Background and how a bank levy is served

A bank levy occurs when a creditor or the IRS obtains legal authority to collect a debt directly from funds held at your financial institution. Typically, the agency sends a levy notice to your bank; the bank then freezes the account and holds funds for a short statutory period before remitting them. In my practice advising clients for 15+ years, the most effective outcomes came from immediate, coordinated action with the bank and the issuing agency (IRS) or creditor.

Emergency steps to take right now

  1. Preserve the notice and read it closely. Capture the issuer’s name, contact number, levy ID number, and the amount. That information is essential for any release or appeal.
  2. Call your bank immediately. Ask exactly how much is being held, when the bank will remit funds, and whether the bank considered any funds exempt. Document the rep’s name, time, and what they tell you.
  3. Identify exempt funds. Certain types of income may be protected (examples include some federal benefit payments and qualified retirement funds), but protections vary by source and how the money is deposited. Do not assume all deposits are exempt; confirm with the issuer and your bank. (See IRS guidance on levy exemptions and CFPB resources.)
  4. Contact the issuer (IRS or creditor). Explain the situation, request a hold or release, and ask about immediate remedy options: an installment agreement, an offer-in-compromise, a hardship release, or an appeals process. For IRS levies, there is often a right to appeal or request a Collection Due Process hearing before funds are seized if you timely respond to a Notice of Intent to Levy. (See IRS – Levy guidance.)
  5. Consider negotiation and payment options. Many creditors will accept an installment plan or a partial payment that results in a levy release. For IRS collections, requesting an installment agreement or submitting financial information can often stop further action.
  6. Avoid moving money to hide it after a levy notice. Intentionally transferring assets to prevent collection can create legal problems and make resolution harder.
  7. If you need urgent cash for living expenses, ask your bank whether it can pay out exempt amounts or allow access to protected funds under state or federal law.

How to request a levy release or reversal

  • For IRS levies: ask the IRS for a release based on undue hardship or because the levy was issued in error; provide documentation of living expenses and exempt benefits. The IRS commonly considers hardship releases when the levy prevents you from meeting basic living costs. See the IRS levy release guidance for specifics.
  • For private creditors and court judgments: contact the creditor or the court clerk to discuss vacating the levy if the debt is disputed, paid, or subject to bankruptcy protection.
  • If the levy is incorrect, gather proof (bank statements, benefit award letters, bankruptcy discharge documents) and file a formal dispute with the issuer and a written request for release through the bank.

What funds are commonly protected?

  • Certain federal benefits (Social Security, SSI) and unemployment benefits may be exempt or partially protected from levy, depending on how and when they were deposited. (Confirm with the issuer.)
  • Retirement accounts and qualified plans often have special protections, but these depend on the account type and whether the funds are in plan accounts or distributions.

Common mistakes and how to avoid them

  • Waiting or ignoring notices. Delay often closes the best options for relief.
  • Assuming all deposits are safe. Mixed deposits (like pay + SSI in the same account) can complicate protection—track and segregate protected funds when possible before any issues arise.
  • Moving money after receiving a levy notice to avoid collection. That can be treated as fraudulent conveyance.

When to get professional help

If you face large tax debts, complex business accounts, or potential bankruptcy issues, seek a tax professional, attorney, or a financial advisor experienced in collections. In my experience, professionals speed up releases, negotiate better terms, and ensure you use protection rules correctly.

Useful scripts and documentation to have ready

  • Bank call: “My account has been levied. The notice number is [X]. How much is being held, and when will the bank remit funds? Please give your name and the time.”
  • Issuer call: “I received a levy dated [date]. I need information on how to request a release, provide proof of exemption, or arrange a payment plan. Who can I speak to or what form is required?”

Internal resources

Authority and further reading

Final notes and professional disclaimer

Act quickly and document every contact. The steps above are educational and reflect best practices; they are not legal or tax advice. For tailored guidance based on your facts, consult a tax attorney, enrolled agent, or a qualified financial professional.