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What Is Bank Levy?

A Bank levy is imposed on the people for recovering the cash and adjusting it to recover tax/debt, they owe as IRS. When any individual fails to pay his tax or IRS, even after the legal notice served on him, 21 days in advance, then the bank (where the person has his account) is directed to recover the cash from the respective individual’s account and send it back to the Tax department. In case the person, owing a debt, does not respond within the 21 days notice period and his account lacks the amount sought as IRS or debt, then the respective bank has got to freeze his account forthwith and recover the entire debt or IRS. It is called bank levy.

Levy is determined by the U.S. Department of Treasury as Internal Revenue Service (IRS) while the bank levy is a tool to be used by the tax department through bank to receive tax payments or recover IRS owed by individuals.There is a difference between Levy and liens. A lien is a right of seizing defaulter’s whole property, in case he doesn’t pay his debt or tax on time, while the bank levy is imposed only to recover the exact amount owed by the individual.

In other words, the bank levy is imposed on individuals following theirs inability to respond to the notice of paying their standing amount of tax or IRS within the notice period(21 days)served to them. In case debt is not paid on time, tax department is empowered to initiate legal action against the individual by imposing bank levy on his account. Following a legal action taken against individual by debtor or tax department, the bank freezes his account forthwith.

Despite being reputed and enjoying a good credit for paying their tax on time, there are many who fail oftentimes to perform their efficiency due to this or that reason and find themselves trapped into bank levy predicament. In such a contrary situation the individuals should muster the courage, develop a patience within themselves and seek to learn a few tricks in order to stop bank levy from hitting them brutally.

Bank levy is a tool to be used by the creditors against those who fail to pay their debt on time. It is executed only after latter’s doubtful response to the notice sent to him, reminding to pay his dues/debt. There is served a notice to the individual, giving him twenty days in advance with a warning either to pay the IRS or be ready to face bank levy. Period of 21 days is the time granted to the person to respond and convince the creditor of his genuine intention of paying the debt/tax with sufficient proofs. 

In case you find any decision going against you over debt, you will be meted out bank levy predicament, by the respective creditor. You can seek the justice against such decision. You can move to the court following bank levy being placed on your account. You legally are liable to use thirty days more and thus prevent the bank from hacking you with bank levy. Though there still are the chances of your money to be recovered by the creditor or IRS, it can be protected under some specific financial schemes such as welfare payments, social security payments, VA benefits, child support, etc. 

Problems You Are Likely To Face

• Once a bank levy is made on your account, the money lying in your account will automatically be seized by the bank. If there is not sufficient money in your account, all the remaining money will be siphoned off and your account will be frozen until the debt is completely paid off by you.
• Bank levy can be imposed on your account arbitrarily, that is, as many times as the creditor wants.
• Bank also charges the penalty from the customer for bank levy it imposes on his account. Bank enhances the complication of already burdened individual by charging such penalty. The amount to be charged as penalty by the bank can be up to more than $ 100 at a time.
• The check written before the bank levy will get bounce following cash in your account going zero.
• Bank is asked by the tax department or debtor to freeze the account of individual and recover the money for sending it, after 21 day legal notice served on individual.
• Tax department or creditor can seize and sell out all the immovable and movable property of individual, such as house, car, farm house and boat to recover IRS or debt.

How To Stop Bank Levy?

Though there is no way of getting rid of bank levy, there are some grounds to be considered which will help you stop the bank levy efficiently. Instead of letting the IRS take its own course and declare you a defaulter, you should cause an impression in its mind that you are a serious individual in paying whatever you owe as debt. A few tips being mentioned over here will really help you, to a great extent, in preventing the bank levy being imposed upon you harshly.

• If you become a victim of contrary situation emerging all of sudden in your life, putting you into a great pecuniary difficulty, you should not lose your patience and rather convince the creditor that you are ready to pay whatever you owe to it. Apprise it a situation which has become an impediment on your way rendering you helpless in paying the cash you owe as debt. By highlighting your personal problems vividly you will gain sympathy and easily manage to stop the bank levy from bring placed on your account. Though it is not a generic formula to be applied by clever, it is meant only for the genuine ones who really want to pay their debt and require a leniency on the part of their creditor. Bank levy will not be imposed on you if you furnish them authentic proofs substantiating your critical financial condition. You should furnish complete details regarding yours inability to afford the money even to survive in your life. Though the creditors are supposed the hard nut to crack, they do relent on moral and pathetic ground.
• Gaining the sympathy will not stop bank levy. Rather you will have to assure the creditor or IRS authorities that you have a good background of paying full tax on time. For it you will have to produce financial statements of Form 433-A.  Such details will, no doubt, flash your good image in the mind of creditors or IRS authorities and stop the bank levy.
• Another way of stopping the bank levy is to seek the justice from court. Though it can provide you sufficient time to help you afford in the mean time cash, it can put you into bank levy as well, if you take the steps in haste and imprudently. If you receive a notice in regard to bank levy, you should not delay any more, as only 21 days are granted by the IRS, either to pay debt or face bank levy.