How A Creditor Can Garnish Bank Account Funds To Recover a Debt
A creditor can sue you in a court of law for unpaid debt. It can ask the court to issue an order that garnishes your bank account. A court order for garnishment means that the amount in your bank account is frozen until the time that the court decides with a final decision as to whether the money must be paid to the creditor. In certain states, there is a provision and a law that states that you are to be notified when judge issues a garnishment order for the money in your bank account. This notice also tells you what to do if you think that some of the money in your account is exempt from garnishment. However, sometimes you will not receive this notice when the judge issues order and the bank freezes you account.
What to do when you receive a notice of garnishment
If you believe that your account contains money and funds that are exempt from punishment such as federal benefits like Social Security benefits, unemployment benefits, veterans benefits etc., the first step that you should take is to get in touch with a competent attorney. It is also very important to follow the instructions and the deadlines mentioned in the notice for telling the judge that your money in your account is exempt from garnishment. You may inform the bank immediately that the money in your account is exempt and for what reasons. You can ask the bank to lift the freeze on your account immediately. However, under most circumstances, you will have to go to court and present suitable evidence to the judge such as receipt for federal benefits in order to have the order for garnishment revoked before the bank can once again unfreeze the funds in your account. Till then, the bank will keep the account and the funds frozen after receiving a garnishment order which will prevent you from accessing those funds.
Step to take when your bank account is frozen due to a garnishment order.
As already mentioned, the first step to take is to contact an attorney and take his legal counsel. If the bank freezes your account, this restricts you or anyone else from getting money out of your account. This means that any checks you wrote or any authorized electronic payments that have not been cleared yet may be returned unpaid. Your bank can also charge you a fee for having insufficient funds in your account when these payments bounce.
Therefore it can be important to immediately make arrangements to prevent outstanding checks from bouncing and to inform the people you have made the payments to that you are resolving a problem with the bank and they are not to present the check you have signed and given to them till you inform them further.
Steps to take to get the judge to prohibit creditors from obtaining exempt funds in your bank card
In order to convince the judge that the funds in your bank account are exempt under federal law, you and your attorney will need to get a hearing before the judge and present suitable documentation and proof showing that your bank account funds are exempt. We have already mentioned the commonly exempt funds such as Social Security benefits, unemployment benefit, veterans benefit etc. If the federal government provided your benefits through electronic deposit you should summit the proof showing these deposits and the source. If you received checks from the federal government which are deposited in your bank account you should submit bank deposit slips, statement from the agency that is the source of the exempt funds, bank account statement or other documents proving the same. Basically if you can show the judge that your bank account contains funds exempt under the federal law, the judge will not allow the creditor to obtain these funds to pay the judgment against you or to collect them as other fees and charges.
At this point you should also remember that certain kinds of debt obligations can be repaid using the exempt funds in your account such as child support and alimony.
If your bank has not already done so, you should show the order of the judge saying that the freeze on exempt funds should be lifted to the bank. You should also ask your bank to waive or refund any NSF or other fees resulting from the temporary freeze on your account.