New York Passes Bill to Close Debt Collection ‘Loophole’
New York passed a bill last week that protects exempt funds from bank account freezes levied by debt collection agencies and creditors.
New York Governor David Paterson announced Friday that he had signed into a law a bill that blocks exempt funds in a consumer’s bank account from being frozen by legal action taken by debt collection agencies and credit card companies.
According to advocates of the bill, it closes a loophole that previously allowed debt collectors to freeze bank accounts with restraining notices, even if the bank accounts contained funds that were exempt from such action under federal law. Exempt funds include those from Social Security, veterans benefits, disability, and pensions.
The new bill would specifically protect the first $2,500 of exempt funds from a bank account freeze.
"This law is a victory for older New Yorkers, veterans, and all low-income consumers who are experiencing difficult times in our sagging economy," said Lois Aronstein, AARP New York State Director. "Governor Paterson, Senator Volker, and Assemblywoman Weinstein are to be commended for their work to help those New Yorkers most in need."
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Comments
Comment from Creditchick1@optonline on October 2, 2008 at 2:54PM EST
Pay me now..pay me later! a Judgment just does not go away. The consumer is not always fully aware and thinks that it will just go away. It stays for years to come.
Comment from anonymous on October 2, 2008 at 2:54PM EST
The above comment about taking their Social Security and the slam to veterans is really dumb.
Comment from MSR Collections on October 2, 2008 at 3:01PM EST
On one hand, I see how this could help older low income people, but what about the company's who can't get thier money back? There are a lot of professional debtors out there and they know how to hide money issues, especially once retirement hit them. It's bad enough a larger percentage of people have cell phones and there is still no national directory so we can call them. Why should an over extended debtor get all the breaks?
Comment from Anonymous on October 2, 2008 at 3:29PM EST
Once again the wrong people are being protected. If someone has money in their bank and they owe me money I want it. How about a law that helps me for a change...
Comment from Anonymous on October 2, 2008 at 3:57PM EST
The perception our society has given the debt collection world is ridiculous. If not for debt collections, our economy would be significantly worse today, and would eventually collapse. The government cannot protect people from paying on goods they have already accepted.
Comment from lmthomas on October 2, 2008 at 4:48PM EST
If the debtor is on soc security \,diabaility or veterans benefits they should be exempt. If there is any money after the $2500 exemption yo will get it. Its no different in many states that allow debtors to go to court if they get a levy and prove they do not have the cash as they are on a limited income. I have been in this business for 4o years. Judgements can last up til 20 years. If the circumstances of the debtor change and the agency/attorney keeps track of their legal accts they will see the money. Grow up and live life a bit and see what happens if their is a death of a spouse,illness,a sick child.etc. Not all debtors are bad and neither are collectors.
Comment from Anonymous on October 2, 2008 at 5:05PM EST
Being in debt is still not against the law. The debtor is not a criminal and should not be treated like one. The collection agencies get away with plenty so it kind of evens out. When will there be requirements such as a personal collection license or more stringent hiring policies for debt collectors to engage in 'ARM' . There is no accountability on the other end of the phone either.
Comment from sif2pif on October 2, 2008 at 6:44PM EST
The only time a debtor complains is when they are asked for the money. This Law will not protect anything above the initial $2500.00. If a debtor wants to pay they will make a way to pay if they don't then they wont. If NY state wants to foster this false sense of security for New Yorkers then they could be in for a rude awakening. Now everyone is going to be disabled on ssi or a veteran.
Comment from Wendy M on October 2, 2008 at 12:29AM EST
I owned an agency in NY for many years and we did freeze bank accounts, but if we ever found out we had taken $$ we weren't entitled to, we had to "give it back", so the comment that in part said "...what's the problem, that you lose the leverage of freezing money you're not entitled to anyway" is really on the mark! I did have one incident where we did seize funds we weren't entitled to and were notified accordingly. The debtor told us to keep the money as he knew the debt was valid and had just been "using the system" to get out of paying the bill. He wasn't happy about the additional interest and fees from the judgment, but essentially he chalked it up to "opportunity cost". He had opportunity to pay before we took judgment and didn't do so, so it "cost" him!!
Comment from FB on October 14, 2008 at 6:05AM EST
Its ridiculous....one one hand they give out bailout packages to these "creditor" companies....and then hamper their cash flow by giving out such powers to the debtors through which the debtors enjoy more freedom not to pay their debt back and hit these companies...!!!
Comment from A Veteren on October 16, 2008 at 4:30PM EST
The comment about Veterans being baby killers is overboard. You evidentaly do not appreciate others fighting for your freedom.