Ask Me Help Desk - Credit card debt collection questions

I live in New York State and have an outstanding balance on a credit card for $5,000. The bank that the credit card is with charged off this credit card debt as bad debt in 2005 and listed the debt as a profit and loss writeoff.

No knowing this, I arranged a reduced payment plan with the bank and paid on the debt for a couple of years. However, the bank only reported the derogatory credit information on my credit reports.

Recently, I became unemployed and no longer have any income. I notified the bank and they are starting legal proceedings against me.

My questions are:

1. If the bank obtains a judgment against me, can they legally go after money in my checking account?

2. The credit card is only in my name, can the bank try to go after any of my wife's assets?

3. In another month, I will start to receive social security retirement benefit payments. Can the bank go after the money I receive from Social Security?

4. In your opinion, when the bank finds out that I do not have any income (other than social security), do you think they will consider this debt uncollectible?

Thank you, in advance, for your answers!

Quote:

Originally Posted by bobp16

I live in New York State and have an outstanding balance on a credit card for $5,000. The bank that the credit card is with charged off this credit card debt as bad debt in 2005 and listed the debt as a profit and loss writeoff.

No knowing this, I arranged a reduced payment plan with the bank and paid on the debt for a couple of years. However, the bank only reported the derogatory credit information on my credit reports.

Recently, I became unemployed and no longer have any income. I notified the bank and they are starting legal proceedings against me.

My questions are:

1. If the bank obtains a judgment against me, can they legally go after money in my checking account?

2. The credit card is only in my name, can the bank try to go after any of my wife's assets?

3. In another month, I will start to receive social security retirement benefit payments. Can the bank go after the money I receive from Social Security?

4. In your opinion, when the bank finds out that I do not have any income (other than social security), do you think they will consider this debt uncollectible?

Thank you, in advance, for your answers!

Yes, if the bank obtains a judgment it can lien against your bank accounts, checking, savings, any other type.

The bank cannot attach your wife's assets BUT it can attach anything in JOINT names.

Social Security benefits are exempt from credit card debts BUT once the money is in a bank account and co-mingled, it is no longer exempt. It is not unusual for creditors to lien against all bank accounts, freeze your money and then work out the details of what is exempt and what is not. In NY you cannot notify the bank or complete paperwork in advance of them being served with a notice of lien.

My feeling is that they will get a Judgment and then lien against real estate, hold the Judgment for the 20 years and see if you come into any money. It would appear that the bank is out of this and a collection agency has purchased the loan and they aren't going to give up. This is what they do for a living.

You are aware that by making payments you extended the Statute, right?

Just one thing to add to Judy's answer. The fact that the bank charged off the debt has almost no affect on you. This is simply a tax maneuver on the bank's part. They took the balance as a loss against their income to reduce their taxes. But this means that ANYTHING they collect on the debt is total income. They probably sold off the debt to a collector taking the amount that was paid as income.

JudyKay,

I have one follow-up question to your post (Yes, if the bank obtains a judgment it can lien against your bank accounts, checking, savings, any other type.):

Does that mean any bank account I have with ANY bank or just accounts with the bank that I had the credit card with?

Thank you for your help!

Bob

Quote:

Originally Posted by bobp16

JudyKay,

I have one followup question to your post (Yes, if the bank obtains a judgment it can lien against your bank accounts, checking, savings, any other type.):

Does that mean any bank account I have with ANY bank or just accounts with the bank that I had the credit card with?

Thank you for your help!

Bob

It can lien against any funds in your name - any bank, any place.

I live in New York State.

If a bank obtains a judgment against me for credit card debt... can they legally attempt to go after the car that I lease from GMAC?

I assume that since the vehicle is owned by GMAC and I am only the lessor that this is not considered an asset that the bank can go after.

Thank you, in advance, for your help!

If a creditor is able to obtain a judgment against me in New York State for an unpaid credit card balance, I have the following questions:

1. are NYS unemployment benefits exempt from a bank levy?

2. are Social Security retirement benefits also exempt?

3. is a retirement pension of $88 per month also exempt?

4. I lease my car from GMAC. Is this vehicle not available as part of any judgment since I do not OWN the vehicle?

5. Are monies that are in my wife's bank accounts not available to satisfy a judgment against me? She was not an applicant for the credit card that is in default and I am not a co-applicant on her bank accounts.

Thank you, in advance, for your help!

Quote:

Originally Posted by bobp16

I have the following questions if a creditor is able to obtain a judgment against me in New York State for an unpaid credit card balance:

1. are NYS unemployment benefits exempt from a bank levy?

2. are Social Security retirement benefits also exempt?

3. is a retirement pension of $88 per month also exempt?

4. I lease my car from GMAC. Is this vehicle not available as part of any judgment since I do not OWN the vehicle?

5. Are monies that are in my wife's bank accounts not available to satisfy a judgment against me? She was not an applicant for the credit card that is in default and I am not a co-applicant on her bank accounts.

Thank you, in advance, for your help!

Bob

1. As far as I'm aware, they can take these funds.
2. SSI is exempt; they can't collect on it.
3. Not 100% positive; if it's deposited into a bank account that has been frozen then they may be able to take that, as well.
4. The car they'll probably leave alone, as it isn't legally yours.
5. Any accounts with your name on it can have the funds removed to satisfy a judgment. If your name isn't on it, they can't legally touch it unless your wife is named in the judgment.

I've merged your twoo threads. Please don't start another thread for essentially the same issue.

1. No, Unemployment is subject to garnishment.
2. Previously answered. SS benefits are exempt from unsecured debt
3. Private pension payments are not exempt
4. Yes, since it's a lease, you don't own it so its not attachable.
5. Any funds in a joint account can be attached, but if you can prove the funds only source was your wife's income they can be exempted. Funds solely in her name are exempt.

Quote:

Originally Posted by ScottGem

I've merged your twoo threads. Please don't start another thread for essentially the same issue.

1. No, Unemployment is subject to garnishment.
2. Previously answered. SS benefits are exempt from unsecured debt
3. Private pension payments are not exempt
4. Yes, since its a lease, you don't own it so its not attachable.
5. Any funds in a joint account can be attached, but if you can prove the funds only source was your wife's income they can be exempted. Funds solely in her name are exempt.

Scott Gem,

Thank you for your informative responses and also for consolidating my questions.

After further searching on the Internet, I found this web site that seems to address all of my questions and it may be useful to others.

NEDAP - What is Exempt from Debt Collection?

Know Your Rights!
**Exempt Income Protection Act**

A new law called the Exempt Income Protection Act (EIPA) went into effect on January 1, 2009! EIPA protects bank accounts that contains subsistence funds such as government benefits, pensions, and some earned income. EIPA prevents creditors and debt collectors from freezing these accounts to pay private debts, like credit cards.

Under EIPA, your bank account cannot be frozen if the balance is less than:

$2,500 - if your account contains directly deposited exempt benefits, including Social Security, SSI, Veterans benefits, disability, pensions, child support, spousal maintenance, workers compensation, unemployment insurance, Public Assistance, Railroad Retirement benefits, and Black Lung benefits;

Or:

$1,716 - all other accounts.
If your bank account was frozen after January 1, 2009 or if you think your bank is not complying with EIPA, call the NYC Financial Justice Hotline at (212) 925-4929 for assistance.

If your bank was frozen before January 1, 2009, EIPA will not automatically unfreeze your account. If you want to unfreeze your account, you must take specific action. Please refer to Frozen Bank Accounts to learn how to unfreeze your account.

For more information, please visit Empire Justice Center's website for a summary of EIPA.

That's a nice site, thanks. Is EIPA federal or state law?

New York State Law:

New York Exempt Income Protection Act Enacted

On Friday, September 26, Governor Paterson signed into law New York's Exempt Income Protection Act. The law was effective January 1, 2009.

Thanks! Good for NY (my state too) for helping protect consumers from predatory lenders. I hope other states follow.