Now Banks Have One More Day
Copyright (c) 2014 Mark Shapiro
I'm a Judgment Broker, not an attorney, and this article is my opinion, please consult with an attorney if you need legal advice. A new law, 31 C.F.R. Section 212.5 (A Federal law) gives banks 2 full days to respond to a sheriff levy, instead of the previous same day response they were required to perform.
During the two days, the debtor has complete access to their account and can remove all the funds, if the bank lets them know about the levy before it becomes active.
Do banks inform their best customers about levy actions? Most judgment recovery specialists say yes, they have seen it happen. They say banks openly and regularly delay freezing an account until they notify their customers about the upcoming levy, so the debtor have a chance to withdraw funds before the bank freezes the bank account.
One way to look at the new law is the system is very well represented by judges at courts who make logical decisions based upon careful review of the facts of the case.
This law was very much needed. There's lots of inexperienced judgment recovery specialists who say: "I'll grab what I can, disrupt the debtor as much as possible, and it will be their problem". Although the protected funds identified in this CFR are, in certain situations, exempt without making a claim; which means that the debtor shouldn't need to do anything to avoid the levy, it does not always work that way.
This law was a really obvious fix which was needed to ensure such exempt funds weren't frozen (or taken), and that a bank would not incur liability for a reasonable delay in determination thereof.
Many bank levies go south due to legitimate exemptions. However, this legislation does not do anything to protect the rights of those who have a legitimate claim on funds held by bank without any such exemptions. It helps banks protect their customers.
If the funds aren't exempted, and they vanish before the 2 days are up, why shouldn't there be some kind of recourse. Why should the debtor's funds not be frozen during this period? That would assure both sides of an equitable result. The 31 C.F.R. Section 212.5 law protects one side without thinking of the other side's rights.
Another way to look at this law is it was written too broadly. The law offers balance to all, and is not perfect for anyone. When a bank warns their depositor, and the depositor withdraws the funds and later the bank reports to the sheriff there wasn't any funds when the levy hit, that's fraud.
Now banks get two days to mess up your levy. The law is unneeded legislation and is nonsense because it is not the bank's nor the government's concern. Under the previous law or 31 C.F.R. Section 212.5, the judgment debtor always had he right to object to a levy and if any of their of the funds turned out to be exempt, a judge could rule accordingly.
About the Author
Mark D. Shapiro - Judgment Referral Expert - http://www.JudgmentBuy.com - where Judgments go to get Recovered!
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