Lien vs. Levy

by Charles Green ; Updated July 27, 2017
Is it a lien or is it a levy?

Your bank account or other property can have either a lien or a levy against it to satisfy a debt such as back taxes owed to the IRS or property taxes owed to your town.

Lien

A lien is a legal claim against property that can be put in place to make sure that a debt is paid. Banks put liens on homes that are lifted when the mortgage is paid off or if the home is sold.

Levy

If you owe taxes, the IRS or tax assessor can remove (levy) funds from your bank account to satisfy the debt. Garnisheeing of wages is another form of levy.

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Your Credit

Not every lien or levy gets reported to the credit bureaus, but if any are, it will drive down your credit score.

IRS

According to Kiplinger, the IRS may impose a levy on your bank account or wages or a lien on your property for back taxes. You can avoid disruption by working out an installment plan with the IRS.

Other Triggers

A lien or levy can be put in place if you are behind on child-support payments, owe money on a loan or owe medical bills.

Notice Required

State laws dictate how a lien or levy is put in place and require that you be notified in advance.

About the Author

Charles Green is a freelance writer in North Carolina who has been writing since 1992 and freelancing since 2002. His work appears in "435 South Magazine," "Wisconsin Golfer" and for various websites. Green earned a Bacheler of Science in business administration from Ramapo College of New Jersey.

Photo Credits

  • Image by Flickr.com, courtesy of Andrew Magill
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