Last December, we received a citation to discover assets for a business customer, and we placed a hold on their account and sent our answer to the citation. At the time, there was less than $5 in the account. The court date for the citation was continued multiple times until a date in June, when a turnover order was entered for the amount provided in our answer. The turnover order indicates that any funds in excess of the amount indicated in the order are to be returned to the account holder, that the freeze on the account is lifted, and that the citation is dismissed. However, we recently discovered that beginning shortly after we sent our answer to the citation, the customer received multiple ACH deposits from vendors, now totaling an amount in the five figures. No funds have flowed out of the account due to the hold. Should we alert the creditor’s attorney of the additional funds, or do we have no further obligation since the citation has been dismissed? The creditor’s attorney never asked us to update our answer.

Jul 21, 2022

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We do not believe you are required to notify the creditor’s attorney of the additional funds in your customer’s account, and we would caution against disclosing the current account balance or continuing to impose a hold without an active citation in place.

A citation to discover assets acts as a lien on a judgment debtor’s personal property, including their bank accounts, and applies to property acquired by the debtor after the citation was served. However, when the citation proceeding is terminated, the lien also terminates.

Consequently, we do not believe your bank is under any obligation to disclose the current account balance to the creditor now that the citation has been dismissed, and we believe that doing so could violate the general prohibitions in Illinois and federal law on disclosing customer financial records to third parties.

If the creditor’s attorney had asked you to update your answer to the citation while the citation was pending, we believe you would have been required to do so. However, we are not aware of any affirmative duty imposed on third-party citation recipients to supplement or amend an answer to a citation when not asked to do so.

For resources related to our guidance, please see:

Illinois Code of Civil Procedure, 735 ILCS 5/2-1402(f)(1) (“The citation may prohibit the party to whom it is directed from making or allowing any transfer or other disposition of, or interfering with, any property not exempt from the enforcement of a judgment therefrom, a deduction order or garnishment, belonging to the judgment debtor or to which he or she may be entitled or which may thereafter be acquired by or become due to him or her, and from paying over or otherwise disposing of any moneys not so exempt which are due or to become due to the judgment debtor, until the further order of the court or the termination of the proceeding, whichever occurs first. . . .”)

In re Porayko, 705 F.3d 703, 704-05 (7th Cir. 2013) (“Section 5/2-1402(m) provides that a citation to discover assets creates a lien on all ‘nonexempt personal property, including money, choses in action, and effects of the judgment debtor’. Paragraph (1) adds that this includes ‘all personal property belonging to the judgment debtor in the possession or control of the judgment debtor or which may thereafter be acquired or come due to the judgment debtor’. Judge Hollis concluded that the value of a checking account is ‘personal property’ within the depositor's ‘control’. This conclusion has the support of the only state decision that has mentioned the subject.”)

Illinois Code of Civil Procedure, 735 ILCS 5/2-1402(m)(2) (“The judgment or balance due on the judgment becomes a lien when a citation is served in accordance with subsection (a) of this Section. The lien binds nonexempt personal property, including money, choses in action, and effects of the judgment debtor as follows: . . . (2) When the citation is directed against a third party, upon all personal property belonging to the judgment debtor in the possession or control of the third party or which thereafter may be acquired or come due the judgment debtor and comes into the possession or control of the third party to the time of the disposition of the citation. . . . The lien is effective for the period specified by Supreme Court Rule.”)

In re Concepts America, Inc., 621 B.R. 848, 854 (Bankr. N.D. Ill. 2020) (“Continuation of the citation proceeding is also a continuation of the citation lien. When the citation proceeding is terminated, the citation lien terminates.”)

Illinois Supreme Court Rule 277(f), Supplementary Proceeding (“When Proceeding Terminated. A proceeding under this rule continues until terminated by motion of the judgment creditor, order of the court, or satisfaction of the judgment, but terminates automatically 6 months from the date of (1) the respondent’s first personal appearance pursuant to the citation or (2) the respondent’s first personal appearance pursuant to subsequent process issued to enforce the citation, whichever is sooner. The court may, however, grant extensions beyond the 6 months, as justice may require. Orders for the payment of money continue in effect notwithstanding the termination of the proceedings until the judgment is satisfied or the court orders otherwise.”)

Illinois Banking Act, 205 ILCS 5/48.1(c) (“[A] bank may not disclose to any person, except to the customer or his duly authorized agent, any financial records or financial information . . . unless: . . . (2) the financial records are disclosed in response to a lawful subpoena, summons, warrant, citation to discover assets, or court order which meets the requirements of subsection (d) of this Section; . . .”)

Regulation P, 12 CFR 1016.15(a)(7)(ii) (Exception to privacy requirements when providing financial information “to comply with a properly authorized civil, criminal, or regulatory investigation, or subpoena or summons by Federal, state, or local authorities; . . .”)