Garnishment of Exempt Bank Accounts

Readers of this Blog know how to title their bank accounts so they are protected from judgment creditors. Suppose a married person owns his accounts as tenants by entireties or in the name of a separate legal entity, and the creditor nevertheless issues a writ of garnishment of the bank free temporarily freezing the money in these exempt accounts. What do you do ?

The first thing you should do is file a standard form with the court claiming your right to exempt this money. Better yet, have your lawyer file a motion to dissolve the garnishment. It is important to know that the Florida statutes entitle you to an “immediate” hearing on your motion to dissolve a garnishment. Be prepared to bring copies of bank statements, signature cards, or account agreements to show the judge.

Next, you and your attorney may consider taking more aggressive actions, especially if you believe your creditor knew the accounts should be exempt and garnished them anyway to harass you or extort a settlement. Florida common law allows a debtor to sue its creditor for the tort of wrongful garnishment if the creditor acted maliciously. A suit is proper after the garnishment is dissolved, and the wrongful garnishment must be brought as a new and separate action rather than a counterclaim. Courts have held that lack of probable cause to garnish an account implies malice. The leading case is Strickland v. Commerce Loan Company. The facts necessary to support a claim of wrongful garnishment may also support recovery on theory of abuse of process.

As a practical matter, if a debtor is surprised by garnishment of entireties account, wage accounts, or other exempt financial accounts the first step is to contact the creditors attorney, explain your exemption, and offer reasonable evidence. Give the creditor a chance to withdraw the garnishment. Most will do so if they see they have frozen an exempt account. If the creditor persists then a motion to dissolve the garnishment followed by a new lawsuit against the creditor may be appropriate.