Can the state take owed taxes from a direct deposit state disability bank account?

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Can the state take owed taxes from a direct deposit state disability bank account?

There was a judgement for owed state taxes 8 years ago. Just last year a levy was put on a credit union account. I’m now receiving state disability and opened a direct deposit regular bank account. I received a letter from the state that a levy was sent to the bank. The manager and my banker say they can”t take money out of my disability account. This money barely pays some bills. It has been a month since I recieved the letter.

Asked on September 30, 2011 under Bankruptcy Law, Wisconsin

Answers:

FreeAdvice Contributing Attorney / FreeAdvice Contributing Attorney

Answered 10 years ago | Contributor

Unless the bank account that you are writing about is specifically designated as a state disability bank account by you on its title and it is deemed exempt from levy under the laws of your state regarding the judgment levy process, the account can be levied upon by your state to collect upon a judgment against you.

The laws in most states are that one's pension or disability entitlement checks cannot be levied upon by a judgment creditor while the money is in the hands of a third person administering the programs or before any check is cashed by the beneficiary (you).

However, if the check is cashed and placed in a regular bank account as a deposit, a creditor can levy that bank account held by a judgment debtor.


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