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JudgmentBuy Article:

Levying Out Of State Banks

What if you have a judgment and your judgment debtor's bank is in another state and has no branches (or does have branches) in the state where your court is?

One of many judgment articles: I am a judgment broker, not a lawyer, and this article is my opinion based on my experience, please consult with a lawyer if you need legal advice.

The answer depends mostly on whether the bank is state or federally chartered. Long ago, most banks were state chartered and funds were held at the branch level. This meant that a judgment creditor's levy had to be at a specific branch.

In the 1980s, the banking industry went through many changes, banks consolidations, and mergers. In 1994, U.S.C. 1811 meant that a creditor's bank levy within a state reached all accounts at every branch in that state.

In 2004, the department of the treasury issued regulation 12 C.F.R. 7.4007, which authorized national banks to honor levies nationwide.

Most courts have determined that a bank does not need to have physical custody of a depositor's money at a particular location. The newest laws let banks scan and then destroy, each deposited check. The account holders do not get their actual checks back; just a scanned copy, unless the account holders have requested returns of their actual checks, for an additional fee.

One expensive option for creditors, is to domesticate their judgment in the same state and county as the bank branch. Besides the expense, in most states the debtor would get notice of the domestication, and could move their funds before the levy could take place.

Laws and bank policies change often. However usually, when a debtor's bank has branches in the same state as the judgment, a creditor can levy any bank branch, or the bank's designated branch.

Usually, when there are no bank branches in the state where the judgment came from; much depends on whether the bank is state or nationally based, and the bank's policies.

Creditors need to find out if their judgment debtor's bank account can be levied out of state, with the bank and perhaps also their local Sheriff's department. Most Sheriffs will not serve levies out of state, except for government workers.

For those with a judgment, you might want to learn the bank your debtor uses; and find out the bank's policies, in case you ever need to utilize that information. Ask the bank when a walked-in deposit is credited to an account. It is important to know when the deposits are credited in full to your debtor's account. What you learn will be helpful if you plan a bank levy.


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