We are currently revising our Garnishment Processing Operating Procedures in light of the new Garnishment requirements. We have seperate procedures for banks in 2 different states and are combining into 1 bank-wide procedure. We have a difference of opinion on proper processing procedures and I would like an opinion. Once processing unit debits the Garnished Funds from the account and holds those funds in the form of a cashiers check in a "pending file" until the notice of Pay or Release is received from the court. I disagree with that process and say the funds should be "held" (hard monetary hold of funds in the account" until the Court Order is received to "pay" the funds, then the account should be debited and funds remitted. Iterest accrual is affected, etc. if you debit immediately, not to mention other issues. Opinion?

My suggestion is that the depositary institution follow the instructions in the order; i.e. if the order says "hold" the funds, then that's what you do. As you indicate, some banks debit the account and either l) move the funds to an omnibus GL account or 2) issue a cashiers check.

Their stated rationale is that the hold might be overriden by an "empowered but ignorant" staff member. That's not an adequate reason as far as I'm concerned.

The bank is holding a court order with written instructions. It is supposed to be neutral and nothing it does should affect the rights of either party. Removing the funds from the account affects the rights of the debtor...