Bank Account Levy
A levy is a one-time seizure of funds currently in your bank account at the moment the levy is served. The bank freezes the available balance (less protected amounts) and, after the exemption claim period, releases it to the creditor. A levy only captures what is in the account at that moment -- it does not automatically capture future deposits (though the creditor can serve additional levies).
Wage Garnishment
Garnishment is an ongoing deduction from your paycheck before you receive it. Your employer withholds a percentage (typically 25% of disposable income under federal law, less in some states) and sends it to the creditor. Garnishment continues until the debt is paid, the order is modified, or you take action to stop it (bankruptcy, negotiation, or exemption claim).
Key Differences
Levy: one-time, targets bank account, you may not know until it happens, exemption claim deadline is short. Garnishment: ongoing, targets paycheck, your employer must notify you, federal limit of 25% of disposable income. Some states (Texas, Pennsylvania, North Carolina, South Carolina) effectively prohibit wage garnishment for consumer debts but allow bank levies.
Which Is Worse?
It depends on your situation. A levy can be devastating if it empties your account right before rent is due. Garnishment is a steady drain that reduces your income long-term. Both can be stopped by filing bankruptcy. If you are facing both simultaneously, bankruptcy is usually the most efficient solution because it stops all collection activity at once.
Frequently Asked Questions
Can a creditor do both a levy and garnishment at the same time?
Yes. A creditor with a judgment can pursue both simultaneously. However, total garnishment is limited to 25% of disposable income (federal law), and some states limit total collection across all methods.
Can I stop a garnishment without filing bankruptcy?
You can file a claim of exemption if your income is below your state's threshold, negotiate a payment plan with the creditor, or challenge the underlying judgment. Bankruptcy is the fastest and most comprehensive solution.
How many times can a creditor levy my account?
There is no limit. A creditor can serve a new levy every time they believe there are funds in your account. This is why a one-time exemption claim is not a long-term solution -- you need to address the underlying judgment.
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