Mark Winston Griffith
Did the Right Thing: NYS Legislature Passes Exempt Income Protection Law
Although it has been easy to miss among some of the other higher profile issues that were addressed during the waning days of the 2008 legislative session in Albany, an important piece of consumer protection was recently passed by the Senate and Assembly, Once it is signed by the Governor, a new law will prevent the improper seizure of bank account funds that are held by people with protected income.
According to a press statement issued by New Yorkers for Responsible Lending,
The new law (S.6203B, A.8527A) will prevent debt collectors from freezing the first $2,500 in a bank account when the account contains directly deposited Social Security, Veterans Benefits, and other subsistence income. The law will extend the same protection for earned income up to $1,716, which is the equivalent of 8 weeks of minimum wage earnings. The law will also make it easier for New Yorkers to unfreeze their bank accounts when those accounts have been unlawfully frozen by debt collectors.
Nearly 3.5 million New Yorkers receive Social Security or SSI benefits. Many more receive Veterans Benefits, pensions, workers compensation, unemployment insurance, child support, and other subsistence income that is exempt from debt collection under federal and state law. Despite these exemptions, a loophole in New York law has allowed debt collectors to freeze the bank accounts and seize the subsistence income of thousands of New Yorkers every year. This practice has had a particularly devastating effect on New York’s elderly, disabled, and working poor citizens, who were often unable to follow the complicated procedures necessary to prove their funds were exempt from collection.
At a time when consumers have had to fend for themselves, this law is a reassuring way to end the legislative session.