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June 30, 2022 Collections

How Long Does it Take to Release a Bank Levy in New Jersey?

A bank levy is a debt collection tool. It effectively allows a creditor to place a “freeze” on the debtor’s account to work toward satisfying a money judgment. Once a bank levy is put in place in New Jersey, it generally takes 21 days before the court will allow it to be executed. In this article, our New Jersey bank levy lawyer provides a more comprehensive guide to how long it typically takes for a bank levy to be released. 

An Overview of Bank Levies in New Jersey

A creditor or debt collector may be able to obtain a bank levy to satisfy an outstanding money judgment. As described by Forbes Advisor, a bank levy “freezes funds in your personal bank account and allows creditors to take funds to pay off your debt.” That being said, there are strict regulations regarding bank levies in New Jersey. To obtain a bank levy, a creditor must:

Obtain a monetary judgment in court; 

– Identify a bank account to be levied; 

– File a petition to levy the bank account; 

– File a motion seeking the turning over of bank account funds; and

– Prepare for a potential hearing if a debtor responds. 

Notably, New Jersey law automatically exempts the first $1,000 in a bank account from a levy. There are other exemptions—including certain federal exemptions for Supplemental Security Income (SSI) or VA disability benefits—that may apply as well. Additionally, under N.J. Ann. Stat. §17:161-4), an innocent person may try to exempt their share of a joint bank account. 

Before Funds Can Be Released: Debtor Must Receive Notice 

Getting a valid money judgment is an important step in the debt collection process in New Jersey. However, doing so does not necessarily mean that the debtor will come forward and voluntarily resolve the debt. A bank levy may be necessary to enforce the monetary judgment. In New Jersey, a bank levy will put a freeze on an account. Once a petition to levy a bank account is approved by a court, no more withdrawals can be made from that account—unless the balance of the bank account is greater than the amount of the bank levy. 

The funds from a bank levy will not be released to the creditor or debt collector until certain procedures are satisfied. Most notably, the bank account holder must receive notice of a bank levy. To be clear, after a monetary judgment is issued by a court, a bank levy can be obtained without notice. However, funds from a bank account cannot be released until a Motion for Turnover of Funds is filed with the court. The bank account holder must receive notice of this type of motion. 

Timeline for Bank Levy: 10 Days for Account Holder to Object, 21 Days for Release of Funds

The debt collection process can sometimes be slow and frustrating for creditors. Before getting funds from a bank levy, a creditor/debt collector needs to obtain a judgment and identify an account to be levied to satisfy that judgment. From there, the process can start to move more quickly There are two key things to know about the timeline for the release of a bank levy in New Jersey: 

  • The Bank Account Holder has 10 Days to Object: Under New Jersey law, a bank account holder—including the debtor and any joint account holder—has 10 days from that date of a Motion for Turnover of Funds to object to a bank levy. If the bank account holder does file an objection, a hearing will be required to determine whether funds should be released. 
  • Court Will Typically Wait At Least 21 Days to Release Funds: In New Jersey, a bank levy will generally freeze funds for at least 21 days. Assuming no valid objections have been filed, the funds will then be released to the creditor or debt collector at the end of that 21-day period. 

Get Help From a Bank Levy Lawyer in New Jersey

At Snellings Law LLC, our New Jersey debt collection lawyers offer persistence that pays. If you have any specific questions about how long it takes to release a bank levy, we are here to help. Call us now or contact us online to set up a completely confidential consultation with an experienced attorney. With a law office in Parsippany-Troy Hills, we provide representation in bank levy cases in Morris County and throughout New Jersey.