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Why Bank Levies Fail

By Mark Shapiro

Republish: EasyPublish™ Published: 08Mar2012 Word count: 1611 Viewed: 60 time(s) Get Free Content For Your Site

I'm not an attorney, I am a judgment expert. If you ever want a strategy to use or legal advice, please contact an attorney.

What if you are certain where a debtor banks, and later hire the Sheriff to garnish their checking account, and later the bank responds by writing "account closed" or "no funds"?

In certain states, bank levies are costly, including the expense of locating the bank account, paying a court, a process server, and the Sheriff.

Receiving an "account closed" or "no funds" letter may be frustrating. There are generally 6 causes for that result, in order of likelihood:

1) The debtor closed their bank account or is poor.

2) You, the Sheriff, or another person, made a mistake or a typographic mistake which made the garnishment to fail.

3) Either your information source, or you were wrong, and that debtor never opened a bank account with that bank, or at that branch.

4) The debtor is only an authorized signer on the bank account, and has no ownership of the money, or uses an AKA.

5) The bank has made an error.

6) The bank lied or is covering for the debtor.

Some common reasons are the debtor either closed their account, never had an account, uses an AKA name, or is only a signer on the account.

If the debtor is broke, bank garnish results will most likely not cover the costs.

At debtor exams, if you ask debtors who is their bank, some tell you lies. Even if you know for certain where a debtor banks, some debtor change banks as frequently as many folks change their socks.

Many laws which guard the public's banking privacy, including debtors. Very few ways of finding bank accounts are foolproof. Some bank locate businesses rely on old records, which aren't 100% accurate or current, particularly with clever or poor debtors.

When your debtor has an AKA, you may have to to get the court to approve an affidavit of identity, and provide proof which ties the debtor with the names they are using.

If the debtor owns a business as a DBA, to get your affidavit of identity court approved, you must get a certified copy of the filed fictitious name statement.

A bank account has an owner or owners. There can also be authorized signers, or benefactors who inherit the money when the owner(s) die.

Sometimes "no funds" means a debtor is just an authorized signer on the account. That means a debtor is merely linked to the account, with no rights to the funds which can be attached by a garnishment.

Sometimes people open a bank account for their kids, under The Uniform Transfers to Minors Act. Sometimes they use their kid's account as their personal checking account which is off-limits to creditors, as they don't have ownership of account.

Sometimes people are defrauded, when they add new authorized signers onto a bank account. Laws sometimes punish folks that make errors more than the crook that ripped them off.

As an example, a guy finds a new lady who starts living in his apartment. A short time later, he adds her as another authorized signer for his checking account. Then she deposits $12,000 in forged checks, and when the three-day hold is done, she takes out all the money, and moves to an unknown city.

After several weeks, the checks get bounced back as forgeries, and get charged back to the the account of the owner. Surprisingly, the account owner becomes responsible for repaying those returned checks.

That fraud who stole money and bounced checks isn't going to get charged and forced to repay, unless they are located, and the complaints get proven in court, and if she has money which may eventually be recovered.

Occasionally banks make errors. At least once a bank has tipped off, lied, or in some other way shielded the assets of the debtor.

When you're certain you know the correct bank for the debtor, and that funds were in the judgment debtor's account at the time of the garnishment; you could subpoena, schedule, and serve a debtor for a court examination.

A request for a subpoenaed production of documents is known in some courts as a Subpoena Duces Tecum (SDT). SDTs served on banks should be worded to include any and all accounts related in any way to the debtor.

You could subpoena requests for a production of documents, from both the debtor and their bank as a 3rd-party. From banks, you could request a copy of the documents served by the Sheriff.

One goal can be to have both the bank and the debtor in court at the same time to produce documents and answer questions. It's hard for 2 parties to tell lies precisely the same way.

You can ask for a year of records. You could find the records for accounts that "didn't". In California, and probably other states, when the debtor is a person, one has to serve them first with a "notice to the consumer".

When the debtor doesn't show up, you could continue attempting to enforce the judgment. When a bank doesn't show up, you may be able to sue them, if local laws (in California, CCP 1992) permit. When one are able to prove the bank had money in the name of the debtor when your garnishment was served, one could begin by writing a polite demand letter to the bank, politely demanding the balance in the judgment debtor's account on the garnishment date, up to the amount needed to satisfy the judgment. Include the proof you knew the bank account existed, the Sheriff's documentation, and the bank's memorandum of garnishee, that shows previous statement of "no accounts".

Banks might pay after getting a polite demand letter, other banks you will need to sue. In such circumstances, often the credit union or bank will settle your lawsuit before the trial.

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