Garnishment

[azref2627]

Jurisdiction

Arizona

My uncle got a default judgment against him by Wells Fargo on Mar 9 for credit card debt. It will be the first of many to come I'm guessing as he was using his credit cards to pay for his wife's Alzheimer's care the past few years. The court says the judge signed the default but it hasn't been processed yet due to staffing so it doesn't show up as a default anywhere as of now.

His main retirement comes via check to him from Bank of America - who he won't get a judgment from since he has no credit cards, bank accounts or debt associated with that bank. He's been able to cash his checks there for a $7 fee for the past few months and he uses the cash to pay his wife's care workers for the month. Will they at some point not be able to cash his checks do to the various judgments he'll have against him? I'm not familiar with bank processes in cashing checks and how they are tied into debt collection. He's not able to support himself without this check as their SSI payments are practically nothing.

Thanks for any help.

 

[Tax Counsel]

His main retirement comes via check to him from Bank of America

What exactly do you mean by this? Does he get an actual retirement check from BoA (i.e. BoA was his employer) that he then takes to a BoA branch and cashes? If he's cashing paper checks, does he have an account at the bank? Does the check get direct deposited? Something else? Are the checks he's cashing for the $7 fee different from the retirement check?

If he's getting paper checks and taking them to BoA to cash immediately and he has no account there then he's not going to have any problem with a garnishment grabbing that money. He can then take the cash home and keep it there to use as needed for his expenses.

 

[azref2627]

Sorry for the confusion. He gets a state retirement from Oregon. I've contacted them and they do not allow debt collectors to garnish his retirement directly from them. The checks are sent out to him and are drawn on a Bank of America account - that's why we go there to cash the checks (and they charge a $7 fee).

I think your last paragraph answers my question though. Thanks.

 

[army judge]

He gets a state retirement from Oregon. I've contacted them and they do not allow debt collectors to garnish his retirement directly from them. The checks are sent out to him and are drawn on a Bank of America account - that's why we go there to cash the checks (and they charge a $7 fee).

There are limits to how much money can be garnished from your paycheck. The idea is that you should have enough left to pay for living expenses.

Federal law places limits on wage garnishment amounts. While states are free to impose stricter limits, Arizona has not done so. That means the federal law governs in Arizona. Here are the rules:

Of your nonexempt disposable earnings, creditors can only take the lessor of the following:

25% of your non-exempt weekly earnings, or
the amount of your non-exempt weekly earnings that exceeds 30 times the federal minimum wage.

"Disposable earnings" are those wages left after your employer has made deductions required by law. To find out what income is exempt in Arizona, see our Exemptions Bankruptcy Exemptions page.

This MIGHT be useful for your relative to know:

Usually, Social Security can't be garnished by a private creditor, as opposed to a government entity.

Retirement funds, including Social Security income, are generally protected from private creditors.

ERISA-qualified retirement accounts are generally safe from judgment creditors.


Here you go, all one might wish to know about garnishments in the state of Arizona:

Arizona Wage Garnishment Laws

 

[azref2627]

Sorry, but I'm not sure how this question got put into the other thread. It says from me but I thought I opened a new thread for this. Thanks so much for the replies to the garnishment check cashing question for him and the stimulus check cashing for me.

Last question I promise as I didn't get an answer as to this specific question. I'm hoping the simple answer is yes the 2400 is safe from debt collectors if it gets deposited into his SSI bank account since its less than two months of his 1500 monthly SSI payment. Thanks.


My uncle is getting $2400 for him and his wife from the stimulus package. They just got a default judgment against them on Mar 9 but not sure it's gone beyond that (not sure if you even get notification that your bank account is being seized).

His SSI is the only thing deposited into this account. His wife has her own account for her SSI. He gets $1500 per month from SSI. From the article below it says his account will be fine if he gets the $2400 via direct deposit (current balance is $145). It this accurate?

Here's the article:

Special Strategy for At-Risk Social Security, SSI, and VA Beneficiaries
A special strategy for those at risk of garnishment is available for recipients of Social Security, SSI, Veterans, or certain other federal benefits. A U.S. Treasury rule exempts from garnishment an amount in a bank account or Direct Express card equal to two months of federal benefit payments for that individual. See 31 C.F.R. § 212; NCLC's Collection Actions § 14.5.4.

The protected amount in a consumer's account need not be traced to the federal benefits—that dollar amount is protected no matter its source. If two months of federal benefits for a Social Security recipient is $2000, the account will be fully protected from garnishment if there is only $800 in the bank account before the stimulus payment is deposited. Once the $1200 is deposited, the total amount will still be less than $2000. Before the next Social Security or other benefit payment is deposited, however, the recipient will need to withdraw additional amounts to keep the new balance under $2000. Fortunately, benefit payments come on a predictable date each month, such as the second Wednesday of the month.

 

[Zigner]

Your link is to a commercial site that requires a log-in to access.

 

[Zigner]

Sorry, but I'm not sure how this question got put into the other thread. It says from me but I thought I opened a new thread for this. Thanks so much for the replies to the garnishment check cashing question for him and the stimulus check cashing for me.

Last question I promise as I didn't get an answer as to this specific question. I'm hoping the simple answer is yes the 2400 is safe from debt collectors if it gets deposited into his SSI bank account since its less than two months of his 1500 monthly SSI payment. Thanks.


My uncle is getting $2400 for him and his wife from the stimulus package. They just got a default judgment against them on Mar 9 but not sure it's gone beyond that (not sure if you even get notification that your bank account is being seized).

His SSI is the only thing deposited into this account. His wife has her own account for her SSI. He gets $1500 per month from SSI. From the article below it says his account will be fine if he gets the $2400 via direct deposit (current balance is $145). It this accurate?

Here's the article:

Special Strategy for At-Risk Social Security, SSI, and VA Beneficiaries
A special strategy for those at risk of garnishment is available for recipients of Social Security, SSI, Veterans, or certain other federal benefits. A U.S. Treasury rule exempts from garnishment an amount in a bank account or Direct Express card equal to two months of federal benefit payments for that individual. See 31 C.F.R. § 212; NCLC's Collection Actions § 14.5.4.

The protected amount in a consumer's account need not be traced to the federal benefits—that dollar amount is protected no matter its source. If two months of federal benefits for a Social Security recipient is $2000, the account will be fully protected from garnishment if there is only $800 in the bank account before the stimulus payment is deposited. Once the $1200 is deposited, the total amount will still be less than $2000. Before the next Social Security or other benefit payment is deposited, however, the recipient will need to withdraw additional amounts to keep the new balance under $2000. Fortunately, benefit payments come on a predictable date each month, such as the second Wednesday of the month.

According to 31 CFR § 212.6 - Rules and procedures to protect benefits., the article you quoted is not necessarily correct.

 

[zddoodah]

Will they at some point not be able to cash his checks do to the various judgments he'll have against him?

If Bank X has no claims against your uncle, there is no reason to believe that the bank will care about judgments that other banks might have or obtain against him. However, if your uncle has an account with Bank X, then any judgment creditor can levy on that account an an attempt to collect.

Note also that money that comes from an ERISA retirement plan would not be subject to garnishment. If your uncle's account at Bank X is funded solely by money from an ERISA retirement plan, then Bank X should not honor a levy by an ordinary judgment creditor.

 

[azref2627]

The main part of the question I was asking for my other question.

A U.S. Treasury rule exempts from garnishment an amount in a bank account or Direct Express card equal to two months of federal benefit payments for that individual. See 31 C.F.R. § 212; NCLC's Collection Actions § 14.5.4.

I doubt anyone disputes that, but is this part below also accurate which would allow him to deposit the stimulus there electronically so he can get it back quicker rather than via check?

The protected amount in a consumer's account need not be traced to the federal benefits—that dollar amount is protected no matter its source.

Or will depositing his stimulus money there screw up his SSI account and cause it problems in the future.

Thanks

 

[Zigner]

A U.S. Treasury rule exempts from garnishment an amount in a bank account or Direct Express card equal to two months of federal benefit payments for that individual. See 31 C.F.R. § 212; NCLC's Collection Actions § 14.5.4.

I doubt anyone disputes that, but is this part below also accurate which would allow him to deposit the stimulus there electronically so he can get it back quicker rather than via check?

As I said elsewhere, I do dispute that portion that you quoted because that's NOT what the law states will occur in all instances. READ THE LAW, not some article you found on the internet.