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Objective information on small claims judgement collection

Bank Account Garnishment

Once you have gone to small claims court and won, one way to collect your judgment is by garnishing the judgment debtor’s bank account(s). Unfortunately, the process involves more than simply walking into the debtor’s bank with a copy of the judgment. This article will explain what a bank account garnishment is, when one might be a good idea, and the general steps to obtaining one.

What Is a Bank Account Garnishment?

A bank account garnishment, also called a bank levy, is a technique by which you can ask a court to order the judgment debtor’s bank to: 1) freeze the debtor’s bank account(s); 2) withdraw from such account(s) an amount sufficient to satisfy your judgment; and 3) deliver those funds to the court, which will then turn the money over to you. If the debtor's account does not contain enough money to satisfy the judgment, he or she will still be liable for the remaining balance.

Under What Circumstances Should I Seek a Bank Account Garnishment?

Traditionally, a bank account garnishment is not the first method judgment creditors use to collect their judgments. Other means, such as placing a judgment lien on the debtor's property so that the property cannot be sold without satisfying the judgment, and garnishing the debtor’s wages, are typically used first. However, there is generally no requirement that these methods be used before a bank account garnishment. In any event, bank account garnishments are especially useful in situations where a debtor is unemployed or does not own any real property.

How Do I Get a Bank Account Garnishment?

Please take note that the following is a general outline of the process to obtain a bank account garnishment. The process in your state will likely vary at least slightly. Please research your state’s laws and procedures before attempting to get a bank account garnishment.

If you don’t have the judgment debtor’s banking information, the first step is to gather that data. Because most debtors won’t exactly be forthcoming with their banking and asset information if you simply ask them for it, most jurisdictions provide the mechanism of “pattern” or “form” interrogatories to gather this information.

The form interrogatories will typically require the judgment debtor to provide information relating to his or her: 1) employment and any other sources of income; 2) bank, savings and loan, credit union and brokerage accounts; and 3) real and personal property. These interrogatories will also usually require the debtor to produce documents such as federal and state tax returns, as well as the debtor’s home deed or lease, driver’s license, most recent pay stub, and most recent bank statement(s). The form interrogatories provide information useful for any type of garnishment. Most jurisdictions authorize you to serve the pattern interrogatories on the judgment debtor as soon as the judgment is entered. The debtor will have a certain amount of time (usually 10-20 days) to respond to the interrogatories. If the debtor fails to respond, or fails to respond accurately, he or she runs the risk of being found in contempt of court.

Once you have the debtor’s banking information, the next steps are to fill out the correct garnishment form (often called a “writ” of garnishment), file the completed form in the court where the judgment was rendered, and serve the writ of garnishment on the bank. The writ may call the bank the “garnishee.” The garnishee is the person or entity that controls money or property owned by the judgment debtor or who owes money or property to the judgment debtor (such as an employer). The writ of garnishment will ask the bank several questions, including whether it controls any funds deposited by the debtor.

If the bank indicates that it does control funds deposited by the debtor, you must then serve the writ on the judgment debtor, along with information about how the debtor can claim that some or all of the money or property is “exempt” from garnishment. Each state has varying laws on what types of property are exempt. However, some common examples of exempt property are worker’s compensation benefits, unemployment benefits, group life insurance benefits, and social security benefits. Please research the laws in your jurisdiction to find out what property is exempt from garnishment.

If the debtor fails to claim an exemption, then the bank will be ordered to turn over the funds to the court, which will then release them to you. However, if the debtor claims that some or all of the funds in the account are exempt from garnishment, then the court will likely set a hearing to determine whether the debtor’s claims of exemption are true. If the court finds the bank account funds to be exempt, you will not be allowed to garnish them. On the other hand, if the court finds that the funds are not exempt, the bank will again be ordered to turn over the funds to the court, which will then release the funds to you.

Bank Account Garnishment Summary

A bank account garnishment can be an effective option for collecting a small claims debt. It allows you to force the judgment debtor’s bank to freeze the debtor’s accounts and use that money to help satisfy your judgment. As always, please keep in mind that each state has its own laws so you need to be familiar with the procedures in your state. The bank account garnishment process is not without its pitfalls and requires a fairly substantial investment of time. You may even be required to go through another court hearing. The best option for collecting your debt is almost always to maintain a relationship with the debtor so hopefully you can work out a payment plan that will work for both of you. This is especially true if the debtor is someone with whom you hope to maintain a working or friendly relationship in the future. Obtaining a bank account garnishment is an adversarial process and will likely bring any such relationship to an end.

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September 27, 2010

If you have been awarded a judgment, waited the 30 days required, sent a demand letter giving the debtor a time limit for paying his/her debt; what should you do if you still have no money? You know that the court can do little, but before you take steps to garnish wages or bank accounts, consider suggesting negotiation or mediation if the debtor gives any impression that they want to settle the matter.

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