By Christopher C. Carr, Esq., Suburban Philadelphia Bankruptcy Lawyer
Your employer has just deposited your paycheck into your bank account and you write a check to pay your mortgage, “knowing” there is now plenty of money in there to cover it and nobody can get it. But the check comes back “NSF”. It bounced and for the life of you, you cannot figure out why! But then there’s that innocent little check you cashed a while back for $1.19 and now it’s coming back to haunt you. Read on to see what happened…
Well, while your wages may be safe from direct garnishment this may be cold comfort indeed because, your bank accounts are not protected in this way. In Pennsylvania, a bank account levy is allowed under Section 9607 – Title 13 – COMMERCIAL CODE only after judgment is awarded. But once armed with a judgment your creditors can take your entire bank account – if they can find it. If a legal judgment has been entered against you in Pennsylvania, the holder of that judgment can satisfy it in whole or in part with money in your bank accounts simply by obtaining a court order against your bank.
And how can creditors gain access to this information in this day and age of “privacy protection”? Well one way is through you via what is called “discovery in aid of execution”. That is, under the PA Rules of Civil Procedure you can be required by subpoena to submit to questioning under oath regarding your assets and accounts.
But most collectors cannot be bothered to go through proper legal channels…that costs legal time and money. Instead they will resort to various underhanded schemes to find your accounts. One of the most successful routines they use is to trick debtors into cashing small checks they send them, say, for $1.19 (see above). Accompanying the check will be a fake letter saying “we made an error in your account in your favor and so here’s $1.19 back”. When you cash the check the collector will see a copy of it in his bank statement and he can tell exactly where you do your banking. That is enough to allow him to get what is called a “Seizure Order” against that bank. You may never even figure out how he got you but for a mere $1.19 (which he just tacks back onto your account) he typically seizes several hundred dollars. (The typical collector’s commission is between 40-50% of every dollar he collects.) The lesson is simple – don’t cash small checks your creditors send you.
Here is another far more important lesson: If you get served with a debt complaint, you definitely want to get a lawyer involved right away not only because not only can he defend you against it (either with a bankruptcy filing or outside bankruptcy) but also because a creditor judgment (that’s the key word of this blog if you haven’t guessed) can ALSO result in a lien against your home which will have to be satisfied before you can sell, whether or not you later go bankrupt. See my blog on the complex topic of Liens.
Now back to the exciting conclusion of this blog: except for a few minor exceptions such as the Commonwealth’s statutory exemptions and payments received from Social Security, the entirety of all of your bank accounts may be subject to garnishment by a creditor who has obtained a judgment against you. And this applies to your hard earned wages as well, once they have been paid to you, as they become available to garnishment once they are on deposit in your personal checking account.It is important to recognize (i) that this is not a one shot deal, it can happen again and again until the debt is satisfied and (ii) that the one sure way to protect your bank accounts and the wages on deposit in them is to avail oneself of the automatic stay in bankruptcy to protect your assets. The stay is one really important reason why people in financial distress opt to seek the protection of the bankruptcy court!
If you live in the Suburban Philadelphia area, including the counties of Berks, Bucks, Chester, Delaware, Lancaster, or Montgomery, and are seeking a competent and compassionate bankruptcy lawyer to help you explore your options and find the optimum solution, please call Attorney Christopher C. Carr, MBA (Finance) at 610-380-7969 (Offices in Paoli and Coatesville) for a FREE DEBT RELIEF EVALUATION. Or visit my web site at westchesterbankruptcyattorney.org and fill out the contact sheet.
I also provide Mortgage Modification Services.
Other attorneys playing the bankruptcy alphabet game:
- Omaha and Lincoln, Nebraska Bankruptcy Attorney, Ryan D. Caldwell
- Bay Area Bankruptcy Lawyer Cathy Moran
- Northern Ohio Lawyer Bill Balena
- Jay Fleischman New York Bankruptcy Lawyer
©Christopher C. Carr, Attorney at Law, 2012, All Rights Reserved. See Disclaimers.