Bank Levies: How Collectors Freeze Accounts and What You Can Do

A bank levy is one of the most jarring collection actions a judgment creditor can take — your account is frozen without warning, often when you least expect it. Understanding how levies work and what is exempt from them removes the shock and gives you a response strategy.

How a Levy Works

After obtaining a judgment, a creditor can apply to the court for a writ of execution and serve it on your bank. The bank is required to freeze funds up to the judgment amount immediately. You typically receive notice after the freeze, not before. You then have a short window — usually 10 days — to claim exemptions.

Exempt Funds in California

California law exempts significant categories of funds from levy: Social Security and SSI deposits, unemployment benefits, disability payments, workers’ compensation, and the first $1,788 in any account (as of current figures under the automatic exemption for low-income debtors). If all or most of your account balance consists of exempt funds, you can claim the exemption and have the funds released.

The Exemption Claim Process

You must file a Claim of Exemption with the court that issued the writ within 10 days of the levy notice. Include documentation showing the source of the funds — bank statements showing direct deposit from Social Security, unemployment, etc. Miss this deadline and you lose the exemption regardless of the source of funds.

Prevention Is Better Than Response

If you have a judgment against you, maintaining separate accounts for exempt funds is a protective strategy. Never co-mingle Social Security with other income in the same account — it complicates the exemption claim. The Justice Foundation kit covers judgment-proofing strategies in detail.