California creditors don't wait forever when a debt goes unpaid. State law allows a creditor to garnish, or levy, a debtor's bank account to withdraw funds to pay off a debt. This applies to any deposit account, such as checking or savings, that lets the owner deposit and withdraw money.
TL;DR (Too Long; Didn't Read)
In order for a creditor to begin garnishing your bank account, they must first obtain legal authorization to do so via a court judgment. Without this judgment, any garnishing actions are illegal.
Understanding Judgment and Writ
No matter how much you owe, the law doesn't let the creditor take it from your bank at will. First, she must obtain a court judgment. This is a legal order that affirms you do, indeed, owe that person money. Once a creditor has the judgment, she asks the court to issue a writ of execution, which the county sheriff delivers to the debtor's bank. The writ can target:
- the debtor's deposit accounts
- joint accounts
- the debtor's spouse's account if the creditor has an affidavit identifying the account as such
- an account the debtor or his spouse use under a fictitious business name
Working With Bank Accounts
A California bank levy only applies to funds in the deposit accounts at the time the sheriff serves the writ. At one time, according to California attorney Carl Starrett's website, the sheriff had to serve the writ on the exact branch holding the account. However, in 2013, the law changed so that banks with at least 10 branches must designate a central location for service. Once the creditor serves the writ at this central location, he can levy accounts located at any of the branches.
The Freeze Goes In
As soon as the bank receives the writ, it must freeze the debtor's account. From that moment, the debtor won't be able use the ATM to withdraw money. If she writes checks on the account, the bank won't honor them. This shouldn't come as a surprise because the sheriff must notify her the accounts are frozen. The account owner has 10 days to challenge the levy. During that time, he has the right to prove the account is exempt from garnishment. The bank cannot release any funds to the creditor during this 10-day period.
Claiming an Exemption
The debtor may be able to keep her money by filing a writ of exemption with the court. California law exempts certain types of deposits from a bank levy:
- Social Security payments can't be levied.
- Most money from welfare is immune to garnishment.
- Wages are usually 75 percent exempt, so if an account holds $2,400 in wages, the creditor can levy only $600.
When the debtor files for an exemption, the documents should include a detailed justification for the exemption and copies of bank statements that show the source of the bank deposits. If the creditor contests the exemption, a judge will make the final decision.
- Sacramento County Public Law Library: Collect Your Judgment from the Debtor's Bank Account
- California Legislative Information: California Code of Civil Procedure section 700.160 Writ of Levy
- California Legislative Information: California Code of Civil Procedure section 684.115 Manner of Service Generally
- Carl H. Starrett: Bank Levies Just Got Easier in California (Debtors Beware)
- Sacramento County Public Law Library: Exemptions from Enforcement of Judgments
- Sacramento County Public Law Library: Claim of Exemption: Bank Levy
- NOLO: Frozen Bank Accounts, Bank Levies, and Assignment Orders