Garnishment workshop part two

Today's garnishment workshop, "Protecting Federal Benefits from Creditors and Defending against Garnishments and Set-offs" was a no-brainer for me to attend, given LAN's work on the issue over the past year. The panel included Johnson Tyler of South Brooklyn Legal Services, who gave advice to LAN attorneys based on his experience as lead counsel in Mayers v. New York Community Bank Corp., et al, in which SBLS sued three banks for freezing the completely exempt account of three plaintiffs. (the case survived the defendents' motion for SJ and is now in discovery). Also on the panel was Gerald McIntyre of the National Senior Citizens Law Center and Darrin Brown of AARP.

Essentially, the issue is this: certain federal benefits are exempt from creditors. Nevertheless, since about 80% of federal benefits are directly deposited into bank accounts by the US Treasury Department, creditors use state garnishment proceedings to freeze bank accounts, putting elderly and other marginalized populations at risk. A lot of the creditors are credit card companies and the debt is often medical. And, the federal government has set as a goal of 100% electronic direct deposit, i.e. no paper checks.

I'll attach a PDF of the outline when I return. Some bright spots are the fact that the feds have said that they will issue proposed REGULATIONS which will alleviate the problem. The buzz is that the feds will issue a bright line rule which says that banks HAVE to look and see if the creditor is trying to attach a protected (i.e. SSI, et al) account, and then protect 2X the benefit rate of that individual from the freeze. E.g., if an individual gets $630/month in SSI, $1260 would automatically be protected from freezing. The good thing about this would be the implicit cost of living adjustment worked in, as SSI and other benefits increase with a COLA every year.

Dave