New Jersey law permits judgment creditors to levy upon a judgment debtor’s personal property or debts due to the judgment debtor from third parties.[1] Typically, this involves a levy upon a bank account (although levies can be made upon commissions due, rents due, etc.).
“A levy pursuant to a writ of execution is the court officer’s method of taking control of property.”[2]
A writ of execution setting forth the name and location of the bank account to be levied upon is filed with the court. After the writ is processed by the court, it is issued to a court officer or sheriff, who then serves the execution upon the judgment debtor’s bank.
If a successful levy is made, the court officer or sheriff sends an affidavit of levy to the judgment creditor’s attorney setting forth the date and amount of the monies attached. The judgment debtor’s account is now “frozen” up to the amount levied upon; these funds are unavailable to the judgment debtor.
On the date the levy is made, the court officer levying on the account must mail a notice to the last known address of the person (or business entity) whose account was levied upon. This notice must state that a levy was made, describe exemptions from levy and how such exemptions may be claimed.[3]
After receiving a copy of the court officer’s affidavit of levy, a motion for a “turnover” order must be filed. The turnover motion seeks a court order directing the bank (or other third party) to turn over the monies levied upon to the court officer or sheriff. As one judge put it, “[t]he turnover proceeding is the mechanism by which courts … direct a bank holding the debtor’s funds to pay those funds over to creditors rather than to the debtor.”[4]
New Jersey Court Rules provide, however, that “no turnover of funds…may be made, in any case, until 20 days after the date of the levy and the court has received a copy of the properly completed notice to debtor.” [5]
Entry of the turnover order creates an obligation for the bank to turn the money over the levying creditor.
Once the court officer receives a filed copy of the court order, he or she recovers the monies from the bank (or other third party) and remits the same to the creditor or creditor’s attorney.
[1] N.J.S.A. §2A:17-63. This statute provides:
Order to garnishee to pay debt After a levy upon a debt due or accruing to the judgment debtor from a third person, herein called the garnishee, the court may upon notice to the garnishee and the judgment debtor, and if the garnishee admits the debt, direct the debt, to an amount not exceeding the sum sufficient to satisfy the execution, to be paid to the officer holding the execution or to the receiver appointed by the court, either in 1 payment or in installments as the court may deem just.
[2] Sylvan Equip. v. Washington & Son, Inc. 292 N.J. Super. 568, 573 (N.J. Super., 1995)
[3] NJ Court Rule 4:59-1(h)
[4] Judge Donald Steckroth in In re Flores, No. 10-34546, United States Bankruptcy Court (D.N.J. Jan. 6, 2011) citing N.J.S.A. §2A:17-63
[5] NJ Court Rule 4:59-1(h)
Richard S. Eichenbaum, P.C. 