Under Indiana law, once a bank obtains a money judgment against a former customer, it may proceed to collect on this judgment by freezing accounts at other banks.
The procedure to obtain the freeze is to file a motion with the court to obtain the judge’s signature on an order freezing the deposit account. The freeze can be obtained without notice to the other side, to avoid a last minute withdrawal of funds by the former customer.
As soon as the other bank receives the court’s order to freeze the account, the depository institution is required to place an immediate hold on any account in which the former customer has an interest. Even if the customer’s legal name is not on the account, if the bank has information that the funds in the account are owned, in whole or in part, by the former customer, then the depository institution is obligated to freeze the funds.
Pursuant to Indiana law, the freeze will last until the earlier of 90 days from the date of the freeze, or the date on which the court schedules a hearing to determine the parties’ rights to the funds. Once the hearing is held, the court can order that the held funds be paid over to the bank holding the money judgment.
Author: Lori Young (bio)
Phone: 812.452.3560
email: lyoung@bamberger.com