Bank Levy

Published on: November 17, 2011

If I Lost My House Through A Foreclosure, Can The Mortgage Company Come After Me For The Deficiency?

By brinkmanandalter2 brinkmanandalter1

In the state of Missouri, yes they can. This may not have necessarily been the case several years ago, when the economy was in better shape. When a house was foreclosed upon in 2002, the mortgage company or bank would have been just as likely to write the debt off as to come after you for the deficiency. But in this economy, it is a much different story.

First of all, when a home loan is foreclosed upon, the sale almost always results in a deficiency. This means that the home sold for less than what was still owed on the loan. For instance, if you have a home loan for which the outstanding balance is $140,000, and that loan is foreclosed upon; but at the foreclosure sale, it only goes for $100,000 (believe me, foreclosure prices are bargain-basement; that is also why foreclosures tend to have a depressing effect on the values of surrounding homes). In this scenario, a deficiency of $40,000 is created (140,000 – 100,000 = 40,000). And it is this amount that the mortgage company can demand from you.

Of course at this point, the $40,000 becomes unsecured debt (as opposed to the secured character it took on before), because there is no longer any collateral to secure the debt against (i.e. the house that was foreclosed on). So if you can’t make payment arrangements on the 40K, the mortgage company (or collection agency that they turn the debt over to) will likely sue you for breach of contract. And once they get a judgment (and believe me, they will), the creditor can do things like garnish you wages or exercise a levy against your bank account.

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Published on: November 15, 2011

How Long Do I Have To File For Bankruptcy After My Bank Account Has Been Levied?

By brinkmanandalter2 brinkmanandalter1

Well, you can file at any time. There isn’t any restriction as to when you may declare bankruptcy. But the more optimal question is: How long do I have to get my money back after the creditor has levied my account? The answer to this is more definite, as you will see.

To begin with, the only way that a creditor can levy (or ‘freeze’) your bank account is if they first get a judgment from the court saying that they can. Typically, that comes initially in the form of a breach of contract action filed by the creditor. Then you have to be properly served with a summons, which notifies you of the action taken against you, the amount of time you have to respond, the date on which the hearing will be held, and other disclosures. Then the hearing must take place, and the judge must order that the creditor has the right to levy an account in your name.

Assuming that all of this takes place, the creditor then has the ability to do things like garnish wages, levy bank accounts, and/or put a lien against some piece of property that you own (like your home). If it is a levy that occurs, then you will receive from either the bank or the creditor a notification after the freeze has taken place (but not before; obviously they do not want to give you a heads-up beforehand so that you can take all the money out of the account). On this document will be a ‘Return Date’. This is usually 21 days after the levy was executed. The return date is important, because it is during this period of time that the bank will hold onto the money that is in your account, and will not send it out to the creditor until the 21 days have passed. It is during this period of time that you can make any kind of dispute about ownership of the account, or prove that the funds held within the account are exempt (such as social security income).

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Published on: October 24, 2011

Do I Have To Have A Certain Amount Of Debt Before I Can File For Bankruptcy?

By brinkmanandalter2 brinkmanandalter1

No, it is not necessary that you have accrued a certain amount of debt before filing for bankruptcy. Some people have tens of thousands of dollars in credit card debt, several more thousand in medical bills, and a few hundred in payday loans. Of course, that doesn’t necessarily mean that the debt levels have to reach that point before you file a Missouri bankruptcy. Many people recognize ‘the writing on the wall’ before anything too terrible occurs.

In the kind of economy in which we live, there is an enormous incentive for people to take out loans and/or credit cards. This is done primarily in an attempt to provide basic needs for their family (food, clothing, medicine, etc.) But of course, such debt can get out of hand, especially if your work hours are reduced, or your pay is cut, or you lose your job altogether. Once the bills become delinquent, the creditors start calling (and the stress levels go even higher).

Having said that, if the overall debt that you owe to your creditors is $3,000 or less, it is probably a good idea to see if a settlement can’t be drawn up, and pay the creditors a lesser amount than you actually owe in one lump sum (instead of filing for bankruptcy). Of course, if such a settlement is reached, the creditor will most likely want the lump sum all at once (and not broken up into smaller payments over time).

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Published on: October 21, 2011

Do I Have To Be Behind On My Debts Before I File For Bankruptcy?

By brinkmanandalter2 brinkmanandalter1

No, you do not. In fact, you can be completely current on all bills before filing for bankruptcy. Nor is there any limitation as to how much debt you carrying before deciding to file. In other words, there is no set amount of debt that you must first accumulate before filing a petition.

To be sure, most people who file a Missouri bankruptcy are far behind on their debts, sometimes many months behind. And frequently, those debts will have been passed off to a collection agency, who in turn will call you several times a day and threaten to sue. It is at this point in the game that you will often see the creditor filing suit against you, which can lead to wage garnishments, bank levies, and the placement of a lien against your property.

It could be argued, therefore, that filing a bankruptcy before it reaches this point is more preferable. Taking care of the debt before it gets completely out of control can prevent (or at least greatly reduce) a lot of headaches, emotional burden, and unnecessary expenditures to the creditors (because most of what you end up paying in monthly minimums to your creditors goes towards interest as opposed to principal). This route puts you on a path towards financial rebuilding much quicker by getting you the fresh start / clean slate that the government provides. Whether it is a St. Louis Chapter 7 bankruptcy or a St. Louis Chapter 13 bankruptcy, your unsecured creditors (such as credit cards, medical bills, payday loans, insufficient funds on a bank account, etc.) are taken care of forever.

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Published on: October 12, 2011

Can A Creditor Take All The Money From My Bank Account?

By brinkmanandalter2 brinkmanandalter1

Yes, but only if the creditor has secured a judgment against you. In other words, a creditor cannot just arbitrarily reach into your bank account and stow away with all your cash whenever they want. Of course, the creditor may very well threaten you with such an action when they call you (repeatedly). But what they fail to tell you about is the process that has to take place prior them getting an order from the judge.

Procedurally, the only way in which a creditor can levy your bank account (it is also commonly referred to as a ‘bank freeze’) is by first gaining an order from the judge saying they can. In order to get this order, a breach of contract action must be filed with the appropriate court (basically the creditor showing that there was a contract between you and the creditor in which you failed to make payments on), you must be properly served with a summons indicating the time, place, and reason for why the breach of contract action was filed (along with instructions making it clear how you may counter or answer the claim), a hearing in front a judge must held (at which time you have an opportunity to be heard and argue your case), and the judge must then sign an order giving permission to the creditor to either garnish wages, levy a bank account, or place a lien against property. Until all those things happen, the creditor can’t do a thing (except, as I mentioned, threaten you with it).

But assuming that the creditor has in fact secured such a judgment, it can move forward with a bank levy. In that situation, the bank is given what is called a ‘Notice of Levy’ which indicates to them that they should remove all funds from the account(s) and place it into a trust account. This amount will then be sent to the creditor after the ‘Return Date’. The return date is important to know, because so long as you file for bankruptcy before this date, the money being held will not be sent to the creditor (and you can get it back).

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