Collect Your Court Judgment From Deposit Accounts

If you've gone to court and gotten a money judgment against someone (called the "judgment debtor"), and that person doesn't pay up, you can use various methods to collect the money. One of those methods is to take money from the judgment debtor's deposit accounts, including savings, checking, money market, and mutual fund accounts in banks, savings and loans, or credit unions. This procedure is called garnishing or levying the account. If you have information about the judgment debtor's account, it's one of the easiest methods to collect what you're owed.

Information Needed for a Bank Levy or Bank Account Garnishment

To seize the money in a bank account or the contents of a safe deposit box, you need the bank's name, the branch, the exact name on the account, and the account number. Sometimes you can get the job done without the account number, but your chances of collecting are better if you have it.

You can easily find the debtor's bank and account number if you have a copy of a check written by the debtor, which may be the case if you had a business relationship. You may also have this information on a credit application or other form the debtor completed.

Are the Funds Exempt?

If the debtor is an individual, not a business, some money in a deposit account might be "exempt" or protected from creditors (most states allow debtors to protect property from creditors using the same exemptions in and outside of bankruptcy). If you try to levy on an account containing exempt cash, in most instances, it is up to the debtor to object in court and prove that the money came from an exempt source. But few debtors file such a claim. Even if the debtor does, it's possible that the debtor has some exempt money but mixes it with non-exempt money (called comingling funds) and cannot prove that the money came from the exempt source.

Learn how deposit accounts can be protected and lost in bankruptcy.

Funds Usually Exempt from Collection

The following is a list of sources the debtor may claim as exempt in most states. However, the debtor can exempt these monies only if they are held in personal, not business, accounts.

• Wages. Under federal law, the debtor may exempt up to 75% of his or her wages. Some states allow debtors to exempt even more. For state wage garnishment limits, see Nolo's Wage Garnishment topic.
• Public benefits. The debtor may exempt these benefits: Social Security, veterans, welfare, unemployment, and workers' compensation benefits.
• Retirement plans. In most states, the debtor can exempt some or all of his or her public and private retirement benefits, including IRAs and Keoghs.
• Insurance proceeds. In most states, a debtor may exempt disability and health insurance benefits, matured (paid out) life insurance proceeds needed to support the debtor and the debtor's family, and the loan value of most life insurance policies.

When the Debtor Doesn't Need to Object

Sometimes, the bank is responsible for protecting exempt funds from levy. This is true if the judgment debtor receives protected federal benefits like Social Security, Supplemental Security Income, veterans benefits, and others through electronic deposit. The bank cannot freeze funds deposited within two months of the bank levy order. Learn more about protection from garnishment of veterans benefits.

What About Joint Accounts?

If you have a judgment against one spouse but not the other, and the married couple owns a joint bank account, whether you can levy all of the money in the account, only one-half of the money in the account, or none of the money in the account depends on state law. You'll find more on these rules in Bank Levies on Joint Accounts (Spouse) and Bank Levies on Joint Accounts (Nonspouse)

Further Resource

For a complete guide to collecting your money after winning a judgment, get Everybody's Guide to Small Claims Court, by Cara O'Neill (Nolo).