Stop Bill Collectors!

What is the Exempt Income Protection Act ?

andalellc — Tue, 24 Apr 2012 21:54:21 +0000

The Exempt Income Protection Act (EIPA) became law in New York on January 1, 2009. The law protects your bank account for creditors if it contains subsistence funds. Subsistence funds include some earned income, pensions and government benefits. EIPA prevents you from having your bank account frozen to pay private debts, like consumer loans and credit cards.

How much money in my account is exempt from creditors?

Under The Exempt Income Protection Act, your bank account should not be frozen if your bank account balance is less than $2,500. This limit applies only if your bank account is used to receive exempt benefits that are directly deposited. What are directly deposited direct benefits? They include:

Social Security benefits
Supplemental Security Income (SSI)
Child support
Veterans benefits
Workers compensation
Disability benefits
Pensions
Spousal maintenance (alimony)
Unemployment insurance benefits
Public Assistance (welfare)
Railroad Retirement benefits
Black Lung benefits

For all other accounts, the limit is $1,740.

What do I do if my bank account was illegally frozen?

If you suspect your bank isn’t complying with EIPA, or if your account was frozen by creditors after January 1, 2009 call your state’s Financial Justice or Consumer Hotline. For example, if you are in New York, call: (212) 925-4929.

Federal Debtor’s Prisons for Bill Collection

andalellc — Mon, 30 Aug 2010 20:34:49 +0000

Federal Debtor’s prisons–outlawed in 1833–are making a comeback in these tough times. If you’re being hassled by creditors hell-bent on bill collection, what could happen might surprise you.

Texas is one state that’s cracking down on people caught speeding too many times: hitting them with “surcharges” and throwing them in jail if they don’t pay up. That’s according to this article on debtor’s prisons, which tells the many ways you can be jailed in the United States for the crime of not having enough money.

Bill collection isn’t the only reason why you might be jailed. Not paying your child support? Expect to be jailed if you don’t cough up the cash. You can also be jailed for not filing your federal taxes or not paying those taxes once you’ve filed.

But perhaps the most surprising way that you can find yourself in prison is not paying your credit card debt. Thanks to over-zealous attorneys and collections companies hit by the financial downturn and resorting to borderline tactics, you might find yourself in the county jail without any fair warning from an attempt at bill collection. In many states (like Florida), all a credit card company has to do to notify you of court action is to send you a first class letter. If you don’t receive that letter (say, they send it to your old address), you could find a nasty surprise next time you check your credit report–a judgment against you. That civil action could lead to an arrest warrant if you don’t pay up.

Technically, you can’t be arrested for not paying a debt. But you can be arrested for contempt of court–and the collection agency lawyers want this to happen, because a person sitting in jail will generally pay up for bill collection a lot faster than someone sitting at home and not answering the phone. A judge may order you to pay several thousand dollars within a day–and he won’t care if you have to skip a mortgage payment to do so.

Check your credit reports regularly, comply with court proceedings, and you may find yourself able to keep out of jail. But if the government–or a collections agency–thinks you have the means to pay (even if you don’t), be alert for that knock on the door: it could be the sheriff’s department coming to take you away.

Bill Collection: Wage Garnishments on the Rise

andalellc — Sat, 03 Apr 2010 14:44:33 +0000

The New York Times recently ran a story about Leann Weaver, who was sued by Capital One for $2,470. When she failed to pay the bill — or defend herself in court — Capital One garnished her wages, which resulted in a quarter of her wages being taken away to repay the debt.

That’s not all — because Leann didn’t know about the garnishment, her bank account became overdrawn. “That’s kicking somebody who’s already in the dirt” she said.

A large number of delinquent borrowers has resulted in tougher attempts at bill collection. And that means more debtors being subject to garnishments. According to the New York Times, pay garnishments are up a whopping 121 percent in the Phoenix area and 55 percent in Atlanta.

What can you do to protect yourself from garnishment due to bill collection? Communicate with your creditors.
If you can’t come to a reasonable settlement with your creditors, take immediate action to protect yourself: you’ll find a plethora of information on this site about protecting yourself from garnishment.

Confessions of a Bill Collector

andalellc — Sat, 20 Mar 2010 18:48:50 +0000

A bill collector is probably the last person you want to talk to when you sit down to dinner. Or after a relaxing evening when you’re headed for bed. Each day, thousands of people receive calls from bill collectors, thanks to a plunging economy, high unemployment and mounting debt. But what is it really like to work as a bill collector?

While it’s easy for those of us who have been on the end of a constantly ringing phone to want to hate the bill collector calling, they’re usually just people like us, struggling for a job. The problem isn’t necessarily the employee calling you — it’s the corporate rule they have to adhere to.
Jennifer works in a high-volume call center for a major bill collector. Here’s what she had to say about her typical day.

The Night Shift

Jennifer works 1:00 p.m. to 10:00 p.m. in the evening and gets paid $13.25 an hour. Most her calls are made from 1:00 p.m. to 5:00 p.m. when most customers are at home. She makes about 300 calls in a typical evening, but only gets in touch with 10 percent of them. The rest of the people get left an automated message on their answering machine. She rarely speaks to a customer twice — with 200 people in her call center, there’s no chance to develop personal relationships. Why the rapid fire calls and high volume calling? Because her employers don’t care about their customers, other than wanting to squeeze money out of them.

Jennifer must follow an exact script when she calls. Her supervisor can monitor her calls at any time. the script identifies her as a bill collector — if you’ve ever received one of these bill collector calls, you know the drill. If she fails to follow the script and her supervisor is listening, she’ll be marked down — affecting her pay.

She’s been called a “witch” and “the devil”. She’s has to deal with racists and angry people cursing her out. If customers have a good reason for needing an extension to pay, Jennifer can do nothing, because she must follow the script. “One woman said she had a stillborn baby and needed a few weeks extension. She begged me to waive the overdue fees. As much as I wanted to, I couldn’t, because it wasn’t in the script.”

In addition to following a script, Jennifer must collect over $100,000 in overdue bills a month. If she doesn’t, her job is in jeopardy.

Does Jennifer enjoy her job? “No,” she says. “I often don’t even tell people I’m a bill collector. I feel so embarrassed about it. But at the end of the day, if I don’t do this…then I’m going to end up on the other end of the phone.”

How to Stop a Bank Account Garnishment

andalellc — Wed, 10 Feb 2010 15:51:04 +0000

When you don’t pay your bills on time, don’t respond to the calls from the collection agencies, and live under cover, you could wake up one day to find your bank account temporarily frozen from a bank account garnishment. That will be a bad day if it’s the day your rent or mortgage is due! You may have missed the judgment notices in the mail (or maybe you moved). You may not even know your creditors went in to court and sued you. You have no idea they got a judgment against you and used it to empty your account. When the creditor follows legal procedures, your account may not be garnished immediately. Instead it might be temporarily frozen.

You won’t be able to get any money from your bank account if you’re subject to a bank account garnishment, but can make deposits into it (as if you would want to). This has a major impact if you write checks for all your payments, because once your account gets frozen by a court, the checks will start to bounce. What you want to know is how to stop a debt collector from freezing your bank account in the first place. Take calls from credit collections agencies as a warning sign and do the following to stop or avoid your bank account getting frozen by a court order.

1. Make small payments towards the debt. Even if it’s $10 a month, it might be enough to stop them suing you. (Think about this, would you rather send them $10 a month or wake up one day to find your account frozen?).

2. Ask the debt collections agency to validate your debt. Do this multiple times: it’s a great weapon that can get your debt cleared. Just send a letter to the agency asking them to validate the debt. That’s it.

3. Stop using your checking account if you have a bank account garnishment. This is the ONLY certain way to stop a creditor freezing your account, if they have a judgment against you.

Remember: be proactive! If they have a judgment and have already frozen your account, it’s too late to hold onto your money.

How to Fight a Bank Account Garnishment

andalellc — Mon, 08 Feb 2010 16:54:18 +0000

Garnishing your bank account is the final step that a creditor would try against you to recover a debt. In the process of bank account garnishment, the creditor has to obtain a legal order from the court to freeze your bank account and take away your money to satisfy a judgment. Unlike laws that protect your wages, there are no laws to protect your bank account: creditors can take all the money in your account if they have the right forms from the court.

There are several possible ways you can keep your money safe, even when you are holding a huge amount of outstanding debts.

Keep your bank account empty, so that the bank account garnishment won’t have any effect: if there’s no money in your account then there’s no money for the creditors to take away.
Request that your employer provide you with paper checks instead of direct depositing checks into your bank account. Cash your paycheck at your bank instead of depositing it. One thing you have to keep in mind is you will then have to pay your bills by using money orders. If you keep money in your bank account and write checks, creditors could enforce the bank account garnishment before the checks are paid. You could find yourself in court answering for a number of bounced checks. And, believe it or not, district attorneys don’t accept the defense that a shady bill collector emptied your account and caused you to bounce your checks.
If you earn exempt funds like social security or disability, set up an exemption bank account. By doing this you will have the law on your side to protect the money in your account, as this requires filing of an exemption with the court. These are very nearly never granted: social security and disability are protected in almost every state.
Open a bank account in a different state. There is a fair chance of the creditors tracing this new account of yours and eventually emptying it. But this won’t occur overnight, as they would have to deal with the courts in a different state and go through their set of exemptions and rules. If you don’t owe a huge amount, the creditors may not find it worthwhile to pursue you in another state.
Perhaps the best way to protect your money from getting garnished is, to open an offshore bank account and save all your money in it. It is 100% legal and is being utilized by individuals and organizations across nations to safe guard their assets. Just make sure you report any dividends or interest earned to the Internal Revenue Service (IRS).

Oregon Homestead Exemption

andalellc — Mon, 08 Feb 2010 16:47:22 +0000

When you declare bankruptcy, or are facing a judgment, this does not mean that you will lose all of your assets or personal property. There are exemption laws that prevent this from happening, allowing you to hold on to certain property, savings and insurance, as well as some types of investment. If you want to know your Oregon homestead exemption, this article explains it in plain English and includes all of your exemptions.

Like other US states, if you live in Oregon you do have asset protection. These laws entitle you to claim property as exempt (i.e. protected from creditors), if it has not been used as collateral for a loan. However, if you have signed over property (whether it be your home, car or boat) as security for a loan, it is no longer protected under exemption laws. In Oregon, you are able to claim exemption for the following types of eligible property, assets, savings and income:

• Oregon Homestead Exemption: An exemption of up to $30 000 applies to real property that you occupy or intend to occupy. This amount increases to $39 600 for joint owners. There is also provision to claim exemption for house boats and mobile homes. The only other requirements for this type of exemption are land size. Your home cannot exceed one block if it is in town or exceed one hundred and sixty acres outside of town.
• Personal property. This includes items such as: bank deposits (to $7500) and higher education savings accounts, jewelry and clothing ($1800), furniture ($3000), cars ($1700) and firearms ($1000).
• Income and wages: A percentage of income and wages are eligible for exemption as well. This means that creditors cannot take all of your earnings for the purpose of covering debt. In Oregon, you are able to legally keep 75 per cent of your wages or $170 per week, whichever constitutes the largest amount. For low income earners, a judge may even authorize a larger exemption.
• Life insurance, pensions, retirement savings and public benefits Annuity contract benefits to $500 per month, Fraternal benefit society benefits, Group life policy or proceeds not payable to insured, Health or disability proceeds or available value, Life insurance proceeds or cash value if you are not the insured.

This list is just a summary. A complete list of every exemption in Oregon, including the Oregon Homestead Exemption, can be found in my book, Stop Bill Collectors!

Pennsylvania Homestead Exemption

andalellc — Mon, 08 Feb 2010 16:45:59 +0000

When filing for bankruptcy, or fighting a judgment, it’s important to understand what property and assets you can protect, as well as any earnings, savings and insurance you are entitle to claim as exempt. Declaring bankruptcy or being sued by a creditor doesn’t automatically mean that you will lose everything you have, but familiarizing yourself with the exemption laws for your state can ensure that you hang on to everything you are legally entitled to. If you want to know your Pennsylvania homestead exemption, this article explains it in plain English and includes all of your exemptions.

State exemptions for Pennsylvania.

As with other US residents, people living in Pennsylvania can claim property as exempt, so long as they have not used that property as security for a loan. The moment you sign over property as collateral for a loan, it ceases to be protected under exemption laws.

Exemptions that can be claimed for eligible property in Pennsylvania:

Pennsylvania Homestead Exemption:While there is no homestead exemption in Pennsylvania, there is provision to claim under the common law of Tenancy by Entirety. This applies to married couples who own a home together (joint ownership). Tenancy by Entirety holds the home exempt against the debts of one spouse only. In other words, if you’re one half of a married couple and your spouse doesn’t have anything to do with your debt–you can’t lose your home.
wages: Wages of prison inmates and the wages of victims of abuse are exempt.
Life Insurance: Life insurance is exempt as long as the beneficiary is your spouse or child.
Personal property: Exemptions include bibles, schoolbooks, clothing, military uniforms, and sewing machines. There is also a ‘wild card’ exemption, which applies to $300 of any property whether it is cash, real property, sale proceeds or securities.

This list is just a summary. A complete list of every exemption can be found in my book, Stop Bill Collectors!

Rhode Island Homestead Exemption

andalellc — Mon, 08 Feb 2010 16:38:51 +0000

Your biggest single concern if you are filing for bankruptcy or if you are on the receiving end of a judgment is making sure that you protect as many of your assets and items of personal property as you are legally entitled to. While US bankruptcy laws do not require all assets and property to be relinquished to pay off outstanding debt (the same goes for judgments), there are restrictions and limitations on what you can claim exemption for and the percentage you can claim. If you want to know your Rhode Island homestead exemption, this article explains it in plain English and includes all of your exemptions.

Bankruptcy laws vary between states, and the state exemptions for Rhode Island are no exception. Residents living here are entitled to protect a portion of their property from creditors, provided that property has not been used as collateral for a loan. For instance, you will not lose exempt property to a credit card company because there is no collateral attached to the debt. However, if you have pledged your boat as security for a loan, you are no longer protected by exemptions laws.

If you are filing for bankruptcy, you’re given a choice between using the exemptions found in the Federal Bankruptcy Code or the Rhode Island homestead exemption found in state bankruptcy laws. The only requirement is that you use one set of laws only. You are not allowed to pick and choose exemptions from both sets of laws. for judgments, You’ll use the state exemptions.

If you plan on using the state exemptions for Rhode Island, you are entitled to the following:

A Rhode Island homestead exemption of $200 000 for land and buildings that you occupy or have intensions of occupying as your primary abode. If you are a married couple and you own a home jointly (called Tenancy by Entirety), the property cannot be taken by creditors until the tenancy has been dissolved or the ‘debtor’ spouse survives the ‘non-debtor’ spouse in most cases.
Cars: Up to $10,000
Certain items of personal property, tools of the trade, life insurance and pension and retirement savings for certain individuals are also protected. There is also provision for income and wages, but these extend only to military personnel on active duty, seamen, minors and wages paid by charities.

For residents of Rhode Island, it is important to thoroughly compare the state exemptions with the Federal exemptions under the Federal Bankruptcy Code before filing for bankruptcy. Taking this measure will ensure that you make the decision which best benefits you.

This list is just a summary. A complete list of every exemption can be found in my book, Stop Bill Collectors!

Can debt collectors freeze your bank account ?

andalellc — Mon, 08 Feb 2010 16:27:03 +0000

Can debt collectors freeze your bank account ? Yes, and no. A frozen bank account is a checking or savings account you can’t use because a creditor has placed a restraint on the account. You can place money in a frozen bank account, but you won’t be able to take money out. If you wake up one day to the shock of finding your bank account is frozen, you may be able to unfreeze it if your creditor hasn’t followed the law.

Why did creditors freeze my bank account?

In most cases, a frozen bank account means that a bill collector or creditor has successfully won a civil judgment against you or another person on your account (such as a spouse or child).

My account has a negative balance die to the freeze. Why?

When the judgment creditor asks your bank to place a hold on the account, they typically ask for an amount equal to twice the amount of the judgment. You may also find that due to the bank freeze, you start to amass bounced check fees and other returned items, because your money isn’t available.

Can debt collectors freeze your bank account if they don’t notify you ?

Unfortunately, yes. The bank must — by law — freeze your account immediately upon receiving notification about a judgment. Then they will notify the bank account holder. You’ll likely discover that your account has been frozen when you receive a notification in the mail about a returned item, or your ATM and debit cards won’t work. A judgment creditor doesn’t have to give you notice either. The only requirement they must make is to notify you of the lawsuit and that it has a judgment against you. Be aware that if you didn’t receive notification of a lawsuit or successful win against you, the creditor may be breaking the law.

How do I get my bank account unfrozen without a lawyer?

The easiest way is to get rid of the judgment — either by paying it off, claiming bankruptcy, or entering into a repayment plan. If your account has protected income, like retirement funds or unemployment, the creditor could be breaking the law. See What is the Exempt Income Protection Act for more details. You can also call the judgment creditor’s lawyer (if you have the number) and notify them that the funds are exempt from collection. If your income is regular wages, it may be a good idea to petition the court to unfreeze your bank account. Several states has laws that protect wage earners, including if you are head of household or under the poverty line.

How long before my account is unfrozen?

Until your debt is paid off or until the creditor lifts it for another reason (such as bankruptcy or if you enter into a payment plan).