Can a Bank Levy Be Reversed?
- When a civil lawsuit is filed, the creditor is responsible for ensuring that the debtor is properly notified. Typically, you must be served with a summons and complaint notifying you of the lawsuit and the date of the court hearing. You must respond to the summons and appear in court at the appointed time to avoid a default judgment. If you fail to appear in court due to circumstances beyond your control, or you were never properly served notice of the lawsuit, you may be able to vacate the default judgment by filing an order to show cause. If the judgment is vacated, the bank account garnishment is automatically reversed.
- You can also attempt to reverse a bank levy if your account contains exempt deposits. Under federal law, creditors cannot garnish Social Security benefits, Supplemental Security Income benefits, veterans' benefits, student assistance, railroad workers' compensation, federal disability and retirement benefits, or military survivors' benefits. Depending on the laws in your state, you may also be able to exempt public assistance benefits, unemployment, workers' compensation, child support and alimony payments.
You must file your claim for exemptions within the time frame specified by the garnishment order. The court will order a hearing to verify your claim. You must provide direct deposit receipts, pay stubs or other documents to prove your exemptions. If your bank account contains only these funds, the garnishment cannot proceed. - If you know you're liable for the debt and your bank account does not contain exempt funds, you can attempt to contact the creditor directly and offer a settlement agreement. In doing so, you may be able to reduce the total amount you owe and avoid paying court costs and fees. If you don't have enough cash on hand to offer a settlement, you can also attempt to negotiate a payment arrangement. If the creditor agrees, he must then file a motion with the court to void the garnishment order.
- Finally, you may consider filing bankruptcy to reverse a bank account garnishment. When you file bankruptcy, the court enforces an automatic stay against your creditors that prevents them from attempting to collect what you owe. The automatic-stay protection remains in place until your case is dismissed or discharged. If you've been served with a garnishment order but your funds have not yet been seized, filing bankruptcy will halt the process. If a garnishment is executed after you file bankruptcy, the court will order the creditor to return the seized funds.