If you have unpaid financial debt and have money in an account, one remedy available to your creditors is that they can take the money in your account through what is known as a bank levy. For those who are the recipients of Federal benefits, the result can be different. Ordinarily, the way a bank levy works is quite simple. Your creditor obtains a writ of execution based on a judgment and takes it to the sheriff and asks the sheriff to levy on your bank account. The sheriff then goes to the bank and orders that your accounts funds be seized pursuant to the levy, and the bank is required to seize your account funds. The bank levy process is therefore a very speedy and inexpensive collection remedy that is frequently used by creditors.
Federal Benefits in a Bank Account May Be Protected from Bank Levy
If you are the recipient of certain Federal benefits in the form of money that is deposited into your bank account, the money that you receive may be protected from a bank levy. Federal law prohibits the practice of denying beneficiaries access to certain Federal benefits paid to those who are in need. If an account has been levied upon, you can claim an exemption as to the portion (or all) of the funds in the account that are traceable to benefits received from the Federal government. For example, if you receive social security benefits that are deposited in your account and your account is hit with a bank levy, you can claim an exemption and protect the funds. If you can prove that the source of the levied funds is social security benefits, and you consult with an attorney in order to follow appropriate legal procedures to claim the exemption, the funds would be protected and would be returned to you.
Types of Protected Benefits
There are many types of Federal benefits that are protected from bank levies in California. In addition to social security benefits, veterans benefits, Federal Emergency Management Agency (FEMA) federal disaster assistance, and several other types of benefits are protected and exempt from bank account levies. This assumes that you strictly follow all appropriate legal procedures and obtain the guidance of a bankruptcy lawyer and take all steps necessary in order to claim the funds as exempt.
Additional California Protections
In addition to Federal law, California law protects many types of funds in your account from a bank levy. For example, if the funds are traceable to a personal injury award, then under California law they are protected from levy. If you are about to receive or have received a personal injury award or settlement and have creditors on the horizon, be sure to discuss this with your attorney in order to avoid doing anything that would cause the award or settlement change its character from personal injury award into some other form that is not protected. In addition to personal injury awards, workers' compensation benefits and various other types of benefits are protected from bank levy in California.
Learn Your Options
If you find yourself in this difficult situation, you should know that there are ways to protect your assets and stop creditors from freezing your bank account. Both Federal benefits and benefits protected under California law are not exempt in every situation. It is critical that you contact an expert bankruptcy lawyer and learn your options. They will be able to provide you with viable options to protect your accounts from creditors seeking benefits that are protected from levy under Federal or California law.