Garnishments and levies are both collection tools used by creditors to seize an asset or replenish a debt you owe. Since they are both common collection tools creditors use, people often ask what the difference is between the two. Our New York debt relief attorneys explain the difference between garnishment and levy, and how you can protect your finances while dealing with creditors.
Garnishments vs. Levies
When you fail to pay off your debt, creditors could take steps to replenish your debts without your permission. Creditors often use a levy and garnishment to collect money from debtors who failed to answer their payment requests. So, what is the difference between garnishment and a levy?
- Garnishment: A garnishment is a collection tool that allows creditors to tell your employer to take a portion of your wages out of your paycheck. The law requires your employer to send that portion to the creditors so that they can apply it to your debt.
- Levy: A levy allows creditors to withdraw money directly from your bank account; either your checking or savings account. When a creditor applies a levy on your account, it typically means that your account will be frozen so that the creditor can continue to take payments from your account until the creditor removes the levy. The levy is usually lifted when your debt is paid in full.
Can Creditors Take All of My Paycheck?
No, creditors cannot take all your paychecks, according to state and federal laws. Creditors can only garnish wages after obtaining legal authority from a court judgment. They can only levy or garnish unpaid credit card statements, medical bills, and cell phone bills, among others. There are strict guidelines for these creditors to follow. For such reasons, it is important to have a debt relief attorney on your side to help you gain control of your financial situation and stop harassment from creditors.
Contact our New York debt relief attorneys today at (516) 217-4488 to schedule a consultation!