“I went to my bank today, and the entire balance in my account was wiped out. To the last penny! I found out it was from a judgment that a creditor had against me. It was from a loan that I had years ago. They never even notified me, yet they claim to have served me with papers. Is there any way to recover this money?” – Stacey
Imagine waking up one fine day only to discover that your bank account has been completely emptied due to a creditor’s judgment. We cannot even imagine the shock Stacey must have felt.
That’s a distressing situation, but it can happen to anyone. Many of our clients explain how overwhelming of an experience this is. So, let us dive into understanding bank levies and explore the options for recovery.
Addressing Stacey’s Concern
First things first, a creditor can wipe out your bank account to the last penny. That’s called a bank levy – a legal action by a creditor to seize funds from your bank account to settle a debt. In Stacey’s case, her creditor must have obtained a court order to levy her account, and hence, the funds were wiped off.
It’s like if you owe $10,000 and have $5,000 in the bank, then the court order authorizing the levy allows the creditor to take everything, even if that means your rent or mortgage check will bounce. Even worse, this levy sometimes results in foreclosure or eviction. So, your account can be levied up to the amount you owe.
Understanding Bank Levies
A bank levy isn’t just a simple withdrawal of funds. It’s a legal tool creditors utilize to collect debts by winning a judgment against you and obtaining court approval to claim your assets. The whole process involves the local sheriff’s department and your bank, ultimately resulting in your account being frozen and funds transferred to the creditor via the sheriff.
Watch Out For the All-Too-Common Gutter Service
Legally, you should receive a notification of the lawsuit against you. Hopefully, even Stacey would have received it unless she constantly changed residences or jobs.
However, some creditors or collection agencies engage in unethical practices like “gutter service,” claiming you were served (by the process server – the person assigned to deliver the lawsuit notification) without actually delivering the papers.
They literally take the papers, throw them in the gutter, and claim to have notified you. This can lead to a judgment without your knowledge, leaving you in a vulnerable situation.
The Risks Involved
Once a creditor has a judgment against you, all your assets, including your bank accounts, remain at risk. The creditor can levy your accounts up to the amount you owe, often leading to financial difficulties like bankruptcy, foreclosure, or eviction for many.
What Can You Do?
When faced with the harsh reality of a bank levy, you’re left with limited options. Here’s a closer look at the pathways you can take to navigate this challenging situation:
File An Exemption: Before taking a drastic step, explore your eligibility to file an exemption to the levy. Also, act swiftly, ideally within a few days of learning that your account has been levied.
File Bankruptcy: If an exemption isn’t feasible, bankruptcy might be a viable option to erase the remaining judgment balance. Depending on your particular state laws, it might also allow the recovery of levied funds.
Contest the Lawsuit: You can attempt to challenge the original judgment in court. This requires proving that you remain in the same house, work the same job, and weren’t properly served, convincing a judge to overturn the judgment and release the funds. Remember, this can be an uphill battle, and generally, you have six months (this varies from state to state) from the judgment date to contest the lawsuit.
Live Without Bank Accounts: This can be a severe measure. But it prevents future levies, as your accounts are never completely safe until you pay the balance.
Concluding Words
At Westgate Law, we understand that financial hardships are often due to unforeseen circumstances. We empathize with Stacey’s situation, and we hope these solutions can help her and those who resonate with this scenario. If you require further legal assistance, contact the Westgate Law attorneys at 844-330-9710 for help.