Bank Levy: Meaning in a Merchant Cash Advance
A bank levy is a legal process that lets a creditor with a judgment take money directly from a debtor's bank account. The bank freezes the funds and, after the steps the law requires, sends them to the creditor.
What does bank levy mean?
After winning a judgment, a funder can ask the court or a sheriff to levy your business account. The bank receives the order, freezes the balance up to the judgment amount and eventually turns it over. Some kinds of money are protected by law from levy, but business operating funds usually aren't.
Why does bank levy matter to your business?
A levy can shut a business down overnight, because payroll, rent and vendor payments all bounce. It's one of the strongest tools a judgment creditor has. It also affects other funders: an account that's been levied can't make advance payments.
What should you do if a levy hits?
Call the bank to understand what's frozen and why. Talk to an attorney immediately. Deadlines for claiming exemptions or challenging the levy are short.
How do you prevent a bank levy?
Most levies follow a judgment that followed silence. Communicating early is the best prevention.
Are any funds exempt from a levy?
Federal and state laws protect some kinds of money from levy, such as certain benefits deposited directly. Business operating funds generally don't get those protections, but mixed accounts can complicate things. Keeping business money in business accounts makes it clearer what's protected and what isn't.
Where will you see it?
In your bank's notice to you, in court papers and on your statement as a hold or a large debit.
Is this legal advice?
This is general information, not legal advice. Levy rules differ by state.
Which terms are related to bank levy?
The full list is in the glossary. Owners ask about this in What should I do if I get a demand letter from an MCA funder?.
A term on your offer you don't recognize?
Send us the line and we'll tell you what it means. Call 877-FUND-654 with any question. We call you back, usually the same business day, and we always talk with you before we shop your file.