One way a creditor can enforce a legal judgment against a debtor is to legally attach the judgment to the debtor’s bank account by means of a bank levy. This will either freeze the money in the account, making the funds inaccessible to the debtor, or result in an immediate withdrawal of funds to pay the creditor. South Carolina law permits creditors to execute bank levies against debtors, but exempts certain types of accounts and monies from seizure.
Exempt Property
South Carolina state statutes allow a creditor to seize the property of a debtor after winning a judgment, with certain restrictions. For instance, debtors who own their residence can protect their home from seizure by means of a homestead exemption. If a debtor does not have or use a homestead exemption, he can have up to $5,000 of cash deposits in a bank account exempted from seizure. This exemption is for any kind of cash deposit account, and the funds can be from any legal source.
Exemptions By Source
In addition to the blanket $5,000 exemption, money in a bank account may be exempt from levy actions depending on its source. Exempt sources include Social Security benefits; unemployment compensation benefits; local public assistance benefits; veteran's benefits; most disability benefits; and alimony or child support payments. Other exempted sources include crime victim's reparation law awards; court awards for bodily injury of the debtor, or bodily injury or wrongful death of a dependent of the debtor; and proceeds from a life insurance policy owned by someone who claimed the debtor as a dependent.
Exemptions By Account
Certain types of monetary accounts are also exempt from bank levies in South Carolina. These include individual retirement accounts, individual retirement annuities and accounts established as part of a trust, as defined by the Internal Revenue Code. Money in an account that is part of a pension plan qualified under the Employee Retirement Income Security Act of 1974 is also exempt. However, money deposited into such accounts solely to evade creditors will not be exempt.
Other Considerations
For a debtor who owns his residence, the South Carolina homestead exemption protects up to $100,000 of the property's value against a creditor's judgment. Although a debtor who takes the homestead exemption loses the blanket $5,000 bank account exemption, South Carolina law still allows up to $5,000 of additional exemptions for assets such as jewelry, tools or a vehicle. If the debtor does not use this exemption for such assets, she can instead use it toward protecting a bank account. All of these exemption amounts are subject to periodic increases to adjust for inflation.
