Will filing for bankruptcy relief stop a bank levee that occurred or will occur?

By Gregory Nassar

YES. Under 11 U.S.C. Section 362(a), after filing for bankruptcy a creditor may not take any action against the debtor or the debtor's property to collect any debt. Meaning that upon filling of bankruptcy the creditor may no longer attempt to levee a debtor's bank account. Thus, levies in progress or set to occur will be stopped upon filing and assuming proper notice is given to the involved parties.

Further, during a levee, the debtor's funds are taken from the debtor's account pursuant to the order of the local law enforcement agency and delivered to the law enforcement agency for processing. The law enforcement agency will then take several days (usually) to process the payment and issue it to the creditor. If properly done, notice to the local law enforcement agency will cause them to stop the levee process (assuming the funds have not been already distributed to the creditor) and keep in trust pending the action of the assigned trustee.

This protection afforded to debtors is part of the automatic stay provisions that is done to protect all parties. Conversely, it will benefit creditors, as the debtor's assets then become property of the bankruptcy estate. Meaning, the debtor-for the protection of the creditor(s), is not permitted to sell of valuable assets after filing.

Filing for bankruptcy is a complex process. Further, determining when to file is difficult enough and should be done without error to avoid mistakenly having your property subject to being taken or losing further assets in surprising bank levees. Thus, it is crucial that you select a highly skilled bankruptcy attorney. I make it my goal to provide each client the dedicated time and experience to assist the client with his/her bankruptcy.

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