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Summons, Subpoena, Garnishment: What do they mean to your credit union or business?

May 10, 2013

by Stephen J. Edwards, Esq.

It is possible that you may receive a number of legal documents during the course of running your business.  Some of those documents have similar names and can be very confusing.  They are also full of obscure legal terms.  The purpose of this article is to clear up some of that confusion.

SUBPOENA: A subpoena is a court order which requires a representative of the business to either appear in court to give testimony on a certain matter, or to produce certain documents.  Subpoenas are generally issued by courts and should be specifically directed to the business, or its officers.  The subpoena should contain the names of the plaintiff and defendant involved in the action, and should have the word “SUBPOENA” in some prominent place at the top or side of the document.  The business must comply with the terms of a subpoena or be subject to contempt of court.
Your credit union or business is under the jurisdiction of the federal government, New Jersey and any other states in which you have a branch office or significant presence.  You do not have to comply with a subpoena from a state where you do not do business.  Administrative agencies also have the authority under some laws to issue subpoenas.  In all cases, if you have any questions concerning the authority of the court or agency issuing the subpoena, consult your attorney.
With regard to credit unions, most subpoenas are issued in matrimonial actions where one spouse wants a share of whatever assets the other has at the credit union.  To avoid wasting your employees’ time it is recommended that the credit union call the attorney issuing the subpoena to determine exactly what is sought and suggest that a certified copy of the records requested be sent instead of having to make a personal appearance.

SUMMONS: A summons is often confused in the public’s mind with a subpoena.  A summons is also a court document but is served upon you only when you are a party to the litigation.  In other words someone is suing your business, and uses the summons, with a copy of a complaint attached, to advise you of that.  If you receive a NJ summons, you must file an answer within 35 days.  Consult with your attorney immediately.  The complaint may be covered by insurance.  If coverage exists, the insurance company will retain counsel to appear on your behalf.

WRIT OF EXECUTION (LEVY): A Writ of Execution is the unfortunate name given to the legal documents that the court issues to one of its officers to levy on (seize) assets.  It has nothing to do with killing someone.  If your credit union has accounts in the name of the person against whom a judgment has been entered, then you may be served with a Writ of Execution.  The creditor secures the writ from the court and it is served on the credit union by a deputy sheriff or a court officer.  The writ requires the credit union to freeze all money in the member’s account.  Do not give any money to the officer.  The creditor has to obtain an additional court order directing the credit union to turn over the money to the officer.  Any funds deposited in the account after the date when the officer serves the writ on the credit union are not subject to the writ and belong to the member.  If you are a business that owes money to one of your customers, then the same procedures apply to any of that money that is still in your possession.

IRS LEVY: The other popular form of levy is from the Internal Revenue Service.  The IRS levy contains language designed to scare you to death.  Don’t worry, they are not after you.  Once the levy is served, all funds at the business which belong to the member or the customer must be frozen for 21 days.  The business must release the funds to the IRS at the end of that period unless it receives a notice from the IRS that the lien has been released, or the holding period extended.  In the event your credit union has a pledge of shares, then you should contact the IRS office and advise them of that.  If the loan is in default, then they will probably let you retain the pledged shares.  The levy may be for more or less than the amount of the shares.  If more, forward what you have.  If less, send the amount demanded in the levy.

GARNISHMENT: This is a levy against the wages of one of your employees.  It will specify the percentage of money to be deducted each pay period; either 10% of the gross salary, or 25% of the net salary.  Net salary is basically the gross salary less the various tax deductions.  The levy documents provide a formula for calculating the net amount.  Remittances are made each pay period to the sheriff or to the court officer, until the total amount shown on the writ has been paid.  A garnishment is only against your employee’s wages, not any other accounts the employee may have at the business or credit union.

DISCLAIMER: The foregoing is provided for informational purposes only, and does not constitute legal advice. It is not a substitute for legal or professional advice. Any legal advice should be tailored to specific clients and their specific needs. No attorney-client relationship is created by any use of this website. You should not act on the information contained in any of the materials on this website without first consulting a competent attorney licensed to practice in your jurisdiction.

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