Bank Levy, Writ of Garnishment or Lien? How Banks Tell Legal Orders Apart

Customers say "bank levy" for anything that freezes their money. Creditors' attorneys say "garnishment." State tax agencies say "levy," child support agencies say "lien" or "levy," and the IRS sends a "Notice of Levy." For the person in legal-order processing, the label on the document matters less than three questions: who issued it, what it tells the bank to do, and by when. Get those right and the rest of the process (account search, federal benefit review, freeze, customer notice, answer, remittance) follows. Get them wrong and the bank either pays out money it should have held or holds money it had no authority to touch.

This guide sorts the legal orders a bank receives into working categories and shows what to look for on each one. It describes the federal framework and common state patterns; your state's statutes and your bank's procedures control the details.

What Each Legal Order Asks the Bank to Do: Restrain, Pay, or Report

Before worrying about the name of the document, read the operative instruction. Nearly every order asks the bank to do one or more of these things:

• Restrain (freeze). Hold funds in the debtor's accounts so they cannot be withdrawn, usually up to a stated amount, until a further order or a waiting period ends.
• Pay over (turn over). Send the frozen funds to a court officer, a sheriff or marshal, the creditor's attorney, or a government agency.
• Report (answer or disclose). Tell the court or agency what the bank holds for the debtor, often on a sworn answer form, by a deadline.

A creditor's writ of garnishment typically asks the bank to freeze and answer, and the payment comes later under a court order. An IRS levy asks the bank to freeze now and pay after a statutory waiting period. A subpoena asks only for records. A restraining notice freezes but does not pay. Classifying the instruction first keeps staff from treating a records request as a freeze, or a freeze as an instruction to pay.

Creditor Writs of Garnishment and Execution From State Courts

Private creditors (card issuers, debt buyers, landlords, medical providers) reach a bank account only after they win a judgment and obtain post-judgment process from a state court. Depending on the state, that process is called a writ of garnishment, writ of execution, writ of attachment, bank levy, or execution, and it may be issued by the court, the clerk, a sheriff or marshal, or the creditor's attorney acting as an officer of the court. New York's execution practice is an example of attorney-issued process; Treasury cited it when it clarified that orders issued by a clerk or an attorney in that capacity can count as orders "issued by a court" under the federal benefit rule.

What creditor process usually requires of the bank:

• Search for accounts in the debtor's name using the identifiers in the writ.
• Run the federal benefit account review under 31 CFR Part 212 within two business days, and establish a protected amount if federal benefits were directly deposited in the lookback period. Our Federal Benefit Payment Garnishment Rule course covers the review step by step.
• Freeze funds above any protected amount, up to the amount stated on the writ.
• Notify the customer, under Part 212 and any state notice or exemption-claim procedure.
• Answer the writ on the court's form by the stated deadline.
• Pay only when state law, the writ or a later court order says to.

Creditor process does not reach every dollar. State exemption laws protect certain balances or sources of funds, and a writ generally catches only what is on deposit when it is served. Whether later deposits are caught depends on state law and the type of writ. Part 212 forbids continuing garnishment of later deposits in accounts where it applies.

Government Levies: IRS, State Tax Agencies and Child Support Agencies

Government agencies can often seize funds without going to court first, so their documents look different and follow different rules.

IRS levies. The IRS uses Form 668-A, Notice of Levy, for property held by third parties, including bank accounts. Under IRC 6332(c), a bank surrenders deposits only after 21 days from service of the levy. The levy reaches what the taxpayer had on deposit when it was served, not later deposits. Our bank account garnishment training covers the hold and remittance steps.

State tax levies. State revenue departments issue their own levies under state tax statutes, with their own hold periods and remittance instructions. Since the 2013 amendments, orders and levies issued by a state or state agency fall within Part 212's definition of a garnishment order, so the federal benefit review applies to them.

Child support levies and liens. State child support agencies use administrative liens and levies to seize funds in accounts identified through financial institution data matches. Federal law (42 U.S.C. 666) requires states to give these agencies authority to attach and seize assets held in financial institutions. A state child support agency may attach a Notice of Right to Garnish Federal Benefits (Appendix B to Part 212). When that notice is attached, the bank follows its customary procedures instead of establishing a protected amount.

Other federal agencies. Orders obtained by the United States in court, for example under the Federal Debt Collection Procedures Act, may also carry the Appendix B notice.

Liens, Subpoenas and Restraining Notices That Are Not Garnishments

Several documents arrive in the legal-order queue but are not garnishments in the operational sense.

Liens. A recorded judgment lien or a federal tax lien attaches to property generally but does not, by itself, instruct the bank to freeze or pay a deposit account. Child support is the main exception: Part 212 expressly treats "a lien arising by operation of law for overdue child support" as a garnishment order. Read what the lien document actually instructs.

Restraining notices and freeze orders. Some states let a judgment creditor serve a notice that restrains the debtor's property without ordering payment. Treasury amended Part 212 in 2013 to make clear that "an order to freeze the assets in an account" is a garnishment order, so the benefit review applies before the freeze.

Subpoenas and records requests. A subpoena duces tecum asks for documents, not money. Route it to the records or subpoena-compliance team under your privacy procedures and do not freeze the account on the strength of a subpoena.

Levy releases, amendments and satisfactions. These modify an existing order. Match them to the original order before acting.

Reading the Order: Issuer, Debtor Identifiers, Amount and Response Deadline

Build a standard intake checklist so every processor reads orders the same way.

1. Issuer and authority. Court and case number, agency and statute cited, or federal form number. This tells you which rules apply.
2. Date and method of service. Many clocks (Part 212's two business days, the IRS 21-day hold, state answer deadlines) run from service. Date-stamp and log at receipt.
3. Debtor identifiers. Name, SSN or TIN, address, and any account numbers. Search on more than the name; the IRS Notice of Levy instructions tell recipients to search at minimum by the taxpayer's name, address and identifying number.
4. The maximum to freeze or pay. Do not freeze more than the order states.
5. Restrain, pay, answer, or produce records.
6. Notice of Right to Garnish Federal Benefits. Present or absent. Under 31 CFR 212.4, check within two business days of receipt.
7. Answer date, hold period, remittance date.
8. Remittance and return instructions. Payee, address, reference numbers.

Keep the bank operations glossary at hand for new staff who need the vocabulary, and see our overview of account garnishments and levies for the end-to-end workflow.

When an Order Is Defective or Served on the Wrong Office

Where an order must be served is a matter of state law, and the rules differ sharply.

• California requires a financial institution with more than nine branches or offices in the state to designate one or more central locations for service of legal process, filed with the Department of Financial Protection and Innovation (Code of Civil Procedure 684.115). Process aimed at accounts at a covered branch is served at the central location; if a required institution fails to designate one, every branch in the state is treated as a central location.
• Texas directs claims against a customer, including writs of garnishment, to the address a financial institution designates as its registered agent address under Finance Code 59.008, and a claim served at another address is not effective against a registered institution.
• Other states may allow service at any branch, at the main office, or on a registered agent. Check your state's statute and keep the designation current.

Common defects and how banks typically handle them:

• Served on a branch when your state requires central service. Follow your state rule and procedure. Some banks forward the document; others return it with an explanation. Do not freeze on an ineffective service unless counsel approves.
• Debtor not identifiable. Part 212 allows the review clock to start when the bank receives enough information from the creditor to determine whether the debtor is an account holder. Ask the creditor, document the request, and diary the follow-up.
• Missing amount, signature or seal; expired writ. Escalate to counsel or your designated legal-order officer.
• Wrong institution or wrong debtor. Answer that no accounts were found, as the order or state law requires.

Every exception should leave a record: what arrived, when, what you did and why. Part 212 alone requires records sufficient to show compliance for at least two years from receipt of the order.

Train the Team That Opens the Mail

Classification errors usually happen at intake, by whoever opens the envelope. Our bank account garnishment procedures training walks deposit operations and legal-order staff through receipt, classification, the federal benefit review, freezes, notices, answers and remittance, so the person reading the order knows which rules apply before the first clock runs out.

Frequently Asked Questions

What is a bank levy?

A bank levy is a legal instruction that makes a bank freeze, and later turn over, money in a debtor's account to pay a debt. The term is used loosely. Private creditors generally need a court judgment and post-judgment process such as a writ of garnishment or execution. Government agencies like the IRS, state tax departments and child support agencies can often levy administratively under their own statutes. For bank staff, the useful questions are who issued the document, what it tells the bank to do, and what deadlines apply.

Is a bank levy the same as a garnishment?

Operationally they overlap. Both freeze funds and usually lead to payment. Federal rules treat them together: 31 CFR Part 212 defines garnishment to include execution, levy, attachment and other legal process. The differences are in the issuer and procedure. A creditor's garnishment usually involves a court answer and a later payment order. An IRS levy has a fixed 21-day hold before the bank pays. State tax and child support levies follow state statutes.

Does a bank have to honor a levy served at a branch?

It depends on state law. California requires larger institutions to designate central locations for service of legal process and directs service there. Texas makes a claim served at an address other than the registered address ineffective against a registered institution. Other states allow branch service. Follow your state statute and your bank's legal-process policy. When unsure, escalate to counsel before freezing or rejecting the order.

Do we have to check for Social Security deposits before freezing?

For most orders, yes. Under 31 CFR Part 212, within two business days of receipt the bank checks whether the order carries a Notice of Right to Garnish Federal Benefits. If it does not, the bank reviews the account for directly deposited federal benefits in the two-month lookback period and protects that amount before freezing anything. Orders from courts, states, state agencies, municipalities and state child support agencies are covered.

Is a subpoena a levy?

No. A subpoena asks the bank to produce records or testimony. It does not authorize the bank to freeze or pay funds. Send it to your records or subpoena-compliance team, which handles privacy and reimbursement requirements, and leave the account alone unless a separate order instructs a freeze. Misrouting subpoenas into the garnishment queue is a common intake error.

What happens if we freeze the wrong customer's account?

The bank may face liability to the customer and regulatory criticism, and the funds have to be released promptly. Prevent it by matching on more than name: use SSN or TIN, address and any account number in the order. Document the match decision. If the order lacks enough information to identify the debtor, Part 212 lets the bank wait for that information before the review clock starts.