New Law Aims To It Easier To Levy On Bank Accounts

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Last year, the Consumer Financial Services Committee of the Business Law Section of the California State Bar sponsored AB 2364 (Wagner). This bill, which took effect on Tuesday, is intended to simplify the process for levying on bank accounts for both creditors and banks.

Until now, a creditor was required to identify and serve separately each branch of a bank at which the debtor maintained an account to reach all of those deposits. Finding the right branch bank for service of levies, attachments and garnishments was not always easy and could be costly. Moreover, the debtor could frustrate these efforts by moving the money around. Despite these shortcomings, the rule was not without a reason. In the pre-digital age, bank records were kept at the branch level. I can remember when my bank would look up my account information on cards. This local record-keeping made it difficult for banks to identify all accounts of a particular customer.

AB 2364 changes all of this by requiring bank or financial institution with more than nine branch offices within California to designate one or more branches or offices for service of legal process within the state. These are referred to as “central locations”. Cal. Code Civ. Proc. § 684.115(a). Banks with fewer than nine branches may also make a designation if they choose.

Last year, the Department of Financial Institutions sent emails to to its licensees with a link to a secure site on which the designation could be input. The DFI hopes to have the designations posted on its Web site by January 15, 2013. If a financial institution fails to make a designation of central location(s), then each branch of that institution located in California is deemed to be a central location at which service of legal process may be made, and all of the institution’s branches or offices located within California are deemed to be a branch or office covered by central process. Cal. Code Civ. Proc. § 684.115(b). From the perspective of the financial institution, the designation of one or more central locations may help to reduce errors by branch staff through centralizing or concentrating these functions.