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Help! $8300 taken out of checking accounts by collection agency/lawyer!

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  • Help! $8300 taken out of checking accounts by collection agency/lawyer!

    I'm in a daze right now...all of our money was literally taken and we were completely blindsided.

    I have some debt from back in 2006 that a collection agency/lawyer sued to collect on. I recall receiving paperwork that they filed for a Judgment Summary but never heard anything afterwards. On the contrary, I received a court form in January 2011 stating "Notice of Release of Garnishment" which said "Notice is nearby given that the Garnishee, Chase, is released from all future obligations as to the Writ of Garnishment against Defendant in this lawsuit".

    I did a name search on the County Recorder's website and found nothing related to me and the judgment or garnishment. Pulled my credit report and again, nothings up, so I thought the case must have been dismissed (especially given the "Notice of Release of Garnishment" letter).

    Today I log into my bank online and see $8300 missing out of two personal accounts. We also have a business account and that still has money in it.
    As if the $8300 gone isn't bad enough, $4000 of that was actually business funds (money we were holding for clients that gets auto-billed by Google on a monthly basis).

    I have no idea what is going to happen at this point. Is the money really literally gone? Can any kind of appeal or anything be filed with the court based on what I posted above?

  • #2
    First, contact your bank to determine if some sort of Writ or Garnishment Order was executed. The bank should be able to tell you who and under what authority. If the funds are commingled funds, that makes it extremely hard to determine what may or may not be protected by statute -- such as any exemptions for certain types of funds (like head of household earnings).

    If this is a real levy, then you need to find out who and which court. You may be able to appeal to the court. Typically, the bank (the Garnishee) holds the funds for so many days before turning it over to the garnisher.

    You have some phone calls to make in the morning.
    Chapter 7 (No Asset/Non-Consumer) Filed (Pro Se) 7/08 (converted from Chapter 13 - 2/10)
    Status: (Auto) Discharged and Closed! 5/10
    Visit My BKForum Blog: justbroke's Blog

    I am not an attorney. Any advice provided is not legal advice.


    • #3
      Thank you for the quick reply.

      I spoke with the bank earlier today and they did receive a "Writ of Garnishment o Money or Property and Summons (Non-Earning)" along with a lot of other paper work, all of which they were able to fax over to me. In total, it was 51 pages worth. The "Writ of Garnishment" is date stamped Sept 27 2012. Other paperwork, such as "Answer of Garnishee" is seems like it's something the bank was supposed to fill out and send to the court?

      I asked the bank how long the funds are held, and they said 120 days maximum. Within that time, they can be released back to me with notice from either the court or the Garnisher, or the funds can be released to the Garnisher...but I was not clear on that part, can they just "cash out" tomorrow now that there is a hold or is there a wait period for an appeal?

      I did put a call into an attorney and he said he will call me first thing in the morning. I don't know what hope there is...I'm hoping at a minimum we can prove that the second bank account was a business account (even though it wasn't technically setup as such but all transactions were business related and no money was every taken out or spent aside from electronic payment directly to Google).


      • #4
        Very interesting! It's a Writ of Garnishment for "non-earnings"! This means that they can't take your earned income. The "Garnishee" is the bank and they will hold the funds for some period of time. It could be based on how much the order is for. (Example, if it's for $12,000 and they only were able to get $8,300... they may wait to see if more funds come in.) I thought that Garnishees typically "held" the money for at least 30 days.

        You are going the right way by seeking an attorney. It will be interesting as to which court issued the order and which creditor was granted the write (was it Chase?). Your attorney will see if there is some exemption that s/he can use to have the money returned. If the funds are all "earned income" and you can prove it, the money will probably be returned to you. If you have no exemption or it gets really complex (commingled funds), it may require a hearing. I know in Florida, we can get an emergency hearing when they (Garnishers/Garnishees) go after earned income.
        Chapter 7 (No Asset/Non-Consumer) Filed (Pro Se) 7/08 (converted from Chapter 13 - 2/10)
        Status: (Auto) Discharged and Closed! 5/10
        Visit My BKForum Blog: justbroke's Blog

        I am not an attorney. Any advice provided is not legal advice.


        • #5
          What is normally classified as "earned income"? Paychecks?

          The order is for $14,xxx and they toold $8,300 as that's all that was available in the two personal accounts. The business account (which they didn't touch) has additional money in it.

          What do you mean by which court issued it? It was the North Valley Justice Court of the State of Arizona, Maricopa County. The Garnishee is in fact Chase (this part is confusing because as I mentioned, I have a court form dated Jan. 2011 that says "Notice of Release of Garnishment"..."Notice is nearby given that the Garnishee, Chase, is released from all future obligations as to the Writ of Garnishment against Defendant in this lawsuit").

          It's going to be a long night.


          • #6
            I found this related to "Non-Earnings Garnishments" in Arizona...

            Arizona’s non-earnings garnishment provisions are set forth in A.R.S. § 12-1570, et seq. Non-earnings garnishment is limited to (1) indebtedness owed to the judgment debtor by a garnishee for monies which are not earnings; (2) monies held by a garnishee on behalf of a judgment debtor; (3) personal property of a judgment debtor that is in the possession of a garnishee; and (4) shares and securities of a corporation or a proprietary interest in a corporation belonging to a judgment debtor, if the garnishee is a corporation. A.R.S. §12-1570.01.

            A non-earnings garnishment is one tool a creditor can use to collect a judgment.
            Is there anything there that may be helpful in trying to figure out this earnings thing? Also, is the business account safe or can they also go after that?


            • #7
              I can't tell what they can go after. They may not have attached the business account because you are using a different EIN/TIN (a business Tax ID rather than your personal one). While there was a Release of Garnishment earlier, the Garnisher could have re-filed. The release may have been due to an expiration of a time period or that the original garnishment order request was somehow invalid.

              You should try to get some rest and work with the attorney in the morning.
              Chapter 7 (No Asset/Non-Consumer) Filed (Pro Se) 7/08 (converted from Chapter 13 - 2/10)
              Status: (Auto) Discharged and Closed! 5/10
              Visit My BKForum Blog: justbroke's Blog

              I am not an attorney. Any advice provided is not legal advice.


              • #8

                Spoke with an attorney and they answered a lot of my questions however I have not filed/done anything yet as I'm still waiting on a few unanswered questions from the attorney.

                A few things I've learned so far...

                The bank has to send an Answer to Garnishment within 10 days back to the Garnisher and also a copy to me. Once that I receive a copy of the Answer, I have 10 days to request a hearing with the court to any objections. I can also file for a hearing before I receive the Answer. There is also mention of a 30 day grace period before the funds can be sent out to the Garnisher.

                About the 2nd bank account which I mentioned was used for business (even though it was opened as a personal account), the attorney said it is very likely those funds can be released back to me and that is something that would need to be presented at the court hearing.

                The attorney also said that if may be possible to file for bankruptcy which would put a hold on the garnishment process and possibly get all the funds back, but it has to be done before the funds are actually released to the Garnisher...once they "cash out", there is very little chance of getting any money back.


                • #9
                  Yes, once cashed-out (the funds are sent to the Garnisher), it's hard to get back. However, a Trustee in a bankruptcy proceeding could get them back for the Estate under the preference rules. As for getting it back through bankruptcy, you'd need exemptions to cover it, otherwise the Trustee still gets it.
                  Chapter 7 (No Asset/Non-Consumer) Filed (Pro Se) 7/08 (converted from Chapter 13 - 2/10)
                  Status: (Auto) Discharged and Closed! 5/10
                  Visit My BKForum Blog: justbroke's Blog

                  I am not an attorney. Any advice provided is not legal advice.


                  • #10
                    Originally posted by justbroke View Post
                    Yes, once cashed-out (the funds are sent to the Garnisher), it's hard to get back. However, a Trustee in a bankruptcy proceeding could get them back for the Estate under the preference rules. As for getting it back through bankruptcy, you'd need exemptions to cover it, otherwise the Trustee still gets it.
                    That is only the case under Chapter 7 right? If filing Chapter 13, then the trustee would not get any lump sum, but a payment over 36 months, correct?


                    • #11
                      In a Chapter 13, the Trustee may choose to recover it from you. It's an area that I have no experience with because I had no preferences in my Chapter 13.

                      If you're asking about "protecting" it in a Chapter 13, you could propose to pay that amount over the life of the Chapter 13. That's a nice feature of Chapter 13s... being able to keep property by paying at least that value to the unsecured creditors over the life of the Chapter 13. Now, what would be interesting, is if you could step into the Trustee's shoes in a Chapter 13 and do the preference recovery yourself (as debtor). (I did step into the shoes of my Chapter 13 Trustee on one occasion myself.)
                      Chapter 7 (No Asset/Non-Consumer) Filed (Pro Se) 7/08 (converted from Chapter 13 - 2/10)
                      Status: (Auto) Discharged and Closed! 5/10
                      Visit My BKForum Blog: justbroke's Blog

                      I am not an attorney. Any advice provided is not legal advice.


                      • #12
                        AZGuy23, my experience is: don't trust any accounts to be safe now. You must get all money out of all accounts ASAP, leaving no more than $150 in any one account (or any amount you are willing to lose) before another garnishment hits. They are allowed to garnish all but $150 each time. This applies to any account in your name or any other name on any Summary Judgement against you, such as a spouse. You will get no warning of a garnishment, only notification afterwards. Each single garnishment from each account requires a separate, single writ to be filed and served on the financial institution. In other words, this garnishment you're speaking of is independent of any other garnishment writs that may be filed. After the garnishment occurs, the bank is required to mail you a copy of the writ and how to appeal it. If you don't appeal it, you will lose the money to the creditor.

                        This happened to me with my business account due to a judgement on a personal debt, and it cost an additional $100 that the bank charged to perform the garnishment. I knew better but didn't do anything with my account balance until the garnishment occurred. You need to learn to operate with little money in your account to prevent this from happening again. As long as there is a balance owed on the judgment or until you file for bankruptcy, any judgement creditor can file for a garnishment at any time. The ONLY thing in your favor is the fact that, as I mentioned before, each single garnishment event has to have a separate writ filed with the court and served on one single unique account. This can be expensive for a creditor to do if they find several accounts of yours. However, if you're going to leave large balances in your accounts, they will probably spend the money to garnishment it over and over.

                        I now keep no more than $150 in my business account and virtually nothing in any personal account. When money hits my account, I remove it the same day. I cash all checks sent to me, so the only money hitting my account is credit card receipts. I now put the cash onto a prepaid debit card from US Bank, hoping that it will be hard for a creditor to find the account. I tried the Walmart Money Card, but they charge $3 for each deposit to the card, which can get expensive. US Bank charges only $3 per month even though I deposit to the card at a branch teller. The only advantage I still see for a Walmart card, is that they don't have an actual banking presence in Arizona, so finding the account is harder for a creditor. My wife cancelled her direct deposit and now cashes her paycheck, from which we get money orders to pay bills with.

                        I would recommend that you move your money out of any bank account, hold it, and put it on a prepaid debit card only when you need to pay someone. I don't know if you can do this with any Google payments - I'm not familiar with them, but at least with a debit card you can make an electronic payment to someone. Or mail them a cashiers check.

                        Also very important, by using cash, money orders, prepaid debit etc., be sure you keep all receipts for your expenditures so you can prove where your money goes for tax purposes and, more importantly for any bankruptcy filing. After you file a bankruptcy, I believe no more garnishments can be performed like this. You could then begin to use the accounts again with Trustee permission, but that's a whole other conversation.

                        Good luck.
                        Last edited by azdebtor; 10-23-2012, 05:25 AM.


                        • #13
                          Thank you for your time writing that lengthy reply, a lot of good information there.

                          I'm very surprised that they garnished you business account, the attorney I spoke with said they can't directly do that.
                          Is your business incorporated or a sole proprietorship? From the attorney, I understood that for them to garnish the business account, they would have to first take my share of the company and then they could go after the account but that there would be a court hearing on the business shares so I would know it was going on.

                          We have several credit cards with zero balance that we can use to continue conducting our business and for daily expenses so that should help there. I agree with you that it's better to not leave any money in the account until this is resolved.

                          Last night I took a few hours and went over all my credit and did a spreadsheet with how much I owe and when the last payment was made. Total came out to $75,000 and every is single account is past the statute of limitations so no one else can get a judgment. All the accounts are scheduled to fall of the credit report early next year but this judgment has to be dealt with because it can be renewed indefinitely.


                          • #14
                            I have nothing to add but I just want to say how sorry I am this happened to you. I can't imagine how you felt when you saw that money was gone.
                            Attorney Retained/Paid: 1-4-10
                            Online CCC-Completed & Cert Received: 1-8-10
                            Filed Chapter 7 1-18-10.
                            341 3-10-10 ~~~ Last Day to Object: 5-10-10


                            • #15

                              It definitely sounds like you are incorporated, so they have to come after you in your personal accounts. As you state, they have to work harder to get money from a corporate account, but your a** is hanging in the wind on any personal account. I would think that the failed Chase garnishment in the past was an attempt on your business account and was dismissed for the reasons stated by your attorney as to the procedure necessary to garnish a corporate account.

                              You will need to decide how to deal with the judgment since, as you said, it can be renewed, but if you have no wages and no money in personal accounts now they are stuck for awhile.


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