When a creditor has obtained a judgment against you, one of the typical methods creditors use to collect on the judgment is a levy on a bank account. You will generally receive a Notice of Levy indicating which accounts the creditor is levying to satisfy the judgment. There are several steps you can take to stop the bank levy and have the funds returned to you. If a creditor has levied your bank account you can stop the bank levy through:
Both of these tools provide important protections that can help you keep your assets and stop creditor action. If your funds are social security benefits then you should visit our blog on:
Filing a Claim of Exemptions in California
Typically when a creditor levies a bank account the account will be frozen and the bank will hold the funds for a period of 10 days. During this period you can file a claim of exemptions that may allow you to have the funds returned to you.
First Step- Are Your Funds Exempt
Under California law certain types of income and funds are exempt from creditor collection and are not subject to a bank levy. The following funds are exempt from a bank levy:
75% of Paid Earnings that were Paid 30 days before the Levy
Social Security Benefits
Worker's Compensation Benefits
Funds that are necessary for basic necessities.
Supplemental Security Income
Disability insurance benefits
This is not an exhaustive list of all the types of funds that you can exempt from a bank levy. You can find a more complete list of the funds that you may exempt here: Exemptions from Enforcement of Judgments
Step Two-Complete Forms for Claiming Exemption
If your funds are exempt from levying then you need to fill out the following 3 forms within 10 days of the bank levy. You must provide the completed forms to the sheriffs office listed in the Notice of Levy.
You should make 3 copies of the following documents once you have completed the forms and bring them to the sheriffs office that is designated on the Notice of Levy.
Step Three-Attend a Hearing
Whether you will need to attend a hearing will depend on whether the creditor objects to your claim of exemptions. If the creditor does not object then the levied funds will be returned to you. If the creditor objects to the claim of exemptions then a hearing will be set. At the hearing the judge will review the claim of exemptions and determine whether you are entitled to claim the exemptions. The judge will either:
Please be aware that even if the claim of exemptions is granted, this does not mean that the creditor cannot seek to levy additional bank accounts or other funds. When the claim of exemptions is allowed it only means that the funds that were levied were exempt. It does not mean that the judgment is not valid or that other funds cannot be levied.
Filing for Bankruptcy in California
When you file for bankruptcy protection the automatic stay stops any potential or current bank levies. The creditor must cease all collection efforts including efforts to collect on a bank levy. If there is a pending bank levy and the sheriff or creditor is holding funds, then your attorney may utilize several different methods to try to obtain the funds back:
If the funds are with the creditor:
If the funds are with the sheriff:
Motion for Turnover of Personal Property -If the funds are being held by the sheriffs office then the sheriff may release the funds to you, or require a court order for the funds to be returned. If you have a legal right to the property then your attorney can file a Motion for Turnover of Personal Property.
If a creditor is levying your bank account, it is important that you take the necessary steps to protect you property and family. Seek legal advice on how you can stop a bank levy and protect yourself from future bank levies.