I wanted to draw Credit Slips readers’ attention to a wonderful (front-page) feature a couple weekends ago (Sat. Apr. 28) by Ellen E. Schultz in the Wall Street Journal ($) regarding the above captioned. Yes, it’s another depressing but highly humanized account of elderly debtors having their bank accounts drained by savvy creditors with garnishment writs. But there’s an interesting twist regarding the garnishment of putatively exempt Social Security funds. The funds, while exempt of course, lose their exemption once deposited into a bank account, unless the account owner (here, the elderly debtor, presumably having independent knowledge of this arcane legal requirement) affirmatively files an exemption notice. Does the Social Security Administration help out by reminding of this legal hurdle, perhaps under its FAQ? Nope. How about the banks, out of a sense of customer service? In hand washing that would make even Pilate proud, most of them (with some commendable exceptions) say that’s not their place to get involved in the private treatment of customers, etc., etc. It’s an eye-opening account about the chasm between legal formalism and statutory text (‘exempt" social security in Congress’ intent) and the less savory, and less inspiring, world on the ground….
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3 responses to “Debt Collector v. Widow”
So a bank has enough information about a transaction that they can give me detailed breakdowns of how I spent money on my credit or debit card (Food, Entertainment, Automobile Repair, Electronics, etc) but they can’t tell if all of the deposits into a given account are from exempt funds? Hogwash, and Banco Popular proves it. I’m a moderately proficient computer programmer, and it would take me about 15 minutes to write a program that would analyze a customer’s statement and spit back how much money is “exempt” or not.
This sort of thing is particularly interesting to me, since Texas’ Constitution prohibits garnishment or seizure of wages to pay debts (excepting child support, taxes and bankruptcy proceedings). I’m actually surprised the junk debt buyers don’t go after Texas checking accounts more often, though I’m glad they don’t (yet).
I am again bewildered by the processes used in some states. In Ohio, when a bank garnishment is issued, the debtor is sent a form advising him of exemptions, along with a mail-in card to request a hearing. The explanation of exemptions is very readable, and the card is simple – you don’t even need to state the reason you want a hearing.
Of course, the attorney (the story likes to use the term “debt collector” but a lawyer files the garnishment) should, before filing, aactually have a clue as to what types of money go into the account.
But this raises another point. The article acted as if bank attachments fall from the sky, with little mention about the process of obtaining a judgment, not to mention all of the other pre-suit collection efforts. I did not really see where any of these people denied owing the money.
Yes, I see problems with the scenarios described. But it certainly was not an even-handed story.
Of the usurers, by the usurers, and for the usurers.