your money. Time is of the essence, as you may have as little as ten days to object to the bank levy, and the process has many critical steps that must be followed precisely. Contact the knowledgeable debtor’s rights attorneys at Fitzgerald & Campbell, APLC today to understand your rights and protect your assets. Call us today at 844-431-3851 or visit us online.

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