One collection method creditors (most commonly, the IRS) use to satisfy the debt you owe them is to levy your bank account. But, what is a bank levy exactly? A bank levy happens when a creditor demands funds from your bank account. The levy freezes your account for a few weeks so you can settle any disagreements, and the creditor can seize ALL the money in your bank account if you cannot get the levy released. Creditors can empty your bank account, causing you to bounce checks and rack up bank fees.
Scary, huh? So what can you do about it? If you’re facing a bank levy, you can file a bankruptcy to stop the levy in its tracks! I highly suggest filing a bankruptcy before the levy ever hits your bank account so you do not have to go through a time worrying about whether or not the funds are still available in your account.
As soon as you file a bankruptcy, a Court order called the “automatic stay" is put in place. The automatic stay prevents any and all creditors from collecting on their debt, especially through a garnishment or levy. So you can protect your money and use it yourself, instead of letting a creditor wipe your account clean.