Introduction: When Your Bank Account Suddenly Freezes
Few things are more stressful than logging into your bank account and discovering your money is gone or frozen. For many Minnesotans, this happens after a creditor wins a judgment and gets permission to place a bank account levy. Overnight, you can lose access to your paycheck, rent money, or grocery budget.
The good news: Bankruptcy in Minnesota can stop a bank account levy immediately. In some cases, it may even allow you to recover money recently taken. This post explains how levies work, what your options are, and why Chapter 7 or Chapter 13 bankruptcy may be the most effective solution.
What Is a Bank Account Levy in Minnesota?
A bank levy is when a creditor legally seizes money from your bank account to collect a debt. Here’s how it usually happens:
The creditor sues you for unpaid debt.
They win a judgment in court.
They send a garnishment summons to your bank.
Your bank freezes funds up to the amount owed.
This process often blindsides people. You may not even realize there was a lawsuit until your account is drained.
What Funds Are Protected?
Not all money can be taken. In Minnesota, certain income is exempt from levy, including:
Social Security benefits
Unemployment benefits
Child support and spousal maintenance
Public assistance (like MFIP, food support)
But here’s the catch: if those funds are mixed with other deposits in your account, the bank may freeze everything until you prove the money is exempt. That means you’re still left scrambling while your bills pile up.
Why Bank Levies Hurt So Much
Immediate financial crisis – Rent checks bounce, utilities get cut off, or you can’t buy groceries.
No warning – You find out only after the freeze.
Emotional stress – Losing control of your account feels like losing control of your life.
For many Minnesotans, this is the tipping point that makes them seek bankruptcy relief.
How Bankruptcy Stops a Bank Levy
The moment you file bankruptcy, the automatic stay kicks in. This court order requires creditors to:
Stop all collection actions, including bank levies.
Release levied funds if they haven’t already been turned over.
Cease future attempts to freeze or seize your money.
Chapter 7 Bankruptcy
Ends bank levies immediately.
Wipes out unsecured debts like credit cards, payday loans, and medical bills.
May allow you to recover funds levied within the 90 days before filing.
Chapter 13 Bankruptcy
Stops levies at filing.
Lets you repay debts over 3–5 years under a court-approved plan.
Particularly useful if you have ongoing exposure (e.g., multiple judgments, tax debts).
Example: A Levy Gone Too Far
“Lisa,” from Duluth, owed $8,000 on a credit card judgment. One morning, she discovered her bank account frozen, including $1,200 from her paycheck she needed for rent.
After filing Chapter 7 bankruptcy:
The levy was lifted immediately.
Her paycheck deposits were protected going forward.
The $8,000 debt was discharged.
Instead of losing her home, she gained a fresh start.
Common Myths About Bank Levies and Bankruptcy
“I can’t stop a levy once it starts.” – False. Bankruptcy stops levies the moment you file.
“They can take all my money.” – False. Certain funds are protected under Minnesota law.
“If I file bankruptcy, my bank account is gone.” – False. You keep your account; you just protect it from seizure.
“Filing is too public.” – False. Unless you tell them, most people won’t know you filed.
Conclusion: Take Back Control of Your Bank Account
If your account has been levied in Minnesota, don’t wait. Bankruptcy can stop levies immediately, protect your money, and erase the debts behind them.
In Minnesota and ready to talk about stopping a bank levy with bankruptcy?
Schedule a free consult with bankruptcy lawyer Todd Murray.
Since 2009, Todd has helped hundreds of Minnesotans get out of debt. His work has saved his clients millions of dollars (and many sleepless nights) in the process. Todd’s clients have described him as “very professional and easy to work with.” He lives in Minneapolis with his wife and four children.