Friday, June 5, 2009

Non-Wage Garnishments

In April I wrote about a successful adversary case in which I obtained a non-dischargeable judgment on behalf of my client for approximately $130,000.00. Here is the original article. One commenter noted that the case had been handled perfectly up to that point, but the commenter wondered how I expected to collect that kind of money from someone who had just filed bankruptcy.

This particular defendant runs a small business as a sole proprietorship. After several weeks of fruitless negotiations regarding a monthly payment plan, I issued a non-wage garnishment to the bank at which the defendant keeps his "business" accounts. The bank froze nearly $14,000.00. Now I had this guy's attention. We eventually worked out an agreement to accept $10,000.00, release $4,000.00, and the defendant would pay $2,000.00 per month towards his remaining balance beginning July 1st.

Then, a couple of days later, I received a call from the bank. They wanted to "amend" their answer down to about $1,800.00. They apparently paid out on a $12,000.00 check after receiving my garnishment summons. I told them that I could not accept an "amended" answer. I had already filed my motion for turnover of the $14,000.00.

Hearing on that motion is scheduled for next Wednesday. While preparing for that hearing, I dusted off the old Code of Civil Procedure. The garnishment statute begins at 735 ILCS 5/12-701. Section 707 states that the judgment operates as a lien on the non-exempt property of the debtor "held by the garnishee at the time of service of the garnishment summons and remains a lien thereon pending the garnishment proceeding." The bank ignored the lien by cashing the $12,000.00 check.

The appropriate remedy is the entry of a judgment against the garnishee. Actually, all turnover orders are judgments against the bank according to Section 711. The appropriate language for a turnover order is that "judgment shall enter in favor of defendant, and against garnishee/respondent, for the use of plaintiff, in the amount of _____." On Wednesday, I plan to enter a standard turnover order. When the bank says that it can't pay, I will begin collections against the bank. The question becomes whether the bank will try to recoup that money from my defendant, which could jeopardize my monthly payment plan. I'll keep you posted.


Perry Mason said...

I like to enforce my judgments with a baseball bat. Compliance is 100%.

Michael W. Huseman said...

We finally have a suspect.