When a creditor's debt collection attempts fail, he may resort to bank account garnishment to collect an outstanding loan balance. Before he can take the money from a debtor's bank account, he must make the appropriate steps to receive the court's permission to garnish. The bank in Tennessee that holds the debtor's accounts must also ensure compliance with the law when it receives a garnishment order.
How Garnishment Works
A creditor must file a lawsuit against a debtor before he can collect debt through garnishment. When the court grants him a judgment, he can request a writ of garnishment that allows him to take the money from the debtor's bank account. A creditor must present the court order to the bank that holds the debtor's accounts to start the garnishment process. The bank places a freeze on the debtor's account balances while it ensures compliance with the law and sends the funds to the creditor upon completing the procedure.
Bank Account Garnishment in Tennessee
Tennessee follows the federal laws for garnishment procedures. By law, a creditor cannot take any of the debtor's money that is exempt from collection. Exempt income includes Social Security, disability, veteran's benefits, unemployment and workers' compensation, public assistance, retirement benefits, private and public pensions, alimony, and child and spousal support. If a bank freezes accounts with exempt funds, an account holder should ask to lift the freeze. If a bank does not comply, an account holder has a right to request a court hearing. When the court decides that the funds are exempt, the bank must comply and release the funds.
As of March 2011, the U.S. Treasury requires all financial institutions to conduct a judgment debtor's account review upon receiving a garnishment order. A bank has two business days after receiving a garnishment order to conduct a two-month lookback review. If an account shows an exempt funds deposit, the bank must leave an available balance equal to that amount or the current balance, whichever is lower. A bank has three days after conducting the review to mail a notice to the account holder. The notice should explain what a garnishment is and state the protected and the frozen amounts in the account.
Property Exempt from Judgment Execution
According to Tennessee law, personal property, including bank account balances, may be exempt from garnishment. When a bank freezes bank accounts, a debtor can request a court hearing and request an exemption. If the court grants an exemption, the judge will order the bank to release the funds.