We believe you must continue to hold the funds until further order of the court — with the caveat that you may eventually have to remit them to the State Treasurer if they become abandoned.
The lien created by a garnishment summons does not expire after a set length of time, unlike the lien created by a citation to discover assets (which expires six months after the citation respondent’s first appearance, unless extended). The Illinois Code of Civil Procedure provides that a garnishment summons creates a lien on a judgment debtor’s property, and the lien remains “pending the garnishment proceedings.” Moreover, your bank, as garnishee, would be held liable for the amount of the garnished property if it “refuses or neglects to deliver property . . . when ordered by the court.”
Consequently, we believe you must continue to hold your customer’s funds until you are ordered to turn them over or you receive notice that the garnishment proceeding has been dismissed. Note that a garnishment proceeding cannot continue indefinitely — a garnishment proceeding cannot continue beyond the expiration of the underlying judgment, and most judgments expire after seven years unless revived.
Additionally, if there is no other activity in your customer’s account and the funds are presumed abandoned under the Illinois Revised Unclaimed Property Act (Illinois RUUPA), you may be required to report and remit them to the State Treasurer. The Illinois RUUPA also provides that a holder that delivers property to the State Treasurer in good faith and “substantially complies” with the Illinois RUUPA’s notice provisions “is relieved of all liability which thereafter may arise or be made in respect to the property to the extent of the value of the property so paid or delivered.” Consequently, if you follow the notice requirements of the Illinois RUUPA, we believe you would be shielded from liability with respect to garnished property that is remitted to the State Treasurer.
For resources related to our guidance, please see:
- Illinois Code of Civil Procedure, 735 ILCS 5/12-707(a) (“Duties of garnishee. (a) 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 or upon request by the officer holding a certified copy of the judgment for enforcement thereof against the judgment debtor, the garnishee may be attached and punished for contempt
- In re Pierport Development & Realty, Inc., 491 B.R. 544, 548 (Bankr. N.D. Ill. 2013) (“In Illinois, a lien arising from a Citation to Discover Assets expires six months after the citation respondent’s first personal appearance. Ill. S. Ct. R. 277(f). The court that entered judgment may also grant an extension of the six-month period.”)
- Ring v. Palmer, 309 Ill. App. 333, 337–38, 32 N.E.2d 956, 958 (4th Dist. 1941) (“Both an execution and the proceedings in garnishment derive their support from the main judgment. Under the decisions, if the main judgment fails, the rights acquired under the garnishment cease. . . . There is no provision in the statute that the commencement of a garnishment proceeding during the 7-year period shall operate to continue the life of such garnishment proceeding after the judgment on which it is based has become dormant by limitation.”)
- Illinois Code of Civil Procedure, 735 ILCS 5/12-108(a) (“Except as herein provided, no judgment shall be enforced after the expiration of 7 years from the time the same is rendered, except upon the revival of the same by a proceeding provided by Section 2-1601 of this Act; but real estate, levied upon within the 7 years, may be sold to enforce the judgment at any time within one year after the expiration of the 7 years. A judgment recovered in an action for damages for an injury described in Section 13-214.1 may be enforced at any time. Child support judgments, including those arising by operation of law, may be enforced at any time.”)
- Illinois RUUPA, 765 ILCS 1026/15-201 (“When property presumed abandoned. Subject to Section 15-210, the following property is presumed abandoned if it is unclaimed by the apparent owner during the period specified below: . . . (6) a demand, savings, or time deposit, 3 years after the later of maturity or the date of the last indication of interest in the property by the apparent owner, except for a deposit that is automatically renewable, 3 years after its initial date of maturity unless the apparent owner consented in a record on file with the holder to renewal at or about the time of the renewal . . . ”)
- Illinois RUUPA, 765 ILCS 1026/15-604(a) (“A holder that pays or delivers property to the administrator in good faith and substantially complies with Sections 15-501 and 15-502 is relieved of all liability which thereafter may arise or be made in respect to the property to the extent of the value of the property so paid or delivered.”)
- Illinois RUUPA, 765 ILCS 1026/15-604(a) (“On payment or delivery of property to the administrator under this Act, the administrator as agent for the State assumes custody and responsibility for safekeeping the property. A holder that pays or delivers property to the administrator in good faith and substantially complies with Sections 15-501 and 15-502 is relieved of all liability which thereafter may arise or be made in respect to the property to the extent of the value of the property so paid or delivered.”)