Judgment debtor bank accounts are being garnished…..

If you have had a judgment entered against you as a result of a credit card lawsuit, beware of bank account garnishment. It seems that, based on some recent calls to our office, several of the more aggressive consumer debt collection law firms in the state of Texas have stepped up their post-judgment collection efforts. Bank account garnishments — perhaps the scariest thing for a debtor-Defendant who has had a Judgment entered against them — are being filed in our courts right now.

Garnishment is a fairly antiquated post-Judgment remedy for creditors. It is “a statutory proceeding whereby the property, money, or credits of a debtor in the possession of another are applied to the payment of the debt.” Bank One v. Sunbelt Sav., 824 S.W.2d 557, 558 (Tex. 1992). In reality, garnishment is a lawsuit against the holding bank, not the Judgment debtor, for the assets held on behalf of the debtor: the money in the account. The holding bank, called the garnishee, is formally served the Writ of Garnishment. The debtor must be served “as soon as practicable following the service of the writ.” One Court has said that a 15-day delay in serving notice to the debtor is insufficient. Lease Fin. Group, LLC v. Childers, 310 S.W.3d 120 (Tex. App. Fort Worth 2010).

A little more information about bank account garnishment:

*** Your bank account can be seized as soon as the Court renders Judgment against you and, in some very limited circumstances, before or simultaneously with the filing of a civil lawsuit.

***If your bank account is garnished and you have direct deposit whereby your wages are deposited into the account automatically, funds that are directly deposited into the account after the account is frozen in the garnishment action are frozen, also.

What are your options if this happens to you? There are a few things you can do:

(1) Consider filing bankruptcy. This is likely stop the garnishment in its tracks because of the powerful “automatic stay,” a Federal bankruptcy rule that provides that most creditors must cease all collection activity while the bankruptcy case is pending. The difficulty with filing for bankruptcy is that you will need to act very quickly to file.

(2) Attempt to settle the Judgment. Perhaps call the Judgment creditor and try to work it out before the funds are taken from the account. Many creditors will settle, even at this late stage, especially debt buyers.

(3) Fight the garnishment. You can contest the garnishment action, but it will be an uphill battle. Unless the garnishing creditor has failed to follow the exacting procedural notice or filing requirements or you have a clear exempt source from which the funds in the account derived, you can at least buy yourself some time while the garnishment is pending even if you ultimately have your account zeroed out.