A bank levy occurs when your bank account is frozen and all or part of the money in your account is seized. The most common causes of a bank levy are unpaid taxes and unpaid debt.
A bank levy doesn’t happen overnight; usually it is the result of a creditor trying to force a consumer to pay unpaid debt. In the case of taxes, the IRS will resort to a bank levy if they have already sent you a letter(s) stating you owe taxes and you either refuse to pay the debt or don't respond to their requests (to make a repayment plan or try to work with them towards repayment). The IRS will freeze your accounts and seize any money in your account up to the amount you owe.
While creditors can and have used this method of receiving payment on unpaid debt, the IRS utilizes this method the most. If a bank levy is imposed on you, you may not be able to withdraw any money or use your debit card. Worst of all, there’s nothing you or your bank can do about it.
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