When a creditor obtains a money judgment against you they have various collection techniques. If they find out that you have a bank account or a credit union account they can proceed with a court order to seize the money.
What happens when I get a Bank garnishment and what can I do?
The creditor can serve your bank with a garnishment or as now more common a Citation to Discover Assets to a 3rd Party (your bank.) The citation has advantages for them and disadvantages for you. A garnishment can seize funds on hand of the date of service while a citation can seize funds both on hand and any other funds deposited after that date. For instance, if your employer direct deposits your paycheck a day or more after the citation, IT IS GONE unless you can claim an exemption.
AMOUNT THAT CAN BE FROZEN
When a bank garnishment is filed Illinois law requires double the amount of the judgment to be withheld. Thus if the judgment is $1,000 (for instance) the bank will withhold $2,000.
WHAT ARE YOUR OPTIONS
In Illinois, lawmakers have left you with few choices when your bank account is frozen. It frequently comes with little or no notice. Very often people don't even know that there has been a money judgment entered against them.
You have to make a quick decision. Once the garnishment hits you lose access to your own money.
- You can pay the full judgment (not likely);
- Offer a repayment plan to the creditor (not likely as they already have the money in your account);
- Grin and bear it (thinking it will be paid off soon but that may not be true);
- File a Chapter 7 or Chapter 13 Bankruptcy and stop the garnishment now so you can get your money and get your finances in order.
When a garnishment or citation hits your joint bank account the court presumes that the funds are yours. The presumption is rebuttable but is certainly a hassle and the money is frozen until a motion is presented in court with proof that the funds belong to the other account holder.
Illinois allows an exemption of $4,000. However, the burden falls upon you. You can claim the exemptions in one of two ways:
- Appear on the return date of the garnishment or citation with a notice claiming the exemption. (The court call is like a cattle call so you should be early and tell the Clerk of the Court you wish to be heard or better yet file your claim of exemptions before the court date.)
- The return date is in the future so this can cause you a great deal of problems holding up your money. You can go to the Clerk of Court where the garnishment or citation was filed and then file a motion to exert your exemptions.
If you miss the return date courts will seldom excuse your tardiness. You must be vigilant.
There is a second problem even if you exert your exemption. Can you use it a second time? Some judges say you can only exert it once while some allow it continually. How will your judge rule? The point is you may be in peril even if you successfully exert your exemptions.
Certain funds are neither subject to garnishment nor citation:
- Public Aid/Link/Snap benefits
- Social security benefits
- Unemployment benefits
- Worker's Compensation and Black Lung payments
- Support and alimony payments (to the extent necessary for support)
- Pensions (to the extent necessary for support)
- Veteran's benefits
- Funds from the sale of a home or a personal injury settlement (subject to allowable exemption limits)
Federal rules require banks to look back 60 days to find the source of the funds and so inform the creditor that certain deposits are not subject garnishment or citation. However, for various reasons bank often neglect their duties. The point is that you must be vigilant. If the bank is not following the rules you lose. You must either appear on the return date or file a motion to release the funds.
WHY BANKRUPTCY MAY BE THE GREAT OPTION FOR YOU
Probably the most effective way of protecting your money and lifting the freeze is through a Chapter 7 or Chapter 13 Bankruptcy.
A Chapter 7 is designed to get rid of all or most of your debts to start "fresh" and be on sound financial footing.
A Chapter 13 allows you a reasonable method of repaying your debts including cars, taxes, tickets, etc. The time period can be as long as 60 months, and the plan often reduces the payment to other debts.
Either a Chapter 7 or a Chapter 13 can be filed quickly and before the bank gives your money to the creditor and stops the GARNISHMENT for once and for all. Sometimes we can file immediately while you are still in our office.
Our law firm has helped thousands of good people like you to put an end to collections.
Robert J Adams & Associates has helped thousands of good people, just like you, save their home. Take advantage of our free and confidential consultation today.