If a borrower where to have a judgment placed on their checking account, how would that money be taken out and what is done with the funds? This is very new to me and I have no idea how to respond to this.

Freeze the account for the amount of the judgment (or less if the balance is less).
Send the customer a letter to notify him of the freeze and the reason.
Wait a reasonable time.
Debit account to purchase cashier's check
Send to court.