One of the most frustrating situations some of my clients have encountered is a bank account garnishment.
These arise when a commercial creditor moves to enforce a judgment they have been awarded by the court and they can completely disrupt normal business activities for the debtor company. Once a garnishment has been placed with the bank, they are required to immediately freeze all related accounts.
Removing a garnishment is never a quick process.
Creditors typically require at least partial payment on their claim along with the assurance of additional payments for the full amount before they will agree to release a garnishment. Unfortunately, this often becomes a "catch 22" situation since payment may be impossible until the hold is lifted. The cases I have dealt with required some creative solutions.
Even after a creditor agrees to release a garnishment, the bank must be satisfied there will be no liability on their part before they unfreeze accounts. This often requires a review by their legal counsel and may involve some extra expense to the debtor company for related attorney's fees.
The best way to avoid a bank account hold is to communicate with creditors and arrange acceptable payment terms. Even if a judgment has already been awarded, most commercial creditors prefer voluntary payment within the debtor company's means.
