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Illinois Supreme Court Order Limits Freezes on Judgment Debtor Bank Accounts

April 28, 2020

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As the need for consumer protections amidst the COVID-19 pandemic continues to grow, the Illinois Supreme Court is helping to provide those protections. In its latest move, the high court has ordered limits to freezes on personal bank accounts. The Order applies to garnishment and citation proceedings arising out of a money judgment where a summons or citation directed to a bank was served after March 8, 2020, or had an original return date between March 8, 2020, and the date of termination of the Governor’s disaster proclamations.

Illinois Supreme Court Order M.R. 30370 provides:

  1. A financial institution freezing more than $4,000 in a personal account of a judgment debtor must return at least $4,000 of the seized funds; or
  2. A financial institution freezing $4,000 or less in a personal account of a judgment debtor must release and return all funds.

The financial institution is also ordered to release the funds when directed to do so by counsel for the judgment debtor, whether the communication is by e-mail, U.S. mail, personal delivery, or third-party commercial carrier (e.g., FedEx). However, nothing prevents the parties to these proceedings from entering agreed orders concerning the funds.

The Order eliminates the need for a judgment debtor with a frozen personal account to file a motion claiming a “wildcard” exemption under 735 ILCS 5/12-705 and 735 ILCS 5/2-1402(b)(1) and thereby eliminates the need for a court order in the individual suit against the debtor to release the frozen funds. The Order does not affect the obligation of garnishees or citation respondents to file answers to garnishment summons or citations to discover assets, and it does not apply to wage deduction proceedings, citation proceedings directed at wages, or supplemental proceedings arising out of child support and spousal maintenance obligations.

Illinois Supreme Court Order M.R. 30370, which expires upon the termination of Executive Order 2020-25, is intended to provide much-needed relief for judgment debtors during the COVID-19 pandemic, but what will the impact be on creditors? As always, if you are a financial institution responding to garnishment or citation requests, or a consumer debt collection business seeking to enforce a judgment through such proceedings, please get sound legal counsel to discuss how Order M.R. 30370 might impact your business during these unprecedented times. 

For more information about Illinois Supreme Court Order M.R. 30370, please contact Heather Kramer (312-627-2299 or hkramer@dykema.com), Dawn Peacock (312-627-2483 or dpeacock@dykema.com), or your Dykema relationship attorney.

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As part of our service to you, we regularly compile short reports on new and interesting developments and the issues the developments raise. Please recognize that these reports do not constitute legal advice and that we do not attempt to cover all such developments. Rules of certain state supreme courts may consider this advertising and require us to advise you of such designation. Your comments are always welcome. © 2020 Dykema Gossett PLLC.