How does a creditor attach a tax refund?

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How does a creditor attach a tax refund?

I’ve seen many different answers to this. Most say it can only be taken for unpaid taxes child support or an unpaid student loan. I have a judgement against me from a private creditor and would like to know the facts about who can take it, and how they go about getting it?

Asked on February 3, 2012 under Bankruptcy Law, California

Answers:

MD, Member, California Bar / FreeAdvice Contributing Attorney

Answered 9 years ago | Contributor

The unpaid creditor can get its money by selling your debt to a third party collection agency. Now, if the debt is already past the statute of limitations (which can happen), then the collection agency can try to collect but if you do not affirm the debt or reaffirm the debt or acknowledge the debt and then dispute with the credit reporting agency, that collection agency is out of luck. As for any other method, it can garnish your wages through a judgment or can attach liens and freeze or take assets once there is a judgment Think of a medical lien on your house and then also think of garnishments to your wages. The notice requirements to initially get a judgment against you will depend on a number of factors, including the location of the debt and whether there are specific or general notice requirements and through the Fair Debt Collection Practices Act, how the creditor gets to the point of judgment. Once there is a judgment, then there are multiple appearances to verify the payment schedule or attachment.

FreeAdvice Contributing Attorney / FreeAdvice Contributing Attorney

Answered 9 years ago | Contributor

The way a judgment creditor levies upon a judgment debtor's state and federal tax refund is to file an application for the levy in the court where the judgment was issued. The court then issues the levy and the local sheriff then serves the levy either upon the nearest Internal Revenue Service branch or state franchise board.

The judgment debtor is informed of the levy on the tax return and he or she then has an opportunity to contest the levy. If there is no contest, or if the levy's contest is denied by the court, the tax refund is paid to the sheriff's office who made the levy who in turn send a check from its trust account to the judgment creditor.


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