In some cases, yes, bankruptcy can stop an account levy. However, it is wise to learn how bank account levies work in the first place, which can improve your state of mind. For example, your creditors cannot call your bank and demand to have your accounts frozen. As with most matters involving debt collection attempts, creditors must follow the proper steps.
Here’s more information that can help you understand the situation.
What is a bank account levy?
It is a legal action a creditor may pursue to remove funds from your banking accounts. The financial institution will freeze your account funds and send those funds to the creditor seeking the levy. In this way, the creditor recovers the debt you owe.
Typically, it is not as easy as many residents of Bridgeport, Connecticut, believe it is for creditors to freeze your bank accounts. Before they can levy your funds, the creditor must sue you for your debt and win the case.
What are your options when a levy occurs?
You may be able to negotiate with your creditor to stop an account levy. After all, they want their money and probably do not want to spend more money trying to collect. If they can reach an agreement with you about your debt, it could stop the levy.
You could also file for bankruptcy once you learn that your accounts are at risk. The process of filing a Chapter 7 bankruptcy triggers the automatic stay. When this happens, most creditor debt collection attempts, including account levies, stop immediately.
What is your next step?
Whether those you owe have already levied your accounts or you fear it is about to happen, consider learning more about your bankruptcy options. Increasing your education can help you make decisions that improve your overall financial circumstances.