Bank account garnishment is a legal technique used to recover money from people with substantial outstanding debts by issuing a court order requiring a bank to freeze a debtor’s account and withdraw sufficient funds to satisfy the legal judgment. Creditors generally use other means to recover funds first, but if a debtor is unemployed, the creditor can resort to bank account seizure. Any funds deposited in the debtor’s name may be subject to garnishment, with the exception of certain government benefits. Once a court order has forced a bank to withhold a debtor’s funds, the bank will notify the debtor that their funds are frozen under a bank account garnishment.
Bank account garnishment, also known as a bank lien, is a technique used to recover money from people with substantial outstanding debts. Garnishment occurs after a legal judgment occurs against the debtor, and is done by issuing a bank with a court order requiring them to freeze a debtor’s account or accounts, and withdraw sufficient funds to satisfy the legal judgment. If the debtor’s account does not contain enough money to satisfy the judgment, he or she will be responsible for the remaining balance.
Creditors generally use other means to recover funds first. Classically, creditors place a lien on a debtor’s property so that the property cannot be sold without paying the debt. Creditors can also use wage garnishment, in which a portion of an employee’s wages is withheld by court order each month until the debt is satisfied, to recover a debt. However, in case a debtor is unemployed, the creditor can resort to the bank account seizure.
Any funds deposited in the debtor’s name may be subject to garnishment, with the exception of certain government benefits. Consumer advocates often advise people to keep exempt funds separate to avoid confusion and make it easier to discuss a garnishment order. Accounts held jointly with a spouse are liable for garnishment, so it is wise to keep assets separate in a marriage where one spouse has outstanding debts, although accounts held jointly with non-spouses may be exempt.
Usually, no warning is given when a debtor is subject to a bank account garnishment, because the creditor does not want the debtor to withdraw funds before the garnishment order. If a recent court proceeding has resulted in a judgment against a debtor and he or she has no assets to pay the debt and is unemployed, it may be safe to assume that a bank account garnishment is in the near future. Debtors should also be aware that moving to a new state or transferring funds to a different bank will not allow them to evade garnishment, as creditors will use a skip trace to find all of the debtor’s assets and issue simultaneous bank liens in the event that assets are in multiple locations.
Once a court order has forced a bank to withhold a debtor’s funds, the bank will notify the debtor that their funds are frozen under a bank account garnishment. The debtor has the opportunity to appeal the garnishment or show that the funds are exempt, and that the funds are released to the debtor after 21 days. In the event that the debtor’s account has more funds than required by the order, the bank may freeze the entire account while it waits for the garnishment to be resolved, or may only place a partial hold on the funds.
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