Levy
Candlefocus EditorWhen a levy is placed on someone, their non-exempt property is frozen, which means the person is no longer able to make any transactions with the property. Exempt property, such as pre-determined essentials, be allowed in certain cases. Properties that can be taken in a levy are both real- such as cash, cars, and houses- and intangible held by someone else, such as future wages. The IRS can collect income tax, Social Security and Medicare contributions, and federal nontax debts in this manner.
Levy is different from a lien, which is a claim or security for the debt, but does not take the property itself. A court order is needed for a private creditor to levy an individual's property. On the other hand, federal agencies such as the IRS do not require a court order. A levy is also distinct from a garnishment, in which a court orders an employer to withhold a portion of an individual’s salary to pay their creditor.
When a pendency of the payment of the levy, it is important that the individual attempts to negotiate with the IRS, or the creditor to resolve the debt. That being said, such negotiation may not occur, and a seizure of property is enforced. It is important to note that there are ways of defending yourself against a levy in the form of an appeal or paying the debt entirely. Overall, knowing the difference between a levy, lien, and garnishment is essential to defend oneself from their consequences.