If you are dealing with debt collection in New Jersey, you may be wondering, what’s the law on bank levies in New Jersey? A bank levy is a legal process used by creditors to seize funds from a debtor’s bank account after obtaining a court judgment. This article explains the legal framework, the process, exemptions, and how you can protect your assets.
What is a Bank Levy?
A bank levy is a legal action taken by creditors to recover unpaid debts by freezing and withdrawing funds from a debtor’s bank account. In New Jersey, a creditor must obtain a judgment from a court before initiating a levy.
How Does a Bank Levy Work in New Jersey?
- Judgment Requirement: A creditor must first file a lawsuit and secure a court judgment confirming the debtor’s obligation to pay.
- Writ of Execution: Once the judgment is obtained, the creditor must request a writ of execution from the court.
- Sheriff’s Involvement: The writ is then provided to the county sheriff, who serves the bank with an order to freeze the debtor’s funds.
- Account Freeze: The debtor’s bank account is frozen, and the creditor is notified.
- Debt Collection: The creditor may then proceed with withdrawing funds to satisfy the debt unless the debtor claims an exemption.
Exemptions from Bank Levies in New Jersey
New Jersey law protects certain funds from bank levies, including:
- $1,000 Personal Property Exemption: Debtors are entitled to a $1,000 exemption from seizure, which includes bank funds.
- Government Benefits: Social Security, veterans’ benefits, state disability, unemployment benefits, and welfare payments are exempt from levy.
- Child Support Payments: Court-ordered child support payments deposited in the account are also protected.
Common Mistakes to Avoid with Bank Levies
- Ignoring Court Summons: Failing to respond to a creditor’s lawsuit can result in an automatic judgment.
- Not Checking for Exempt Funds: Some debtors don’t realize that certain deposits are protected.
- Failing to Request a Hearing: If a debtor believes their account contains exempt funds, they can request a hearing to challenge the levy.
How to Protect Your Funds from a Bank Levy
- Claim Exemptions: If your funds qualify for an exemption, file a claim with the court immediately.
- Negotiate with Creditors: Before a levy is imposed, try negotiating a settlement or payment plan.
- Seek Legal Help: Consulting an attorney can help you understand your rights and options.
- Keep Exempt Funds Separate: To avoid complications, deposit exempt funds (such as Social Security benefits) into a separate account.
FAQs about Bank Levies in New Jersey
1. Can a bank levy occur without notice in New Jersey? Yes, but the creditor must first obtain a court judgment before freezing the debtor’s bank account.
2. What should I do if my bank account is levied? Immediately check for exemptions and file a motion in court if your funds qualify for protection.
3. How long does it take for a bank levy to be lifted? If an exemption is claimed, a hearing is typically scheduled within a few weeks. Otherwise, the levy remains until the debt is satisfied.
4. Can I negotiate with creditors to avoid a bank levy? Yes, creditors are often willing to set up a payment plan or settlement to avoid legal proceedings.
Conclusion
Understanding what’s the law on bank levies in New Jersey can help both debtors and creditors navigate the legal process. If you are facing a bank levy, knowing your rights and exemptions can help you protect your assets and take appropriate action.