Garnishee Orders Against Bank Accounts In Malaysia: A Guide
Updated: 6 days ago
In Malaysia, banks holding funds in a judgment debtor’s account are by far the most common target of a garnishee order under Order 49 of the Rules of Court 2012.
To a creditor, the appeal is obvious - why deal with a stubborn debtor when you can collect what is owed from another party who is much more likely to comply?
But as attractive as they sound in theory, there are key considerations and constraints creditors in Malaysia should understand before pursuing garnishee proceedings against a debtor’s bank account.
Here’s how we’ve broken it down:
the need to first obtain a court judgment
types of accounts that can and cannot be garnished
how much information is needed about a debtor’s account
the steps involved in applying for and obtaining a garnishee order
how banks behave as garnishees, and
our RM50,000 practical minimum recommendation
Of course, feel free to skip the reading and get in touch for a free case assessment.
Otherwise, let’s begin.
You need a separate initial court judgment
This is what will likely make most readers go ‘oh’ and consider other strategies!
A garnishee order is a type of execution proceeding, meaning you must first obtain a court judgment ordering the debtor to pay. Only then can you apply for a garnishee order, and even then usually only if the debtor continues to refuse payment.
The process generally looks like this:
A debt becomes due
The debtor fails to pay
The court grants judgment in your favour
The debtor (now known as a judgment debtor) still fails to pay
You initiate garnishee proceedings against them
That’s a lot of steps, and for smaller debts, the cost of obtaining a judgment - let alone a subsequent garnishee order - simply cannot be justified.
But say you’re at Step 6 - let’s look at garnishing your judgment debtor’s bank accounts.
Bank accounts that can be garnished
Generally speaking, Malaysian courts allow garnishee orders against money standing to the credit of the judgment debtor in a bank account, including:
current accounts
savings accounts
deposit accounts
certain fixed deposits
other bank-held funds belonging solely to the judgment debtor
Order 49 is drafted broadly enough to cover debts ‘due or accruing due’ to the judgment debtor, which is why deposit accounts can often be garnished even where the deposit has not yet matured.
What usually cannot be garnished
Not every account or source of funds can be attached as is, for example:
joint bank accounts
trust accounts
EPF savings
funds beneficially owned by another person
future receivables
As a rule, if ownership is uncertain or another person may have a claim to the funds, objections become much more likely.
Finding the debtor’s bank account
We cover this at length in our guide to finding debtor bank accounts, but the key point is that generally, creditors don’t need the debtor's exact account number or branch, but they do need to have evidence of which bank the accounts are in, such as:
previous payments received from the debtor's account
banking details provided by the debtor during the course of dealings
cheques, bank transfer records, or other payment documentation
contracts, invoices, correspondence, or other documents linking the debtor to the bank
This evidence is then provided to the courts to convince them that the bank holds funds for the judgment debtor, and we think it's a good seque into our favourite case study on how a dishonoured cheque was used to identify and garnish a bank account.
By the way, if you too are in this situation, here's our guide on how to handle dishonoured cheques as a creditor.
Can you garnish every bank in Malaysia?
For the sake of argument, say a creditor comes to us wanting to garnish every bank in Malaysia to find out all the bank accounts their debtor has, spray and pray style.
Our response would be that in theory it could be done, but the majority of banks will not hold money for the debtor and are likely to make us pay for their legal fees due to time wasted (see Stage 3 of the next section).
Even at a few thousand Ringgit per bank, you’re looking at a very expensive exercise.
This is why we identify banks before applying for a garnishee order instead of using it to locate bank accounts - that’s more of a job for a judgment debtor summons (JDS).
Applying for a garnishee order against a bank account
In simple terms, garnishee proceedings generally follow a three-stage process.
Stage 1: Ex parte application
The first step is filing an ex parte application supported by an affidavit.
The affidavit must typically:
identify the judgment obtained
state the outstanding judgment sum
identify the bank being named as garnishee
explain why the creditor believes the bank holds money for the judgment debtor
The application is made without notifying the debtor beforehand.
This is intentional. If advance notice were given, debtors could simply transfer their money elsewhere before the court has a chance to act.
Stage 2: Garnishee order to show cause
If the application succeeds, the court may issue a Garnishee Order to Show Cause, sometimes referred to as a Garnishee Order Nisi.
This order performs two crucial functions:
It freezes the money held by the bank at the time of service.
It requires the bank to attend court and explain what funds it holds for the debtor.
The order must then be served on both the bank and the judgment debtor before the hearing date.
Stage 3: Garnishee order absolute
At the hearing, the bank discloses whether it holds any funds belonging to the judgment debtor, and the debtor may also attend and raise objections.
If no valid objection succeeds, the court may grant a Garnishee Order Absolute, directing the bank to pay the creditor directly from the debtor's funds.
This is the final order that actually transfers the money.
Do banks try to stop garnishee orders?
Usually, no. If the debtor simply has money in a savings or current account, the bank will generally confirm that the money is there and release it to the creditor.
However, you shouldn’t think of banks as allies - they typically comply with court instructions and no more, and some responsibilities simply do not fall onto them.
Banks may contest if they have a claim over the funds
For example, if the money is in a flexi loan account, the bank may say that the money is needed to pay the debtor’s loan. If the bank objects, the matter may become contested.
Banks don’t need to volunteer debtor banking details
Unless specifically ordered by the court, banks are not required to help creditors trace the debtor’s assets, identify other accounts, or locate money transferred elsewhere.
Garnishee orders only capture funds available at the time
A garnishee order typically only captures funds already present in the account when the order is served. It does not automatically freeze future deposits or capture money subsequently paid into the account.
A practical minimum amount
We’ll sum up garnishee orders like we would most other enforcement methods: Highly effective under the right circumstances, but potentially cost and time-consuming.
The combined costs of a civil suit and subsequent garnishee proceeding can easily reach RM40,000 - RM50,000 and take months to years in exceptional cases.
As a result, while there is no legal minimum, we generally advise clients against garnishee proceedings for debts under RM50,000 as even full recovery rarely justifies the expense.
That doesn’t mean you should write off the debt! In our experience, a well-negotiated settlement with realistic payment terms is often far more effective.
That’s it from us, and we wish you a smooth recovery 🙂
Garnish your debtor’s bank accounts with Rule & Co.
With a decade in legal debt recovery, Rule & Co. has supported creditors through countless garnishee proceedings against debtor bank accounts. We guide you through the process from start to finish, helping you understand your options, navigate the court process, and take necessary steps towards recovering what you are owed.
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