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Although
many types of property can be levied, by far the most common type of
levy is on a bank account (deposit account). Also, levies can arise
from a number of sources, the most common being those which stem from
a court judgment and those issued by a state or federal taxing
authority. This article discusses only those levies which are on bank
accounts, and only those which arise from a judgment creditor or
taxing authority.
In
general, the mechanics of a bank levy are as follows:
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The
bank in which the account resides is served with the levy indicating
the amount of the money sought.
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The
bank withdraws funds from the levied account up to the amount
of the levy, if such funds are available in the account. The funds
are held in reserve by the bank for a period prescribed by law. The
time that the bank holds the funds varies depending upon the type of
levy involved. Consult a lawyer or qualified professional regarding
the bank holding period for a specific type of levy.
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After
the holding period expires, the bank forwards the funds directly to
the taxing authority (in the case of a tax lien), or to the "levying
officer" (often a marshal in the case of a levy from a judgment
creditor). A levying officer operating under State law will hold the
funds for an additional 21 days before forwarding the funds to the
judgment creditor.
Reversing
A Levy The best time to attempt to reverse a levy is during the
bank holding period. Often a state or federal taxing authority will
levy a bank account as a means of obtaining a taxpayer response when
there has been a lack of contact. In certain cases, the taxing
authority may reverse a levy based on contact which occurs after the
levy has been issued. Such a release is at the discretion of the
taxing authority and may be connected to a payment arrangement with
the agency involved.
Often
judgment creditor levies can be more difficult to release. A reason
for this is that the judgment creditor typically wishes to establish
a priority in the event of a bankruptcy; getting his money before
other creditors is a means to this end.
Third
Party Claims Another
method for releasing a levy involves the use of a third party claim.
This method may be available to debtors who have creditors (including
taxing authorities) which have perfected prior security
interests or liens on deposit accounts. A senior secured creditor
makes the claim, contending that the levy should be released because
the senior creditor has priority over the levying party.
Your
best bet is to immediately consult a qualified professional to find
out more about overturning or releasing a levy.
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