California Garnishment Laws on Bank Accounts
Garnishment of bank accounts is called a bank levy. Section 700.010-700.200 of the California Code of Civil Procedure contains the laws on such levies. Specifically, Section 700.140 provides for levy upon a deposit account at a bank. According to the law, the party collecting from the account has to obtain a court judgment in its favor and notify the sheriff of the levy through the appropriate channels. The sheriff actually enforces the levy, receives the funds from the bank and disburses them to the creditor.
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Identification
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Garnishment, or levy, of a bank account can only occur after a judgment has been issued against the holder of the account. In California, this entitles the collecting party to a Writ of Execution, Form EJ-130. This document is a directive from the court to the sheriff to execute the levy as described therein. Only a sheriff or court marshal can execute a bank levy.
Function
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Unlike wages, for which state and federal laws limit the amount that can garnished, a bank account can be garnished up to the full amount of a debt or the entirety of the deposits. A bank levy can occur for collection of a debt or collection of a court judgment received in Small Claims or other civil courts. A levy can also be initiated by a local, state or federal government agency for collection of fines or unpaid taxes.
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Effects
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In addition to the Writ of Execution, some counties will require the collecting party to hire a process server to deliver a Notice of Levy, Form EJ-150, to the bank. The local sheriff will instruct you whether this is necessary. This provides instructions to the bank that includes the amount of the levy and the name of the debtor. Typically, the debtor is only notified of the levy once the levy is in force.
Features
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California Code of Civil Procedure Section 700.140(c) states that once the bank is notified of a levy, it is not allowed to honor any check or other form of withdrawal from the account while the levy remains in effect. Deposited funds that have not yet cleared to the account at the time the levy takes effect cannot be credited to the account for purposes of withdrawal while collection efforts are ongoing. The amount of the levy, or the total proceeds in the account, whichever is less, are paid to the sheriff. Once the payment is made, the levy is lifted.
Considerations
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Section 700.140 (d) actually protects the bank from liabilities incurred as a result of the levy. The bank is not liable for nonpayment of a check or other demand for payment, or for failure to honor any withdrawal request. Section 700.140 (e) exempts certain types of accounts from levy. The exempted accounts payable-on-death accounts, such as a Totten trust, for which the debtor is a named beneficiary or payee.
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References
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