Legal Definitions - trustee process

Trustee process is a legal procedure that allows a creditor to seize money or property belonging to a debtor, but which is currently held by a third party. In this context, the third party is referred to as the "trustee" (even if they are not a trustee in the traditional sense of managing a trust). The process essentially allows the creditor to "attach" or "garnish" these assets directly from the third party, preventing them from being paid to the debtor and instead directing them towards satisfying the debt. It's a way for creditors to reach assets that are not in the debtor's immediate physical possession.

• Example 1: Bank Account Garnishment

  A credit card company (the creditor) has obtained a court judgment against a customer (the debtor) for unpaid bills. The customer has funds in a checking account at "City Bank." The credit card company can initiate a trustee process against City Bank.

  Explanation: In this scenario, City Bank acts as the "trustee" because it holds the debtor's money. The trustee process legally compels the bank to freeze and turn over the debtor's funds to the credit card company to satisfy the judgment, rather than allowing the debtor to withdraw or spend them.

• Example 2: Intercepting Payments Owed to a Debtor

  A freelance graphic designer (the debtor) owes a significant amount to a former business partner (the creditor) based on a court judgment. The graphic designer recently completed a large project for "Creative Marketing Solutions Inc." and is awaiting a payment of $7,500. The former business partner can use a trustee process against Creative Marketing Solutions Inc.

  Explanation: Creative Marketing Solutions Inc. is the "trustee" because it holds money that is rightfully owed to the debtor. Through the trustee process, the business partner can intercept the payment directly from Creative Marketing Solutions Inc., ensuring that the $7,500 goes towards satisfying the debt owed by the graphic designer, rather than being paid to the designer first.

• Example 3: Rent Payments

  A landlord (the debtor) has failed to pay a landscaping company (the creditor) for extensive work on their property, despite a court order. The landlord owns several rental units, and one of the tenants regularly pays $1,500 in monthly rent. The landscaping company could initiate a trustee process against that tenant.

  Explanation: The tenant, in this situation, acts as the "trustee" because they hold money (the rent payment) that is due to the debtor (the landlord). The trustee process would legally require the tenant to pay their rent directly to the landscaping company, rather than to the landlord, until the landscaping company's judgment is satisfied. This allows the creditor to access the debtor's income stream held by a third party.