- A creditor must first serve the court papers to the financial institution which holds the accounts. The bank puts a "freeze" on the money and notifies the account holder. The debtor has a right to appeal. If a creditor also is the bank where a debtor holds checking and savings accounts, it may take funds to satisfy the debt without the debtor's consent and without obtaining a judgment. He may not, however, take any exempt funds.
- Certain funds are exempt frorm money judgments by federal law: Social Security income and disability, Social Security retirement, public assistance, veteran's benefits, workers' compensation, alimony, child support, and unemployment benefits. A creditor must leave a minimum amount for the debtor to pay for housing, food and medicine. State laws prevent creditors from taking all of the money and limit how much must remain in the account for the debtor's basic needs.
- When a creditor seizes checking and savings accounts in judgment, a debtor has no access to the funds. A bank must notify the account holder about the "freeze" within one business day and include a notification that some funds are exempt and that the account holder has a right to a hearing. It must include the court's address and a form to request a hearing. A debtor must respond promptly to the notice and inform the bank and the creditor's attorney about the exempt funds in his accounts. A creditor may not take any funds that belong to a joint account holder if he is not a party in judgment.
- A bank will release the funds to the account holder after the court's decision at the hearing. The debtor must present the proof of exempt funds, such as statements, paycheck stubs or letters, and calculate how much comes from exempt and nonexempt source. If a debtor fails to request a hearing, the bank may freeze his checking and savings accounts for up to 90 days, and a creditor will take the money up to the judgment balance.
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