New Jersey Banking Law Lawyer – Ins and Outs of Bank Levies
An effective method of recouping an outstanding debt is to place bank levies on the debtor’s bank account and garnish that money.
What is a Bank Levy?
A bank levy permits a creditor to freeze a debtor’s bank account to receive payment of a money judgment. When the account is frozen, a debtor can still deposit money, which could become subject to the levy, but cannot withdraw money. Generally, the creditor only freezes the amount owed; however, a New Jersey banking law lawyer has seen an entire account frozen because the debt exceeded the amount in the bank account.
How Do I Get Bank Levies?
Freezing a debtor’s bank account is extremely invasive and thus cannot be done without permission from the court. You must:
- Obtain a monetary judgment order from the court;
- Petition the court to place a levy on the bank account;
- File a Notice of Motion to Turn Over Funds.
The debtor has 10 days to challenge the bank levy and assert any exceptions or exemptions. A hearing will occur to determine whether any or all of the frozen money should be released to the creditor.
What Could Hinder Garnishment?
Jointly Owned Accounts. Generally, the law recognizes equal shares to money in a jointly owned bank account. Thus, a bank levy may only freeze half the funds if the co-owner is not the debtor. New Jersey further protects the non-debtor co-owner from having his or her contributions levied if that person could prove his or her net contributions to the account (e.g. pay stubs). N.J. Ann. Stat. §17:161-4. For example, if the non-debtor co-owner was the only one who contributed to the account and/or the debtor’s name was added to the account for convenience, then the entire account may be released to the non-debtor.
Exemptions. Certain benefits or money could also be exempt from a bank levy.
Federal law exempts the following benefits from being levied:
- Social security and supplemental security income (SSI)
- Federal, civil service, and railroad retirement benefits
- Veterans’ benefits
- Student loan disbursements and aid, and
- Federal Emergency Management Agency (FEMA) aid
New Jersey law also exempts:
- First $1,000 in your account
- State aid for dependent children
- Disability, workers’ compensation and retirement benefits (generally)
- Sickness insurance policies
If there are more than two months’ worth of deposits, then you can still seize the account and garnish money in excess of the two months’ deposits.
Contact a Skilled New Jersey Banking Law Lawyer for Assistance
Placing a levy on a bank has many and possibly complicated steps. Our knowledgeable and experienced New Jersey banking law lawyers with Snellings Law LLC will:
- Seek to obtain a money judgment
- Investigate the debtor’s bank accounts and other assets
- Petition the court to obtain a bank levy
- File a Notice of Motion to Turn Over Funds
- Defend and argue your right to garnishing the debtor’s bank account.