When a creditor gets a judgment against you, one of the ways that they might try to collect it is to levy your bank account. This means that they freeze some or all of the funds in your account without warning. Once the money has been frozen, you will receive two copies of the notice of the levy as well as an exemption worksheet from the bank.  This worksheet is very important as it gives you the opportunity to claim that some or all of the money that was seized is exempt (meaning the creditor can’t take it). You only have 14 days to fill out the exemption worksheet and send copies of it (along with copies of two months of your bank statements) to your bank and the creditor’s attorney, so acting quickly is very important.

So what kinds of funds in your account are exempt?  The exemption worksheet will provide a more detailed list, but it includes any money you receive as government assistance, child support, proceeds from a life insurance policy, and pension payments. A portion of your wages are also exempt. Frankly, almost every levy we see includes exempt funds. The key here is to move swiftly and make sure that you are honest and accurate in claiming exemptions (you may be committing perjury if you claim an exemption you aren’t entitled to).

As always, I suggest contacting an attorney to discuss your particular situation. We provide free consultations on these matters. Also, those of you facing multiple judgments or buried under a mountain of credit card debt might be interested to learn that funds levied within 90 days of a bankruptcy filing must be returned to the debtor.