Why Bank Levies Fail
Imagine knowing where your judgment debtor’s bank is, paying a county Sheriff to serve the bank levy and getting a notification from the bank that there are no funds in the account or worse, it has closed. By the time you’ve located the bank account, paid the court, the Sheriff and/or a process server, you’ve invested a bit of time and money.
While getting a “no funds” or “account closed” letter can be discouraging, there are generally six reasons for this outcome, in order of probability:
- The judgment debtor is poor, or closed their bank account
- The Sheriff, you, or someone else, made a typographical error that triggered the levy to fail
- The judgment debtor never had a checking account at that bank or branch
- The judgment debtor utilizes an AKA, or is just an authorized signer on the savings account and doesn’t have ownership of the cash
- The bank made a mistake
- The bank is lying or is safeguarding the judgment debtor
The main reasons are the judgment debtor either never ever had an account, closed their account, is only a signer on the account, or uses an AKA name. When your judgment debtor is poor, bank levies will rarely cover the money you invested, and at judgment debtor examinations, judgment debtors may lie about where they bank.
Even when you are sure of a judgment debtor’s bank, some judgment debtors will change up their bank accounts often to avoid having their accounts levied. There are also laws that shield exclusive banking info, including for judgment debtors.
Many bank location services keep historic records that aren’t present or accurate, especially with evasive judgment debtors. If the judgment debtor makes use of an AKA, you should get an affidavit of identification accepted by the court, with proof that connects the judgment debtor with the names they currently using.
When the judgment debtor possesses a DBA business, you will need a certified copy of their fictitious name filing in order to obtain an affidavit of identification approved by the court. There could also be authorized signers, or benefactors that inherit the funds upon death of the owner(s).
In some cases, “no funds” indicates the judgment debtor is only a licensed signer on the bank account. That implies the judgment debtor is just linked to the account, and has no ownership of the money that could be eligible by a levy. Some individuals open savings account for their kids, under “The Uniform Transfers to Minors Act“. Some utilize this account as their personal checking account to keep it off limits to creditors.
If you are positive you know the right bank for the judgment debtor, and how much money was in the account at the time of the levy, you could request a subpoena and serve a judgment debtor for a debtor’s examination at the court. A subpoenaed request to provide proof is known in some courts as a Subpoena Duces Tecum (SDT Form).
SDTs served on banks must be worded to include any and all accounts associated with the judgment debtor. You can subpoena a request for documents from both the judgment debtor and their bank as a third-party, served by either the local Sheriff or a registered process server.
One goal can be to have both the bank and the judgment debtor in court at the same time to answer concerns and produce documented proof. Ask for a year’s worth of records or more, and you may even find records for an account that “did not exist”.
In California, and probably other states, if the judgment debtor is an individual, you’ll need to first serve them a “notice to levy”. If the judgment debtor does not show up, you’ll need to persevere. If the bank doesn’t show up, local laws may allow you to sue them.
If you could show the bank had funds in the name of the judgment debtor at the time your levy was served, you can begin by writing a demand letter to the bank, requesting the balance in the account on the levy date, up to the quantity needed to satisfy the judgment. Include the proof you knew the bank account existed, copies of the Sheriff’s paperwork, and the bank’s statement of garnishee that shows their previous declaration of “no accounts”.
Some banks may pay after getting a demand letter, other banks you will need to take legal action. In these situations, the bank or credit union is likely to settle a lawsuit prior to the trial if your information is accurate.
If you would like professional delivery of your bank levy documents, give us a call at (866) 754-0520 and we’ll answer any questions you may have and let you know exactly how long it will take and how much it will cost.