We currently have funds sitting in a separate, non-wage garnishment account. Since we received the garnishment notice, back in 2002, we have never received a turnover order, the customer has closed all of its accounts, and as far as we know, the creditor no longer exists. How long should we maintain the garnishment account?

We believe your institution should have reported the segregated garnishment funds to the Illinois State Treasurer as unclaimed property after five years of inactivity, and since it has not, it should do so now. Two different Illinois laws appear to be in conflict here, but we think the stronger argument is that you should comply with the unclaimed property law’s requirements, rather than continuing to hold the funds after more than five years of inactivity.

The Uniform Disposition of Unclaimed Property Act (the “Act”) requires financial institutions to report deposit accounts and remit them to the State Treasurer after five years of inactivity. While there are exceptions to this requirement in the Act, none of them apply in this case.

However, the Illinois Code of Civil Procedure (the “Code”) requires a garnishee (such as your bank) to retain “property in his or her possession, custody or control belonging to the judgment debtor or in which the judgment debtor has any interest.” The judgment becomes a lien on the property and “remains a lien . . . pending the garnishment proceedings.” Moreover, the Code holds a garnishee liable for the amount of the garnished property if it “refuses or neglects to deliver property in his or her possession when ordered by the court . . . .”

While the creditor entity may no longer exist, there remains a possibility that it does, or that it has a successor entity that exists, or that it sold its interest in the judgment to a successor-in-interest. While Illinois law provides that a judgment may be enforced up to seven years from the date it was entered, it also provides that the judgment may be revived “in the seventh year after its entry, or in the seventh year after its last revival, or at any other time within 20 years after its entry.” In other words, a judgment can remain valid and out there for a very long time, and it is within the realm of possibility that someone still could show up at your bank’s doors with a turnover order for the funds, leaving open the question as to whether the bank would remain liable for “refusing or neglecting” to hand over the funds. We are not aware of any Illinois court decisions that address this scenario against the backdrop of the unclaimed property statute.

Nevertheless, in our view, the more prudent course of action would be to comply with the unclaimed property statute, since it clearly requires remittance of the funds to the State Treasurer and does not provide an exception for this scenario.

For resources related to our guidance, please see:

Uniform Disposition of Unclaimed Property Act, 765 ILCS 1025/2(a) [Repealed effective 1/1/18] (Property held by financial organizations is presumed to be abandoned after five years have passed without any account activity. Account activities include deposits or withdrawals, correspondence in writing from the customer concerning the deposit, and more.)

Illinois Code of Civil Procedure, 735 ILCS 5/12-707 (“To the extent of the amount due upon the judgment and costs, the garnishee shall hold, subject to the order of the court, any non-exempt indebtedness or other non-exempt property in his or her possession, custody or control belonging to the judgment debtor or in which the judgment debtor has any interest. The judgment or balance due thereon becomes a lien on the indebtedness and other property held by the garnishee at the time of the service of garnishment summons and remains a lien thereon pending the garnishment proceeding.”)

Illinois Code of Civil Procedure, 735 ILCS 5/12-715 (“If a garnishee refuses or neglects to deliver property in his or her possession when ordered by the court . . . the garnishee may be attached and punished for contempt; or the court may enter judgment against the garnishee for the value of the property or the amount due upon the judgment and costs, whichever is the lesser, and have same enforced against the garnishee.”)

Illinois Code of Civil Procedure, 735 ILCS 5/2-1602(a) (“A judgment may be revived by filing a petition to revive the judgment in the seventh year after its entry, or in the seventh year after its last revival, or in the twentieth year after its entry, or at any other time within 20 years after its entry if the judgment becomes dormant.”)