More often than not, simply obtaining a money judgment against a debtor will not compel the debtor to voluntarily pay what is owed. Money judgments often remain unsatisfied; however, all is not lost. A Pennsylvania debt collection attorney can utilize various legal remedies to enforce the judgment. A common remedy for enforcing a judgment is through a bank account levy.
GARNISHMENT V. LEVY
Some people confuse the terms “garnishment” and “levy”. These terms are often interchangeable; however, there is a subtle difference. “Garnishment” is a term that means to “attach” whereas “Levy” is a term that means to “take”. For example, wage garnishment is a process for attaching a portion of someone’s wages from his or her paycheck for the payment of a money judgment until the money judgment is satisfied (paid in full). A levy, on the other hand, is often used in the context of a debtor’s bank accounts. To levy a bank account means to utilize a legal process to freeze the account and then subsequently compel the bank to release the funds from the account to fully or partially satisfy a judgment.
PENNSYLVANIA LAWS FOR FREEZING BANK ACCOUNTS
Before a Pennsylvania bank levy can happen, Pennsylvania law requires a series of procedural steps that a creditor, with the assistance of a collection attorney, must follow. First, the creditor must obtain a money judgment. After the judgment is obtained, the creditor must find a bank account that is in the name of the debtor. Once an account is located, the attorney must file and serve a Writ of Execution on the bank. The Writ of Execution is a legal document that adds the bank as a “garnishee” to the lawsuit. Adding the bank as a garnishee directs the bank to immediately place a freeze on the account. When the bank puts a freeze on the account, the debtor is not able to access the funds. The bank freeze remains in place until the creditor takes the necessary steps to force the bank to turn over the funds to the creditor.
WHAT HAPPENS IF THE BANK DOES NOT FREEZE THE BANK ACCOUNTS?
If the bank is properly served with a Writ of Execution, and the bank fails to freeze the debtor’s accounts, the bank may be liable for payment to the creditor for the amount of funds that were in the bank account that should have been subject to the freeze.
WHAT TYPES OF ACCOUNTS ARE SUBJECT TO BANK LEVY?
Business bank accounts and personal bank accounts (checking or savings) are subject to levy under Pennsylvania law.
ARE JOINT ACCOUNTS SUBJECT TO BANK LEVY?
Generally, a bank is only responsible for freezing bank accounts that are in the sole name of the debtor. Under Pennsylvania law, if a bank account is owned jointly between husband and wife, then a creditor is not permitted to levy those accounts and the bank will not freeze the joint account. If an account is owned jointly by a debtor and anyone else, the laws become murkier. In these instances, a debt collection attorney can advise the client of the client’s rights.
WILL THE BANK FREEZE ALL THE FUNDS IN THE ACCOUNT?
Pennsylvania law sets forth a list of exemptions. The bank is also entitled to a fee. Excluding the exempt funds and the bank fee, the bank will freeze all funds up to the amount of the judgment plus certain costs and post-judgment interest.
WHAT CAN THE DEBTOR DO WHEN THE DEBTOR’S ACCOUNT IS FROZEN?
When the bank places a freeze on an account, the debtor is notified. Usually, the debtor is made aware of the freeze prior to the notice if the debtor tries to withdraw money from an ATM or otherwise tries to access the account. Frozen bank accounts are almost always a surprise to the debtor and usually, the debtor or the debtor’s attorney immediately reaches out to the creditor’s attorney to try to resolve the matter. At this point, Pennsylvania law does not provide the debtor with much of a remedy so long as the money judgment is valid and the procedural steps were properly followed. If an exemption applies, the debtor will claim the exemption.
ADVANTAGES AND DISADVANTAGES OF A BANK LEVY
Bank account levies are often a successful way to satisfy a Pennsylvania money judgment. For debt collection attorneys, the procedural requirements are simple and Pennsylvania law favors the creditor. Bank levies are an efficient process because they do not take a lot of time and the creditor will receive a bank check as opposed to the seizure of other property such as a car or other personal property.
However, there are some pitfalls to this process. In order to successfully levy an account, a bank account must be discovered. This information is generally not available to the public. It is not advisable to simply “blanket” various banks within a geographic area and randomly send paperwork to every bank in the hope that one of them holds an account. Experienced Pennsylvania collection attorneys use various methods to discover assets of the debtor, including bank accounts. This is just one of the reasons why a good collection attorney is invaluable.
PENNSYLVANIA COLLECTION ATTORNEYS – THE MARTIN LAW FIRM, P.C.
Since 2001, The Martin Law Firm, P.C. has successfully obtained and enforced money judgments throughout the Commonwealth of Pennsylvania. We represent individuals and businesses for the collection of all types of debts. We handle matters on an hourly basis or contingency fee basis, depending on the situation. Call us today at 215-646-3980 to discuss your debt collection matter.