Dear Bankruptcy Adviser,
I went to my bank today, and the entire balance in my account was wiped out -- to the last penny. I found out it was from a judgment a creditor had against me. It was from a loan I had years ago. They never even notified me, yet they claim to have served me with papers. Is there any way to get this money back?
I can't imagine the shock you must have felt when you discovered the account had been levied. My clients express it is one of the most overwhelming experiences possible.
Unfortunately, a creditor can wipe out your bank account entirely. This happens when the creditor obtains a judgment and seeks court approval to seize your assets. I go into this in more detail in a similar column, "3 ways to fight a creditor's account levy." All your assets are at risk once the creditor has a judgment against you.
On the upside though, the creditor can't take more than you owe. The creditor can levy your bank account down to the last penny, but only up to the amount you owe. On the downside, this means your mortgage, rent or other bills won't be paid unless you have another stash of funds.
You may be eligible to file for an exemption to the levy, but that requires quick action within days of learning the account has been levied. If this doesn't work, other options could be to file bankruptcy, fight the lawsuit in court or no longer use your bank account. Know that all of your accounts are at risk until the judgment is paid and that the creditor can execute future levies on your accounts without notice until the balance is paid or settled.
I hope you can resolve this soon, but you are likely to be out more money to resolve this problem.