If you or your business owe money to a creditor in New Jersey, the creditor may have multiple options for attempting to collect the debt you owe. Bank levies are one type of collection action that can be taken against both consumer and commercial debtors in New Jersey, depending upon the circumstances. If you received a notice of levy on your bank account, you might be surprised and unsure about what steps you need to take moving forward. An experienced New Jersey bank levy attorney at Snellings Law LLC can discuss your circumstances with you and can provide you with more information about bank levies in New Jersey.
Understanding How Levies Work in New Jersey
In order to know about your options for responding to a notice of levy in New Jersey, it is important to have a clear understanding of what bank levies are and how they work. What is a bank levy? In short, it is a particular type of collections tool that a creditor can use to freeze the bank account of a consumer or commercial debtor so that they can receive the money they are owed. A bank levy does not prevent a debtor from putting money into the account, but it does prevent the debtor from taking money out of the account or using instruments to draw funds from the bank account that has been levied, such as checks or debit cards. Depending upon the circumstances, a bank levy can freeze only a portion of the account for the money owed, or it can result in the entire account being frozen.
How do bank levies occur? In order for a creditor to get a bank levy, the creditor must go through the court. To be clear, under New Jersey law, a creditor cannot simply levy a debtor’s account themselves without an order from the court or without having the court place the levy on the debtor’s account. Typically, a creditor will be able to levy a bank account either by obtaining a judgment after filing a debt collection lawsuit against the debtor or by petitioning the court and asking the court to place a levy on the debtor’s account. Once the court orders a bank levy, then the levy has to actually be executed. The creditor will need to identify the bank account to be levied and will need to have detailed information about the debtor’s account. To execute the levy, the creditor will typically create a document known as a Writ of Execution. Then a law enforcement officer will usually deliver the Writ of Execution and a Notice of Execution to the debtor.
Challenging a Levy Once You Receive a Notice of Execution
A debtor may receive a notice of levy after losing a court case in which they have been sued by a creditor or after receiving the Notice of Execution that informs them of the levy and their rights. When you receive notice of a bank levy, what can you do to respond, and what must you do?
For most debtors, it is important to learn how to respond to the notice of levy by challenging it or by filing exemption claims. New Jersey law requires debtors to challenge a bank levy within 10 days of receiving notice in most circumstances.
To challenge a bank levy in response to receiving a notice of levy, you will usually need to file a motion to object, and you will need to provide grounds for the objection. Even if you do not have grounds to challenge a bank levy, you may be able to file claims for an exemption that will exempt certain amounts of money that are currently contained within or deposited into the account. The following are examples of exemptions you may be able to claim so that they cannot be frozen or garnished:
- Social Security disability benefits;
- Retirement benefits;
- Disbursements from student loans; and
- Up to $1,000 in the account.
Determining whether you can challenge a levy, and determining which assets may be exempt, are both processes that you should work through with an experienced bank levy attorney in New Jersey. These determinations are complex, and it will be important to have a lawyer on your side who has experience handling bank levy issues and responding to notices when debtors are informed of a levy.
Contact a Bank Levy Attorney in New Jersey
If you received a notice of levy and need assistance determining how you can respond, it is critical to seek advice from a New Jersey bank levy lawyer as quickly as possible. As we noted above, you likely have only 10 days to respond, so you will need to act fast. Contact Snellings Law LLC today.