January 13, 2009
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News: States' Laws Concerning Garnishment.
With credit card defaults spiraling out of control, we may expect to see a rise in garnishment lawsuits. Fortunately for us, the states have found it necessary to get involved in garnishment regulations for things like credit card debt. Just like the protective health insurance mandates provided by almost every state, state residents receive state protection from the extremes. Of course, these protections vary from state and all are not equal. For example, New York State is (soon-to-be) mandating protection of the first $2,500 in a debtor's account. There is a qualification, however: At least that much of the funds must have arrived into the account through electronic deposit from the protected asset administrator within the last 45 days. Also, a limit has been placed requiring that no more than two accounts can be absconded within a given year for private lawsuits like credit card debt. At least it's a start.
Other states are taking similar actions but, there is still a lot of variance between the ways banking systems must handle the confusion. Some states, for example, prohibit private lawsuits like credit card debt altogether. It behooves anyone involved in this to be appraised on existing mandates (or the lack of) for their particular state. Even though a person's credit card debt may be sold to a collection agency, that still doesn't prevent garnishment.
Though state law can't supersede federal law, it can place further restrictions on that law. States do regulate greater restrictions on private garnishment lawsuits like credit card debt. One example is the time limit placed on these garnishments, be they wage or non-wage garnishments. The downside, however, is the total control the government takes. No longer may a debtor or even a debt counseling agency negotiate anything. The court will now set the payment arrangement (no longer termed a ‘plan' because it must be followed. Although terms and timing are set up on a case-by-case basis, once the ruling is final, everything becomes set in stone. So, it is expedient to have a credit counseling agency involved during the court proceedings to protect the consumer because, this is the last chance to negotiate.