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Mom is in trouble - Bank account funds on hold!


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Hello. I stumbled on this forum while trying to research a legal issue for my mom. In a panic, I received a call today from my mom that her bank accounts had been cleared to $0 with a "debit hold". After calling the bank, she learned that this was a legal hold/garnishment and relates to a debt a collections law firm had been trying to hunt down from her. She has legal documents received in the mail (not served in person or via signature) that reference the attorney representing a Judgment Assignee  and requesting a lot of information (interrogatories in aid of execution/request for production in aid of execution/notice of serving discovery in aid of execution). Unfortunately, she only reached out to the law firm to seek more information and attempt to work out a payment plan, which they did not support. She disregard the other legal letters (which appear as court orders to me) for nearly 6 months which has led her to this point. She does not have any documentation of any judgment against her, never received notice of a motion to compel production, and was not notified of any asset/wage garnishment (at least yet). We live in Florida. 

Some questions I have:

- Is she stuck at this point because she didnt respond to the court letters? Or does she have any grounds to appeal or now address such requests? 

- Does the fact that she wasnt served in person relevant at all? 

- Is it possible the bank assets are just frozen temporarily until the debt is settled? She doesnt know the total judgment, or even if there was a judgment. 

- Arent there state laws that limit how much financial assets can be garnished? Can they take all of her funds? 

- Is the underlying debt still settleable? Or once there is a judgment, the amount owed to resolved is fixed?

Thanks in advance for any help you can provide!

 

  

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looks like there was a judgment from 2004 with a judgment lien that lapsed in 2009. My understanding is that judgments can be collected for up to 20 years in Florida. But does the lapsed judgment lien limit that, or is that only for real property and not bank funds and wages? 

Will she have an opportunity to challenge the garnishment writ? If so, what are some of the best positions to potentially stop/reverse the garnishment and reopen discussions for payment plans or other methods to satisfy the debt? 

If the account the money is being garnished from is a joint account with someone else, will that protect the money? Or only if it was set up as tenants in the entirety? 

Again, thanks for any guidance. I am scouring the internet trying to learn quickly to help her as much as possible. 

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6 hours ago, Son in FL said:

looks like there was a judgment from 2004 with a judgment lien that lapsed in 2009. My understanding is that judgments can be collected for up to 20 years in Florida. But does the lapsed judgment lien limit that, or is that only for real property and not bank funds and wages? 

Will she have an opportunity to challenge the garnishment writ? If so, what are some of the best positions to potentially stop/reverse the garnishment and reopen discussions for payment plans or other methods to satisfy the debt? 

If the account the money is being garnished from is a joint account with someone else, will that protect the money? Or only if it was set up as tenants in the entirety? 

Again, thanks for any guidance. I am scouring the internet trying to learn quickly to help her as much as possible. 

A lien on property is different from a bank levy.   Considering there’s already a judgment, you really need to get answers from an attorney.    I would go to the court where the judgment was rendered and see what documentation is available to show to an attorney, if necessary

Settlement can be agreed upon at any time.  The judgment creditor can agree to less than the full amount.

I don’t know if you’ve read this, but it’s from a FL attorney.

https://www.amcclurelaw.com/wage-bank-garnishment

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11 hours ago, Son in FL said:

Is she stuck at this point because she didnt respond to the court letters? Or does she have any grounds to appeal or now address such requests? 

Most likely she is stuck.  Based on your description it looks like what they were doing is called a debtor's exam.  That was her time to inform the court of what her assets were and to negotiate a payment plan or settlement.  Unfortunately she only had 30 days to appeal the verdict of the debt award once it was made.  When that lapsed appeal is no longer possible.  She is lucky she wasn't arrested for failure to appear.  If this really was a debtor's exam process some courts view not answering or showing up to court as a serous offense and issue bench warrants.

11 hours ago, Son in FL said:

Does the fact that she wasnt served in person relevant at all? 

No.  Few states require personal service.

11 hours ago, Son in FL said:

Is it possible the bank assets are just frozen temporarily until the debt is settled? She doesnt know the total judgment, or even if there was a judgment

You can find out how much the judgment was for by going to the clerks office and reviewing all the court documents or the paperwork they sent her.  It is in there somewhere.  Keep in mind that even if they were ordered $X amount in 2004 Florida allows for 4.25% post judgment interest to be added annually along with the fees required to collect on it like attorney and court fees.  It is very possible in all this time that the debt amount has ballooned considerably.  Using generic numbers if the total amount owed now is $7000 and she had $3k in her bank account they can hold the entire amount and seize it because the debt is partially paid.  If she had more in the account than the debt was they can only hold the amount in the levy order.

11 hours ago, Son in FL said:

Arent there state laws that limit how much financial assets can be garnished? Can they take all of her funds? 

For paychecks: yes.  Only 20% of a paycheck can be garnished.  For bank levy:  unless it is funds protected by law such as SSKI, SSI, pension etc.  the answer is no.  There is no limit on a bank levy.  If the amount of money in the account is less than or equal to the debt, yes they can take all the funds in the account.  The 20% limits is why some creditors go straight for bank levy because there are no limits if the funds are not from a protected source.  

11 hours ago, Son in FL said:

Is the underlying debt still settleable? Or once there is a judgment, the amount owed to resolved is fixed?

Depends on how much the total debt is now and how much they seized from her bank account.

10 hours ago, Son in FL said:

Will she have an opportunity to challenge the garnishment writ?

She would need a lawyer for that.  The time to challenge was when they sent her all that paperwork for 6 months.  Ignoring it was the worst thing she could have done.  She may have sealed her fate on this one but a lawyer would have the skill to know if there is an out or a loophole.

10 hours ago, Son in FL said:

If the account the money is being garnished from is a joint account with someone else, will that protect the money? Or only if it was set up as tenants in the entirety?

Not at all.  Under NO circumstance should she be on a joint account with ANYONE.  It puts their money at risk of being seized as well.  

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4 hours ago, BV80 said:

A lien on property is different from a bank levy.   Considering there’s already a judgment, you really need to get answers from an attorney.    I would go to the court where the judgment was rendered and see what documentation is available to show to an attorney, if necessary

Settlement can be agreed upon at any time.  The judgment creditor can agree to less than the full amount.

I don’t know if you’ve read this, but it’s from a FL attorney.

https://www.amcclurelaw.com/wage-bank-garnishment

Thank you! Informative article and I immediately spoke to Alex McClure. He was great, but unfortunately we dont have much of a case worth hiring an attorney for. His free consultation was fantastic and really gave us a clear picture of the potential outcomes. 

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1 hour ago, Clydesmom said:

Most likely she is stuck.  Based on your description it looks like what they were doing is called a debtor's exam.  That was her time to inform the court of what her assets were and to negotiate a payment plan or settlement.  Unfortunately she only had 30 days to appeal the verdict of the debt award once it was made.  When that lapsed appeal is no longer possible.  She is lucky she wasn't arrested for failure to appear.  If this really was a debtor's exam process some courts view not answering or showing up to court as a serous offense and issue bench warrants.

No.  Few states require personal service.

You can find out how much the judgment was for by going to the clerks office and reviewing all the court documents or the paperwork they sent her.  It is in there somewhere.  Keep in mind that even if they were ordered $X amount in 2004 Florida allows for 4.25% post judgment interest to be added annually along with the fees required to collect on it like attorney and court fees.  It is very possible in all this time that the debt amount has ballooned considerably.  Using generic numbers if the total amount owed now is $7000 and she had $3k in her bank account they can hold the entire amount and seize it because the debt is partially paid.  If she had more in the account than the debt was they can only hold the amount in the levy order.

For paychecks: yes.  Only 20% of a paycheck can be garnished.  For bank levy:  unless it is funds protected by law such as SSKI, SSI, pension etc.  the answer is no.  There is no limit on a bank levy.  If the amount of money in the account is less than or equal to the debt, yes they can take all the funds in the account.  The 20% limits is why some creditors go straight for bank levy because there are no limits if the funds are not from a protected source.  

Depends on how much the total debt is now and how much they seized from her bank account.

She would need a lawyer for that.  The time to challenge was when they sent her all that paperwork for 6 months.  Ignoring it was the worst thing she could have done.  She may have sealed her fate on this one but a lawyer would have the skill to know if there is an out or a loophole.

Not at all.  Under NO circumstance should she be on a joint account with ANYONE.  It puts their money at risk of being seized as well.  

Wow! Thank you for the prompt and thorough responses. I've learned basically what you've confirmed as well. I did contact the law firm who obtained the writ of garnishment. While the documents sent back in November were not court ordered, they were to start discovery and would have likely led to an engagement in settlement discussions had she responded. Since the money was frozen yesterday, the firm does not yet know how much money is in the account and they've yet to mail out the notice to my mom which starts the 20 day clock to respond/appeal or document any exemptions. While she likely doesnt have any exemptions beyond 1K personal property threshold, it seems our best chance to do anything is right now. She is going to make a hail mary attempt at settling in a lump sum for less than the total judgment (9k current total on 4k initial judgment due to 7% interest and legal fees). I dont have much of an expectation, but it is worth a shot.  

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So we are now trying to settle the matter, but are also planning for the funds to be taken by the creditor. If the creditor did not make collection efforts over the last 18 years and now have garnished the bank account, is there any leg to stand on to dispute the writ? To me, it almost seems like they waited forever to grow the claim with interest and fees (under 4K now over 9k). Similarly when she inquired about the legal paperwork received, she was told they would not accept her offer to go on a payment plan to settle. Any other common procedural missteps I should be aware of that might help her get unstuck here?  We received the notification from Bank for the garnishment and it is for nearly twice the amount of the actual claim owed after court costs/legal fees. Not sure how that’s possible. Any other help you can provide would be greatly appreciated! 

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Sad to say, but this is how some of these creditors operate.  
 

After getting a judgement they are entitled to a certain amount of interest.  When inflation was low, the interest made just sitting and letting the interest accumulate a very good investment.  Now that they are closer to the expiration of the judgment, they want to cash in. That may be shady, but it is legal.  

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11 hours ago, Son in FL said:

We received the notification from Bank for the garnishment and it is for nearly twice the amount of the actual claim owed after court costs/legal fees. Not sure how that’s possible. Any other help you can provide would be greatly appreciated! 

Every state allows for judgment interest.  After 18 years, it really adds up.  The FL statute is § 55.03.

Here is a link to the current rate table in your state

http://brevardclerk.us/civil-judgment-interest-rates

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12 hours ago, Son in FL said:

If the creditor did not make collection efforts over the last 18 years and now have garnished the bank account, is there any leg to stand on to dispute the writ?

Unfortunately no.  There is no legal requirement they attempt collection actively in all that time.  The only requirement is that the judgment be active when they do collect.

12 hours ago, Son in FL said:

Similarly when she inquired about the legal paperwork received, she was told they would not accept her offer to go on a payment plan to settle.

They are not required to offer a payment plan either.  The entire reason that a consumer ends up at this point is they defaulted in the first place, were sued and lost.  From the creditors standpoint there is already a history of not paying and they don't want to take the risk again.  14 years ago they probably would have accepted payments but once they levied the account there is no leverage to use to get them to take payments instead.

12 hours ago, Son in FL said:

We received the notification from Bank for the garnishment and it is for nearly twice the amount of the actual claim owed after court costs/legal fees. Not sure how that’s possible. Any other help you can provide would be greatly appreciated! 

14 years of post judgment interest can quickly balloon a claim to twice the original claim.  This is another reason a payment plan may not be helpful at all.  If the amount of the payment is so small that it doesn't even cover the interest being added on then absolutely no progress is ever made in paying off the actual judgment.  Too many consumers can't afford a payment more than $25-50 a month which is nothing compared to the debt typically.  Any payment to pay off a judgment would have to be several hundred dollars in order to deal with post judgment interest and the underlying claim.

The next thing I would do right now is pull copies of her reports directly from the bureaus and see what is on there.  She may have more than one of these out there and you don't want another to surface and bite her after cleaning up this one.

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On 7/1/2022 at 12:34 AM, Son in FL said:

looks like there was a judgment from 2004 with a judgment lien that lapsed in 2009. My understanding is that judgments can be collected for up to 20 years in Florida. But does the lapsed judgment lien limit that, or is that only for real property and not bank funds and wages? 

Will she have an opportunity to challenge the garnishment writ? If so, what are some of the best positions to potentially stop/reverse the garnishment and reopen discussions for payment plans or other methods to satisfy the debt? 

If the account the money is being garnished from is a joint account with someone else, will that protect the money? Or only if it was set up as tenants in the entirety? 

Again, thanks for any guidance. I am scouring the internet trying to learn quickly to help her as much as possible. 

The 5 year Statute of Limitations on Florida Judgments was reinterpreted by the Florida Supreme Court to really be 20 years. https://www.haber.law/florida-statute-of-limitations-on-a-judgment-lasts-20-years/

That's the bad news. The good news - if your dates are correct, the 20 year SOL expires in 2 years (2004 Judgment date plus 20 years is 2024, which is 2 years away. If mom can lay low for 2 more years she should be home free.

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4 hours ago, Flyingifr said:

The 5 year Statute of Limitations on Florida Judgments was reinterpreted by the Florida Supreme Court to really be 20 years. https://www.haber.law/florida-statute-of-limitations-on-a-judgment-lasts-20-years/

That's the bad news. The good news - if your dates are correct, the 20 year SOL expires in 2 years (2004 Judgment date plus 20 years is 2024, which is 2 years away. If mom can lay low for 2 more years she should be home free.

It is too late for mom to lay low. The son is here because they just levied her bank account.

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Thanks, all. Great guidance and dialogue here. At the end of the day, Mom wants to settle her debt but being cleared of every dollar to her name has been devastating. Ideally, we would get the garnishment dismissed and settle the debt for less than the monies frozen and/or paid over time.

 

I see two potential paths that I’d like your thoughts on:

Florida statutes say that we have 20 days to complete and return an exemption form outlining what funds are exempt from garnishment. There are some categories on the form that are pretty generic like “unemployment benefits” or “life insurance proceeds” without much detailed requirements/qualifications provided. I’ve done enough research to know there is a lot of complexity around what actually can be considered exempt, but we are not hiring an attorney. I also read that if you hand deliver this form to the plaintiff, they must respond within 8 business days as opposed to the regular 14 business days if the response is by mail. The law firm representing the plaintiff is local, so it is very feasible for us to hand deliver her response in hopes of starting an uncommon accelerated response timeline. This one seems clear in the statutes that if they don’t respond in time, the writ is dissolved. What are the chances of this procedural mishaps happening and actually releasing the frozen funds?
 

And as for the exemption claim, what are the risks associated with taking a long shot position on some of the possible exemptions in hopes of the plaintiff not appealing/moving to a hearing? I’m guessing they could start ringing up more legal fees for their review of the exemption, court appearance, etc? 
 

FWIW, we have offered a low ball lump sum settlement amount last week to try to leverage what little uncertainty exists between now and the 20 day period where we can claim any exemption. They do seem willing to negotiate, but I am not sure when they will actually learn of the account balances garnished. 
 

Any further guidance here? Many thanks. 

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does your mom own a home?

If she doesn't own a home or have equity in a home, the FL homestead protects $4,000 in property (or $250,000 in home equity), cash is property so you can used this exception if she doesn't own her home or plan to. 

https://www.trls.org/debtors-rights-in-florida-claiming-your-exemptions-from-judgments/

 

From above link

Your personal property
If you do not claim the homestead exemption described above, you have the right to claim a personal property exemption of up to $4,000 per person . Unless the judgment creditor has a lien or security interest in the property (for example, a furniture loan), you can protect up to $4,000 of your personal belongings. Note that this exemption does not apply to child or spousal support debts.

If you own more than $4,000 worth of personal property, you can choose which property to protect. The personal property can include money held in a bank account.

 

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19 hours ago, nobk4me said:

I'm not sure it was mentioned how old "Mom" is.  Does she get a pension or Social Security?  Those funds are exempt, for a limited amount of time.

Up to 2 months worth of SSDI, SSI, certain pensions are exempt from bank levy.  ANYTHING over 2 months worth of benefits is fair game.  ANY co-mingled non-exempt money is fair game.  It used to be once a levy hit an account the consumer being levied had to notify the bank the funds were exempt and fight for it.  That changed well over a decade ago and now banks are required to determine if the funds are exempt BEFORE enforcing the levy.  If the Mom's account was levied then the funds are not exempt.  I have yet to hear of one case where a bank got it wrong.  My educated guess is because the exempt funds are always ACH deposited and easy to identify compared to the paper check days.

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On 7/6/2022 at 3:49 PM, Clydesmom said:

It is too late for mom to lay low. The son is here because they just levied her bank account.

That bank account may not have enough $$$$  in it to pay in full. I was operating under that possibility with my comment, expecting a Round 2 and suggesting mom prepare for it now rather than after it hits.

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Thanks all. My mom is 62, so no SS or pension benefits yet. My understanding is the money in the account is just frozen and has not yet been paid out to the creditor. She just received the official notice of the writ of garnishment, of course right on the 3rd business day from the date the money was frozen. As expected, the notice gives her 20 days to submit a claim of exemption. Still seeking some thoughts on the following questions:

 

"I read that if you hand deliver the exemption form to the plaintiff, they must respond within 8 business days as opposed to the regular 14 business days if the response is by mail. The law firm representing the plaintiff is local, so it is very feasible for us to hand deliver her response in hopes of starting an uncommon accelerated response timeline. This one seems clear in the statutes that if they don’t respond in time, the writ is dissolved. What are the chances of this procedural mishaps happening and actually releasing the frozen funds?
 

And as for the exemption claim, what are the risks associated with taking a long shot position on some of the possible exemptions in hopes of the plaintiff not appealing/moving to a hearing? I’m guessing they could start ringing up more legal fees for their review of the exemption, court appearance, etc? 
 

Thanks!

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2 hours ago, Son in FL said:

I’m guessing they could start ringing up more legal fees for their review of the exemption, court appearance, etc? 

My understanding of Judgements, The Judgement you mother got specifies and amount (debt plus court cost plus attorney fees  maybe) and an interest rate. They cannot add attorney fees.  If your judgement was even $4000 in 2004 it has grown to $14,466.11 in 2022 dollars or $9,349.00 in 2004 dollars. 

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5 hours ago, Son in FL said:

"I read that if you hand deliver the exemption form to the plaintiff, they must respond within 8 business days as opposed to the regular 14 business days if the response is by mail. The law firm representing the plaintiff is local, so it is very feasible for us to hand deliver her response in hopes of starting an uncommon accelerated response timeline. This one seems clear in the statutes that if they don’t respond in time, the writ is dissolved. What are the chances of this procedural mishaps happening and actually releasing the frozen funds?

Given the amount she owes and they already have a good amount frozen in her bank account my educated guess is slim to none.  This is NOT the time to gamble on a long shot maneuver.

5 hours ago, Son in FL said:

And as for the exemption claim, what are the risks associated with taking a long shot position on some of the possible exemptions in hopes of the plaintiff not appealing/moving to a hearing? I’m guessing they could start ringing up more legal fees for their review of the exemption, court appearance, etc? 
 

Collecting on judgments does allow for asking for legal fees.  DO NOT assume it does not.  READ THE JUDGMENT.  It usually spells it out.  There are one pro and one con that I can think of vs. risks.  The pro is that the court gives her the exemption and she saves some or all of her money leaving her able to negotiate a payment plan or lump sum settlement.  The cons are the court could deny the exemption or the other possibility is that in order to consider the exemption that she undergo a full debtor's exam which could expose more assets to seizure.  

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2 hours ago, Clydesmom said:

Given the amount she owes and they already have a good amount frozen in her bank account my educated guess is slim to none.  This is NOT the time to gamble on a long shot maneuver.

Collecting on judgments does allow for asking for legal fees.  DO NOT assume it does not.  READ THE JUDGMENT.  It usually spells it out.  There are one pro and one con that I can think of vs. risks.  The pro is that the court gives her the exemption and she saves some or all of her money leaving her able to negotiate a payment plan or lump sum settlement.  The cons are the court could deny the exemption or the other possibility is that in order to consider the exemption that she undergo a full debtor's exam which could expose more assets to seizure.  

Thanks for the response. Very helpful. 

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20 hours ago, Son in FL said:

My mom is 62, so no SS or pension benefits yet

Maybe she should consider getting Social Security benefits now?  I think you can start collecting SS at age 62, although it will be a lesser amount than if she waited until 65.  But it would provide her with a source of income that creditors can't touch.

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2 hours ago, nobk4me said:

Maybe she should consider getting Social Security benefits now?  I think you can start collecting SS at age 62, although it will be a lesser amount than if she waited until 65.  But it would provide her with a source of income that creditors can't touch.

Watch out because there are tax consequences to taking SS early and the taxes might be higher than the judgement.

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