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#1873582 - 11/22/13 04:10 PM Garnishment
VWgirl21 Offline
100 Club
Joined: Jan 2008
Posts: 199
The Bluegrass
The FDIC is onsite performing an exam of our deposit products. The examiner recommended that we amend our garnishment procedures to charge the bank's garnishment fee before paying the garnishment. What are other bank's doing?

TIA
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#1873603 - 11/22/13 04:25 PM Re: Garnishment VWgirl21
Elwood P. Dowd Offline
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Elwood P. Dowd
Joined: Aug 2001
Posts: 21,939
Next to Harvey
Kentucky law does not provide your bank with any priority for taking a fee prior to satisfying an attachment under state law. At a minimum, you are risking a contempt of court citation for $50 or $75? At the other end of the spectrum, you risk the possibility the court could find you liable for the entire amount of the judgment, not just the amount you failed to pay in.

Processing third party claims against customer funds is not an examination topic. Your examiner has no idea what he or she is talking about...
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#1873607 - 11/22/13 04:28 PM Re: Garnishment VWgirl21
VWgirl21 Offline
100 Club
Joined: Jan 2008
Posts: 199
The Bluegrass
Our examiner said there could be UDAAP considerations with the bank taking the fee after or not taking it because all the funds in the account went to pay the garnishment. That is why he suggested revising the procedures.
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#1873616 - 11/22/13 04:32 PM Re: Garnishment VWgirl21
Elwood P. Dowd Offline
10K Club
Elwood P. Dowd
Joined: Aug 2001
Posts: 21,939
Next to Harvey
Tell him about the state law issue then ask him to put it in the written report...
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In this world you must be oh so smart or oh so pleasant. Well, for years I was smart. I recommend pleasant.

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