Garnishment of Debtor’s Bank Account by Judgment Creditor did Not Extinguish Debtor’s Interest in Account; Debtor Could Recover Funds under 522(f)

Garnishment of Debtor’s Bank Account by Judgment Creditor did Not Extinguish Debtor’s Interest in Account; Debtor Could Recover Funds under 522(f)

Creditor obtained a judgment against the Debtor in state court on April 7, 2017 in the amount of $85,203.00 in damages, plus $30,000.00 in attorney’s fees. Thereafter, Creditor filed a request with the state court for issuance of a garnishment summons and writ of execution on the judgment. On October 25, 2017, the writ of and the garnishment summons were issued. The summons was directed to BB&T as garnishee. On October 31, 2017 the garnishment summons was served on BB&T by the sheriff and the Debtor’s bank account was garnished.

The garnishment summons carried a return date of November 21, 2017 at 8:45 a.m. and the return date was continued by the state court to February 12, 2018 at 11:00 a.m. On that date at 10:53 a.m., the Debtor filed his voluntary petition for relief under Chapter 13 of Title 11 of the United States Code, 11 U.S.C. §§ 1301 et seq., before BB&T was ordered to turnover to Creditor or the state court the sum held in partial satisfaction of the judgment. The same day, the Debtor filed a Motion to Quash Garnishment of his BB&T bank accounts. The Court entered its standard Order Staying Levy or Garnishment on February 13, 2018. The Debtor filed the balance of his schedules and Chapter 13 Plan on February 26, 2018, which show that the Debtor exempted $1,431.08 held in his BB&T accounts under state law, by setting out his claim of exemption on Schedule C. The Debtor’s Chapter 13 Plan contains a motion to avoid Creditor’s judicial lien as impairing his exemption pursuant to 11 U.S.C. § 522(f).

The issue in this case is whether the garnishment by Creditor extinguished the interest of the Debtor thwarting his efforts to recoup the garnished bank account funds under § 522(f).

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