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Mary
The answer is confusing to most people. Here is how it works in most states:
The check is not garnishable. Thus, those same funds in a bank account are not subject to levy.
The problem rises when the creditor does not know the funds are exempt, the court approves the levy and the bank seizes the funds and turns them over to the creditor.
The debtor can get the money back but it usually takes about 60 days to jump through the hoops of filing a motion with the court, holding the hearing, issuing the refund order and the creditor putting the money back. During that 60 days, checks are bouncing all over the place and the debtor is trying to live without the funds.
You can stop the direct deposit. But, what then? If you deposit the check to pay bills, it might get caught in a levy and you've got the same problem.
In my opinion, the correct way to handle the problem is for the debtor to "file his exemptions" after the judgment. Sometimes this is done at the courthouse and sometimes by certified mail to the creditor. It just puts everyone on notice that the funds in the account are exempt. Judges typically don't like it when a creditor seizes funds they knew were exempt.
I can't tell you this process works in every state and I don't have any special knowledge about CO law. I suppose you could call the court clerk and ask about "filing exemptions to prevent a judgment levy". It could be called something different in other states but this should be a platform to launch the conversation.
In any event, it is not a thing to worry about until after the lawsuit has been filed and a judgment awarded.
Make sense?
Bill
beebee61 said:
Mary
The answer is confusing to most people. Here is how it works in most states:
The check is not garnishable. Thus, those same funds in a bank account are not subject to levy.
The problem rises when the creditor does not know the funds are exempt, the court approves the levy and the bank seizes the funds and turns them over to the creditor.
The debtor can get the money back but it usually takes about 60 days to jump through the hoops of filing a motion with the court, holding the hearing, issuing the refund order and the creditor putting the money back. During that 60 days, checks are bouncing all over the place and the debtor is trying to live without the funds.
You can stop the direct deposit. But, what then? If you deposit the check to pay bills, it might get caught in a levy and you've got the same problem.
In my opinion, the correct way to handle the problem is for the debtor to "file his exemptions" after the judgment. Sometimes this is done at the courthouse and sometimes by certified mail to the creditor. It just puts everyone on notice that the funds in the account are exempt. Judges typically don't like it when a creditor seizes funds they knew were exempt.
I can't tell you this process works in every state and I don't have any special knowledge about CO law. I suppose you could call the court clerk and ask about "filing exemptions to prevent a judgment levy". It could be called something different in other states but this should be a platform to launch the conversation.
In any event, it is not a thing to worry about until after the lawsuit has been filed and a judgment awarded.
Make sense?
Bill