Connecticut law provides that a judgment creditor may apply for a financial institution execution (bank garnishment) when a judgment debtor defaults on an order of periodic payments entered by the court. When such a default occurs the creditor can attempt to execute on the whole unpaid debt. It is therefore prudent to know your customer’s bank.
The plaintiff’s attorney prepares and signs the bank execution application and mails it to the clerk of court together with the current application fee of $100.00. If the papers are in order the clerk will sign the execution and return the original to our offices. The cost of the application fee is added to the debt.
We then deliver the bank execution to the marshal who makes service upon various banks and/or credit unions (one at a time) to attempt to levy upon funds of the judgment debtor. Prior notice to the debtor is not required by law. The bank processes the application and if no account of the debtor exists, the bank mails the execution back to the marshal.
Unless a specific bank is known, this process can be somewhat of a fishing expedition. If the marshal locates a bank with an account of the debtor, funds in the account will be frozen on the day of service of the execution on the bank. The marshal is entitled to levy upon the unpaid amount of the judgment together with statutory post judgment interest (usually), the execution application fee and the marshal’s statutory fee (currently 15% of the debt).
A bank will also typically charge its customers between $50.00 and $100.00 when a legal execution has been served, as in a returned check charge. The execution attaches just on the funds that are in the account on the day of service. By way of example, if $200.00 is in the account on Thursday, those funds are attached if the marshal serves a $1,000.00 execution on the bank on Thursday. If an additional $200.00 (or $2000.00) is deposited on Friday the later deposited funds are not affected.
Therefore if a marshal executes on a $1,000.00 judgment (assuming enough funds are on hand) this garnishment may end up costing a judgment debtor in the neighborhood of $1,300.00. Our post judgment written communications with debtors advise them that they are better off paying the periodic judgment payments directly to this office as it is cheaper to keep the marshal out of the process of satisfying the debt.
The funds levied upon remain on hand with the bank while notice of the levy and an exemption claim form is sent to the debtor by the bank. If no claim for exemption is filed within fifteen (15) days of this notice then the bank is required to turn the money over to the marshal. The marshal will then deduct his fees and expenses and send the net recovery to this office.
If an exemption claim is filed by the debtor with her bank, the bank will continue to hold the funds and mail the claim to the court which will schedule an exemption hearing and mail notice. The debtor must appear at the hearing and prove their exemption with bank records, etc. The money attached remains frozen until a disposition notice is received by the bank from the court. Occasionally, appropriate compromises with the debtor are entered into at this time.
If the entire amount is recovered the marshal will deliver the funds to this office together with a return of service indicating the debt is “fully satisfied.” If the debt is only partially satisfied, another garnishment can be attempted, but very often a new payment plan is entered into with the debtor at this time. The debtor often “wakes up” as a result.
There is no limit to the number of bank garnishments that a judgment creditor can apply for each judgment debtor. After a partial garnishment if a debtor does not contact our office to make meaningful arrangements for payment of the balance of the debt another garnishment can be attempted.
Without specific knowledge of a judgment debtor’s bank, the marshal will go from bank to bank and serve the process one at a time. The process can take up six (6) months or more to play out. Information vendors can provide banking information to creditors for a fee, usually on a no-find no-fee basis, but still will charge if an account is located with only minimal funds or in an out of state bank for example.
If the first bank the marshal serves contains an account (with money) of the judgment debtor then the process can be relatively quick. If it so happens that the fourth bank has an account the process can take several months.
The process is also dependent on the bank’s efficient, accurate handling of these garnishments which is not at all guaranteed. (If a bank mishandles a garnishment or exemption claim, the law provides that they can be found liable for the debt and a Turnover Order entered.)
If a judgment debtor does his banking in an obscure credit union the marshal may not find any funds throughout this entire process. Therefore it is critical that creditors keep advised of their customer’s banking information.