Yes, we believe that the customer may sign its check over to your bank to make its loan payment.

The Illinois garnishment law creates a lien on the debtor customer’s property held by your bank as of the day you received the writ of garnishment. Illinois courts have interpreted this to mean that the only funds subject to garnishment are those that the garnishee (your bank) has in its possession on that date. Subsequent deposits would not be subject to garnishment. Consequently, we believe that a customer may sign a check over to your bank that the customer receives after its account has been frozen pursuant to the writ of garnishment.

Additionally, we note that the Illinois garnishment law permits garnishees to assert its offsetting claims in a written answer to the garnishment order. But in this situation, having your customer endorse the check —  rather than depositing it — may be a simpler approach.

For resources related to our guidance, please see:

• Illinois Garnishment Proceedings, 735 ILCS 5/12-707(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 Garnishment Proceedings, 735 ILCS 5/12-707(b) (“The garnishee shall file, on or before the return date, or within the further time that the court for cause may allow, a written answer under oath to the interrogatories, setting forth as of the date of service of the garnishment summons any indebtedness due or to become due to the judgment debtor and any other property in his, her or its possession, custody or control belonging to the judgment debtor or in which the judgment debtor has an interest. . . .”)

• In re Marriage of Eberhardt, 900 N.E.2d 319, 331 (Ill. App. 1st Dist. 2008) (“Under section 12–707 of the Code (735 ILCS 5/12–707(a) (West 2006)), a judgment or the balance due on a judgment becomes a lien on the property held by the garnishee at the time of the service of the garnishment summons and remains a lien on the property pending a garnishment proceeding . . . Here, a lien attached to Stephen’s First Midwest personal accounts when the garnishment summons was served on January 2, 2007. Stephen’s business accounts, including deposits after the date of service, were not subject to the lien.”)

• Zucker v. U. S. Computer Corp., 408 N.E.2d 41, 46 (Ill. App. 3d Dist. 1980) (“Section 7 of the Garnishment Act . . . provides that indebtedness is to be measured as of the date of service of the garnishment summons, which in this case was November 16. Because the bank was not aware of final settlement by the payor bank at that time, there was no indebtedness for garnishment purposes.”)

• Illinois Garnishment Proceedings, 735 ILCS 5/12-708 (“The garnishee is entitled to assert against the indebtedness due to the judgment debtor offsetting claims against either or both the judgment creditor and the judgment debtor, whether due at the time of service of the garnishment summons or thereafter to become due and whether liquidated or unliquidated . . . .”)

• Maplehurst Farms, Inc. v. Greater Rockford Energy & Technology Co., 521 N.E.2d 1270, 1273 (Ill. App. 2d Dist. 1988) (“The fact that this temporary lien has attached in favor of the judgment creditor does not prevent the garnishee or other adverse claimants from asserting an interest in the subject property. The Bank did not lose its right to claim a setoff by failing to assert that right in its original answer to the garnishment interrogatories.”)