When a judgment results in your account being levied without your prior knowledge…shock is an understatement. When your account is levied…it’s one of the most overwhelming situations you could ever experience. When a creditor receives a judgment, they can wipe out your checking account to the last penny. The judgment against you means that they sought approval from the courts (and obtained said approval) to seize your assets. In some cases, creditors will receive a court order to levy the debtor’s bank account.
Once a creditor obtains approval to levy your bank account, they’ll have the local sheriff’s department serve the court order on your bank. The notification results in the bank freezing your accounts at the institution. They then send the frozen funds to the sheriff who then forwards the funds on to the creditor who originally received the judgment.
You, as the debtor, should have received notification of the original lawsuit filed. Sometimes there’s a problem if the debtor frequently changes jobs or places of residence. Sometimes (more often than many would like to admit) creditors will resort to what is referred to as “gutter service.”
Gutter Service means that the process server assigned to provide you with notification of the lawsuit took the papers and proceeded to toss them “in the gutter” while claiming that you were served as required.
Once a judgment has been taken out against you, your assets are at risk. You could be eligible to file for an exemption to the levy, but this would require immediate action (within days of learning that the account was levied). It’s also important to note that obtaining approval to levy your account does NOT mean the creditor has permission to take more than you owe.
Regardless of why the account was levied, in many situations, it leads account holders to turn to bankruptcy. Filing for bankruptcy would wipe out the remaining balance on the judgment. You might even be able to recover some of the levied funds depending on state bankruptcy law where you reside.
Another option is fighting the lawsuit in court. It doesn’t guarantee that you’ll recover any levied funds, but you could get the original judgment set aside. It’s an uphill battle to fight a judgment. Successfully fighting a judgment depends largely on when the judgment was obtained. In most areas, you have six months from the date of the judgment to contest. If you could show that you have been living in the same house and working at the same place for consecutive years, your chances for success fighting the judgment improve; most judges are sympathetic to this type of situation where gutter service seems obvious.
Another option is to simply go without using bank accounts. Any bank account you open will be at risk until the judgment is paid. The creditor holding the judgment can apply future levies to your accounts with no notice. The only way for your accounts to be completely safe is to pay the balance or settle the account.
For more information on how to handle judgments, levied accounts and creditors harassing you for payment of your debts, contact the southern California bankruptcy attorneys at Westgate Law.