Oklahoma Bankers Association
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Governor signs garnishment bill

Thursday afternoon, Gov. Mary Fallin signed into law a measure that had become the OBA's major legislative effort in 2016. The bill, HB 3104, will save every member bank money, and it will do so every year.

The law goes into effect on Nov. 1 of this year. The process will now require a judgment creditor who has a garnishment summons served on your bank to do two things:

  1. The judgment creditor must have a “good faith” belief that your bank is indebted to or holds or controls money or other property belonging to the judgment debtor (your customer); an
  2. The judgment creditor must remit a $25 fee that must be delivered to your bank and accompany the garnishment summons. 

“I realize that the $25 fee is not sufficient to cover all of your potential costs,” OBA President Roger Beverage said.  “But we do believe this bill will eliminate most, if not all, of the existing 'shotgun' practices by a number of law firms.”

Beverage described these predatory practices as those where the lawyer serves a garnishment summons on a bank, thrift or credit union regardless of whether the lawyer believes or has any idea about whether the institution has any money or property belonging to the defendant. 

“This practice can involve banks located anywhere in the state,” Beverage said.  “Moreover, this practice never includes payment of the existing fee ($10) that's required. And the lawyers know banks aren't going to go to court for 10 bucks. 

“So – we attacked the two vulnerabilities in the existing process. A good faith belief that there are assets being held by your bank (which is not now required), and mandating up front a payment of $25 that must accompany the summons itself.  These amendments should enable real judgment creditors, not shysters, to work through this simple process.”

This practice has driven up the cost of garnishment compliance for a member bank which has no option except to respond to the summons. Today's process needed reform because:

  1. The bank incurs the expense of an employee researching the question of whether the bank has any accounts, money or other property belonging to the debtor and responding to the Court about the results of that search, regardless of whether there's any real evidence or belief that the bank has the debtor's property; and
  2. The lawyer knows the bank or other federally-insured financial institution will not sue the creditor's lawyer to recover the small ($10) fee, so it's easy to abuse this requirement and ignore it. 

As the result of a brief survey we ran earlier this spring, it looks like the average cost to comply with a garnishment summons demand for a member bank today is around $7,000.  We realize the costs for smaller banks will not be this much, but whatever those net costs may be, this measure should drastically reduce them.

In many instances, this ongoing savings will be sufficient to cover the cost of OBA membership.

Please call Roger Beverage at the OBA if you have any questions about the potential impact of this most recent and welcome development.

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