A bank account seizure is when a creditor freezes a consumer’s checking account. The purpose is to take the funds that the consumer owes the creditor from that checking account. A judgment and court order are required before the account can be frozen and the levy can be executed unless the creditor is a government creditor, such as the IRS. However, there are certain funds that cannot be seized. These funds are to ensure that the consumer is able to afford the basic living necessities.
Funds that Cannot Be Seized
- Government benefits – These are benefits that individuals receive from the U.S. Government as a means of support. They can include Social Security, Social Security disability, and government retirement benefits.
- Child support – These funds are supposed to be used toward the care of a minor child. As a result, these funds are exempt from garnishment.
- Life insurance benefits – These funds are received when one is the beneficiary of a deceased loved one. These funds cannot be intercepted or garnished.
- Percentage of your earned wages – The percentage varies by state.
- Disability or unemployment benefits – These are usually provided by your employer.
- Payments from personal bodily injury – The amount varies by state.
Declaring Funds that Are Exempt from Garnishment
If a creditor wins a judgment against you for a past debt, you should immediately inform your bank which funds within your account are considered exempt by the U.S. Government. It is recommended that you move all exempt funds from that specific checking account to another checking account immediately, as all of your funds, including the exempt funds, will be frozen due to the bank account seizure.
Your bank has a form available that will enable you to identify the exempt assets and the amount of income that comes in each month that should be left out of the bank levy. Any further proof you can provide regarding your exempt assets should also be presented to the bank, as this will help to ensure that the creditor does not seize your exempt funds.
What to Do If Your Exempt Funds Are Seized
In the event that the creditor seizes your exempt funds, you should immediately contact the court that awarded the judgment and file a claim for wrongful garnishment to have the exempt funds restored to your account.
You should also be aware that not all states allow creditors to garnish checking accounts to repay old debts. You should check with your state’s attorney general’s office in order to know the specific bank account seizure laws of your state.
Attaining Legal Help
Making sure that your exempt funds remain yours during a bank account seizure is not always an easy task. An established and experienced bank levy attorney in your state will know the state’s specific bank account seizure laws that apply to your case, help you keep your exempt funds in your possession, and present the strongest possible case to recover your exempt funds if they are wrongly taken.
