- January 29, 2021
- Posted by: Crystal Larsen
- Category: Bank Levy
When you owe a large amount of debt, it can restrain your financial stability. Any failure to repay your debts might result in a state bank levy. Bank levies are a common method adopted by the IRS or the creditors to recover any unpaid debt. With help from professionals, you can get a bank levy release quickly and efficiently. Bank levies can have a drastic impact on your financial well-being. Not only will you be able to pay for normal expenses, but your other debt obligations might also increase.
All You Need to Know About State bank levy laws and Bank Levy Release
Collection Calls And Bank Levy Notices
Getting calls and notices from collectors is one of the most stressful parts associated with debt. When you get behind on the debt payments, it might feel like the collection calls are never going to end. However, debt collectors have a limit on what they can say. After all, you don’t want to go through this extremely unpleasant process if they are insisting on taking money that you do not have.
According to the Fair Debt Collection Practices Act or FDCPA, there is a restriction on which third-party debt collectors can say or do. However, this is not applicable to the original creditors.
Chances Of Getting Sued
This is another fear that you might have while being in debt. Lawsuits can be stressful. If you don’t have the financial means to defend yourself and get the bank levy release, the stress can increase. There are several reasons for which a creditor can sue you. Some of these are easy to resolve while others might take a lot of effort.
Some creditors will sue you even if you don’t have enough funds for paying off your debt. Their decision depends on the laws your state has in regard to the debt collection. Some states have protection laws for the people in debt, including the limit on wage garnishment. If you live in such a state, it is less likely that a creditor will sue you. Another reason affecting the decision of the creditor will be the statute of limitations and your credit report. If they win the judgment against you, you might face a bank levy.
Once the creditor has won the judgment against you, they can take a number of collection actions against you, including imposing bank levies. However, as mentioned before, some states have debt collection laws that are consumer-friendly. In such cases, the bank levies will have only a limited scope and will leave a reduced financial impact on you. But if you are living in a state with strict debt collection laws, bank levies can damage your financial well-being. Therefore, it is very important that you hire professional help to get the bank levy release.
Some states provide a homestead exemption that helps protect the debtors. If you have lost a lawsuit against the creditor and have a home, this exemption can protect your property. States with a homestead exemption have a restriction on the equity a creditor can take after winning the judgment against you.
In certain situations, state laws protect the equity in the automobile as well. However, only one vehicle gets this protection, and only for a certain amount. To know more about the exemptions for vehicle equity from debt collections, you will have to subtract the owed amount on the automobile from the vehicle’s current value.
Limit On The Bank Accounts Because of Levied Bank Account
Different states have different rules for bank levies. Depending on the laws in your state, the creditor cannot take certain funds from your account. In states with these protections, the creditors can take only a certain percentage of money from your bank account. So, even though you might not be able to get the full bank levy release, you can prevent the creditors from ruining your financial well-being. However, if your state doesn’t provide these protections, the creditor can take every single fund from your account during a bank levy.
Apart from bank levy and seizing property, some creditors will also put in a request for wage garnishments until the debt is completely paid off. Some states have laws protecting the percentage of wages that can be garnished. In most cases, about 75% of your income is protected. Some states offer the protection of 85 to 100% of your wages. There are some states like Alaska that do not protect a percentage of your income but a dollar amount. Overall, what protections you will get after you have lost a lawsuit against a creditor, the biggest influencer will be the state that you live in. To know what protections your state provides, you can talk to a tax expert and get the bank levy release.
Protection Of Funds
Apart from the state exemptions mentioned above, there are some funds protected from a bank levy that are applicable regardless of the state that you live in. Mainly, all the money that the government has given, a creditor can’t take during a bank levy. This includes the payments for Supplemental Security Income as well as Social Security. In most cases, the creditors can’t take payouts for workers’ compensation and disability benefits during a bank levy as well.
A number of retirement benefits’ funds are protected from a bank levy. These include federal retirement, longshoremen retirement, and military retirement. In some cases, annuities and pensions will also be exempted.
Also, creditors can’t take money received for alimony or child support. The exception to this is when the bank levy was specifically requested for collecting unpaid alimony or child support. Lastly, the creditor can’t take the funds received after winning a lawsuit. If you remove these exempted funds before the bank levy starts, you will be able to ensure that these funds are not taken from your account by any mistake.
Steps To Get The Bank Levy Release
Bank levy can put you in a difficult financial situation. So, it is important that you take steps to get the bank levy release. The first step that you need to take is a dispute as soon as possible. If you win, you might be able to get the amount reduced. If you don’t, the creditor can take other possible collection actions. Take the help of tax relief experts when a federal or state tax agency imposes the bank levy. They can help you the right way to pay off your debt and get the bank levy release.