A Guide to Bank Levies: How Do They Work?

Stay-at-home orders and social distancing protocols during the COVID-19 pandemic forced many businesses to shut down. Consequently, employment rates began to plummet, and many U.S. households failed to sustain their income. This led to a significant increase in several types of consumer debt, including credit cards, auto loans, mortgages, and student loans.

When a debtor falls behind on payments, a bank levy for debt collection may be issued to recover the debts.

Serve Index LLC, New York’s leading process server agency, outlines everything you need to know about a bank levy.

Who Can Request a Bank Levy?

A bank levy is a legal order used by creditors to recover money owed to them. If approved by the court, the bank freezes the debtor’s account and transfers their assets to the creditor as payment for their debt.

For a bank levy to take effect, the judgment holder must file a writ of judgment at the court presiding over the case. After which, a process server delivers the writ to the bank branch where the account is based. In some cases, the bank requests to have the documents served at a specific branch, so it’s best to check with them first.

Bank levies are often used by government institutions such as the Internal Revenue Service (IRS) and the Department of Education. However, they can also be used by private creditors.

Who Is Exempted from A Levy?

Under New York’s Exempt Income Protection Act (EIPA), accounts with a minimum balance of $1,920 cannot be subjected to a freeze or levy. The baseline can increase to $2,625 if the account covers government benefits.

Additionally, not all types of funds can be levied. The federal government exempts the following from being subjected to a bank levy:


  • Social Security benefits
  • Supplementary security income (SSI)
  • Child support, spousal support, or alimony
  • Veterans benefits
  • Unemployment insurance
  • Worker’s compensation benefits
  • Disability benefits
  • Federal Emergency Management Agency (FEMA) aid
  • Student loan disbursements
  • 90% of the debtor’s wages or salary earned in the last 60 days
  • Other federal, civil, and railroad retirement benefits

For IRS levies, the debtor may dispute the bank levy if they can prove that failure to pay was caused by “an immediate economic hardship.” However, this doesn’t mean that the debt is dissolved. The debtor must still coordinate with the IRS to determine a doable repayment plan. You can learn more about IRS bank levies by going over IRS Publication 194.

NYC’s Trusted Process Servers

Ensure the safe and secure delivery of your documents by hiring a professional process server in New York City. At Serve Index LLC, we serve all types of legal documents, including writs for a levy, subpoenas, divorce papers, civil action suits, eviction notices, and tenant notices.

Our reliable team of process servers is equipped to serve court papers to even the most evasive and uncooperative of recipients. When you choose us, you can expect regular updates on service progress, reliable GPS tracking, email notifications, and real-time photo logs.

Beyond that, we also provide legal support services such as skip tracing, court filing, mobile notary, and document retrieval.

Entrust your documents to the best process servers in NYC. Reach out to us today to learn more about our services.

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