what is a bank levy

If you’re behind on payments already, a bank levy can feel devastating when tax time rolls around. If you can’t pay your taxes or owe a creditor money, it’s an extremely effective way for creditors to get their money back, but can make it especially difficult for individuals already trying to pay back their debts to handle the other areas of their lives. If you’re trying to figure out how to stop a levy on your bank account, you definitely will want to be in touch with a bank levy attorney or a tax attorney. They’ll be able to help you fight the levy or settle it in a way that’s beneficial for everyone involved. In the post below we’ll answer some of the big questions — what is a bank levy? How do I stop a levy on my account? How can a tax attorney help me? — and hopefully, equip you to handle the situation. 

What is a Bank Levy? 

A bank levy legally allows creditors to withdraw funds from your bank account. Anything in your bank account is frozen and those funds are required to be sent to creditors to pay off the debt you owe. The creditor will send your bank proof that there’s a legal reason to request the levy, though bear in mind that your bank or creditors might not give you a heads up. However, a levy is usually a last resort, so you should already be aware that legal action might be taken against you to reclaim the money owed. 

Luckily, if you’re already well too aware of what is a bank levy, there are ways to dispute it, which we’ll cover below. 

How Do I Stop the Levy From Happening? 

If you believe the levy or seizure of funds is wrongful, it’s possible for you to file an administrative claim against the IRS within two years of it happening. (Before, you only had nine months, in accordance with the older tax laws before 2018.) A bank levy attorney is imperative here and can help you reach a settlement — we’ll discuss that more in the last section. 

If it’s a case of creditor error — for example, if your debts have already been paid, you were the victim of identity theft, or the statute of limitations for older debt has passed — you might have plenty of grounds to stop (or at least halt) the creditor from collecting from your account. 

Furthermore, if there was no notification of legal action and you were not legally served, you could try to stop the future legal action from coming at you. And of course, filing for bankruptcy and negotiating with the creditors can at least buy you some time by halting the process. 

Again, a bank levy attorney can help you figure out which is the right option for you — and what will have the fewest ramifications for your credit and financial situation later on down the road. 

How Can a Bank Levy Attorney Help Me? 

A bank levy attorney will bring a layer of expertise to the proceedings that you likely don’t have. They can assess the situation, explore all your options, and advise you on what the best way to proceed is. And they might be able to find small loopholes that you would have overlooked — for example, if you weren’t properly or legally served notice of the levy, they could buy you some time by disputing that. 

Tax law can also be complicated and a headache generally — you want someone well versed in the headache who can negotiate on your behalf and has an intimate knowledge of how things work. Even if they’re not able to totally get rid of the levy, they can get you some time and find the best way forward for you. 

Hopefully you never have to ask the question, ‘What is a bank levy?” But if you should, you want to be well prepared with a good tax attorney at your side.