You asked about procedures allowing creditors to freeze a person's bank account to secure payment. The Office of Legislative Research is not authorized to give legal opinions and this report should not be considered as such.

SUMMARY

By law, a creditor may obtain a court-ordered judgment against someone who owes him money (debtor). The creditor may execute or serve the order on a bank where the debtor has an account. With a few exceptions, unless the debtor claims that money in the account is exempt, the bank must release funds, up to the amount of the judgment, to the creditor.

BANK AND CREDITOR OBLIGATIONS

Creditors cannot attach or seize exempt funds to satisfy a court judgment. However, the debtor-owner of such funds in a bank account must claim the exemption for it to apply. Creditors may ask a court clerk for an order to enforce the judgment that directs a bank to pay over funds in a debtor's account. Banks served with such orders must remove funds from the account up to the amount of the judgment and mail the account holder notice and a form he must return to the bank if he claims that any of the removed funds are exempt.

When the debtor claims an exemption, the bank must notify the Superior Court and continue to hold the funds until the earlier of 45 days or a court issues a disposition order for the disputed funds. Courts must schedule hearings and direct banks not to pay over funds they find are exempt; otherwise, they will authorize the bank to pay money from the account to the creditor.

If the debtor does not return the claim form to the bank within 15 days of the date of the mailing, the bank pays over the funds to the creditor on request.

EXEMPT FUNDS

State and federal law exempt some types of funds from execution by creditors. These include Social Security and other federal benefits, state welfare, child support, pensions, $ 268 per week in wages (40 times the minimum wage), and a $ 1,000 "wild card" exemption. Exempt funds retain their exempt status after they are deposited into a bank account. But because of the inability of banks to identify which funds are exempt, Connecticut law provides bank customers with a claim form procedure by which they can claim an exemption if an execution is levied on their account.

Public Act 01-196 protects $ 800 from direct execution when the account has received an electronic deposit of Social Security or veterans benefits in the past 30 days. On January 1, 2003, the protected amount will increase to $ 1,000 and will include electronic deposits made by the state's Bureau of Child Support Enforcement (PA 02-93).

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