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bank levy

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Definition: Bank account levy is when the creditor takes the money from your bank account as the result of a lawsuit judgment. When a levy is issued, your bank account(s) are frozen and you can't access the money until the debt has been repaid. A creditor can’t levy your bank account without first winning a lawsuit judgment against you and then obtaining a court order to levy your bank account.

Certain types of deposits, like social security income, can’t be levied. However, if this money is mixed in your account with other money, you’ll have to prove which money is exempt from the levy and which is not. Courts often use a first in first out type of system to decide which money is not subject to levy. For example, if your social security income was deposited first and you later spent money from your checking account, that first money spent will be assumed do come from the social security income.

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