A bank account levy occurs when a creditor (a person or business 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 the outstanding debt of the account holder or "debtor."
Not all creditors have an immediate 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, you might be subject to a setoff). Specifically, most creditors must sue the debtor in court and win a money judgment.
However, certain creditors—such as the Internal Revenue Service—can levy a bank account without first going to court.
A bank levy is a collection technique creditors use to recover money owed. Some creditors, like the IRS, have a statutory right to collect using a bank levy.
Other creditors must use the court process. 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:
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.