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Bank Levy and Claim of Exemption Based Upon Extreme Financial Hardship

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sandyclaus

Senior Member
What is the name of your state (only U.S. law)? California

My family member had an unpaid credit card debt for which the creditor (CA) filed and received a judgment against him. He went to his bank to withdraw funds last Friday on payday to pay some bills, and found that the creditor had executed a bank levy and took his entire paycheck and cleaned out his account.

Herein lies his problem. This family member also received a cut in his hours last week. Whereas he was getting an average of 22-25 hours per week, he has now been reduced to 5-10 hours max. He has rent to pay, and pretty much everything in his last paycheck was to go towards his July rent and bills while he waits for his unemployment/underemployment benefits to kick in.

It was suggested to him that he file a Claim of Exemption to try to get the sheriff to release those funds back to him, and he is following the steps outlined on this page to do so: http://www.saclaw.lib.ca.us/pages/claim-exemption-bank-levy.aspx

What is unclear is what code/statute he needs to reference on Question 5 on the EJ-160 Claim of Exemption form. He is a single adult, no children, and is filing the claim of exemption based solely on financial hardship. Without those funds, he won't be able to pay his rent for July. He may be able to borrow them from someone, but they will expect to be paid back - and if they don't come from the levied funds, he isn't sure where to get them. If he cannot get the creditor to accept his hardship exemption, then he faces another potential future bank levy again that he simply cannot afford. The form asks for a code section, so I figure there must be a specific one he can put that fits his financial hardship category.

Don't get me wrong - he knows he screwed up by not taking care of this sooner. He simply is at a point, financially, where this bank levy could not have come at a worse time. In addition, he is scratching his head (as am I) as to why the creditor didn't just do a wage garnishment instead - at least that way, they wouldn't have to keep coming back and filing another Writ of Execution each time they wanted to ding his bank account. They could have gotten 25% of what little money he would earn from work and it wouldn't impact my son quite as deeply as their "take it all, then repeat" approach employed as the bank levy does. Just doesn't make much sense.

So, can anyone help with the right code/statute reference to fill in on the form? Thanks in advance.
 

CSO286

Senior Member
What is the name of your state (only U.S. law)? California

My family member had an unpaid credit card debt for which the creditor (CA) filed and received a judgment against him. He went to his bank to withdraw funds last Friday on payday to pay some bills, and found that the creditor had executed a bank levy and took his entire paycheck and cleaned out his account.

Herein lies his problem. This family member also received a cut in his hours last week. Whereas he was getting an average of 22-25 hours per week, he has now been reduced to 5-10 hours max. He has rent to pay, and pretty much everything in his last paycheck was to go towards his July rent and bills while he waits for his unemployment/underemployment benefits to kick in.

It was suggested to him that he file a Claim of Exemption to try to get the sheriff to release those funds back to him, and he is following the steps outlined on this page to do so: http://www.saclaw.lib.ca.us/pages/claim-exemption-bank-levy.aspx

What is unclear is what code/statute he needs to reference on Question 5 on the EJ-160 Claim of Exemption form. He is a single adult, no children, and is filing the claim of exemption based solely on financial hardship. Without those funds, he won't be able to pay his rent for July. He may be able to borrow them from someone, but they will expect to be paid back - and if they don't come from the levied funds, he isn't sure where to get them. If he cannot get the creditor to accept his hardship exemption, then he faces another potential future bank levy again that he simply cannot afford. The form asks for a code section, so I figure there must be a specific one he can put that fits his financial hardship category.

Don't get me wrong - he knows he screwed up by not taking care of this sooner. He simply is at a point, financially, where this bank levy could not have come at a worse time. In addition, he is scratching his head (as am I) as to why the creditor didn't just do a wage garnishment instead - at least that way, they wouldn't have to keep coming back and filing another Writ of Execution each time they wanted to ding his bank account. They could have gotten 25% of what little money he would earn from work and it wouldn't impact my son quite as deeply as their "take it all, then repeat" approach employed as the bank levy does. Just doesn't make much sense.

So, can anyone help with the right code/statute reference to fill in on the form? Thanks in advance.

Is he a recipient of any needs-based public assistance? (Welfare, TANF, medicaid)

He may not need a code/cite to do it. If he was on any of those programs, or had been within the last six months, then he may be eligible for a hardship exemption. Really, otherwise he's most likely out of luck.
 

sandyclaus

Senior Member
Is he a recipient of any needs-based public assistance? (Welfare, TANF, medicaid)

He may not need a code/cite to do it. If he was on any of those programs, or had been within the last six months, then he may be eligible for a hardship exemption. Really, otherwise he's most likely out of luck.
He is. He has been receiving SNAP/CalFresh benefits (aka food stamps), which had been suspended because his income was just barely too much to qualify him (literally, he was over by a whole $7). He went to see his worker yesterday, and she reinstated his benefits effective immediately. So, based on your information, he SHOULD qualify for an exemption.

I think the main concern is what to fill in on that form. As it asks for a specific code/statute reference, do we know if there is one for him to put on the form? Or should completing a financial statement and attaching a declaration that includes documentation of his SNAP/CalFresh benefits be sufficient?
 

sandyclaus

Senior Member
My only question was what US Code or California statute would be used to reference the applicable law for a claim based solely on on financial hardship. I found the statutes that provide for the exemptions and limits, such as for a vehicle or real estate holdings, buy not one that says anything as simple as "if you cannot afford to pay for your basic living expenses, a hardship exemption can/should he granted, based on providing a financial statement in support of such an exemption." Does such a statute or code even exist?

That's all he is looking for.
 
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CSO286

Senior Member
He is. He has been receiving SNAP/CalFresh benefits (aka food stamps), which had been suspended because his income was just barely too much to qualify him (literally, he was over by a whole $7). He went to see his worker yesterday, and she reinstated his benefits effective immediately. So, based on your information, he SHOULD qualify for an exemption.

I think the main concern is what to fill in on that form. As it asks for a specific code/statute reference, do we know if there is one for him to put on the form? Or should completing a financial statement and attaching a declaration that includes documentation of his SNAP/CalFresh benefits be sufficient?
Does the claim of exemption form have a spot for indicating that he is/has been a recipient of needs-based public assistance? The ones I've seen come though our office usually have a spot like that, and then they have a relase so that the creditor can verify this info with the Public Authority. (remember, I'm in a different state!)

Best I found is this list of exempt property and other info. You're going to have to do some digging through, but start here: http://codes.lp.findlaw.com/cacode/CCP/3/2/9/d2/4/3
704.080 references public benefits.
 
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sandyclaus

Senior Member
Does the claim of exemption form have a spot for indicating that he is/has been a recipient of needs-based public assistance? The ones I've seen come though our office usually have a spot like that, and then they have a relase so that the creditor can verify this info with the Public Authority. (remember, I'm in a different state!)

Best I found is this list of exempt property and other info. You're going to have to do some digging through, but start here: http://codes.lp.findlaw.com/cacode/CCP/3/2/9/d2/4/3
704.080 references public benefits.
Unfortunately, our form doesn't ask about public assistance. Instead, there's just the item that says to list the code or statute upon which the claim is based. And 704.080 is specific only where the public assistance benefits are the source of funds that were in the account when levied. Here in California, the SNAP/CalFresh benefits are distributed on a separate benefits card, and and the actual benefit can only be spent on food with no cash back. That prevents people from cashing out the card and using it for other things instead of the food for which it was intended. The source of the money in his account was his wages being direct deposited to the account.

I'm hoping someone like Zig, DC, or Tranq might have something on this. Maybe we're barking up the wrong tree and there isn't a specific code or statute and that part of the form is left blank for this kind of claim. I just don't want his claim to be denied because of a simple mistake or oversight here, especially if the creditor files an opposition and it has to go to a hearing before the judge.

Thanks for the help so far, CSO. Because of your suggestion, he did edit his declaration to include that he is receiving the SNAP/CalFresh benefits. I sure hope it helps.
 

CSO286

Senior Member
Unfortunately, our form doesn't ask about public assistance. Instead, there's just the item that says to list the code or statute upon which the claim is based. And 704.080 is specific only where the public assistance benefits are the source of funds that were in the account when levied. Here in California, the SNAP/CalFresh benefits are distributed on a separate benefits card, and and the actual benefit can only be spent on food with no cash back. That prevents people from cashing out the card and using it for other things instead of the food for which it was intended. The source of the money in his account was his wages being direct deposited to the account.

I'm hoping someone like Zig, DC, or Tranq might have something on this. Maybe we're barking up the wrong tree and there isn't a specific code or statute and that part of the form is left blank for this kind of claim. I just don't want his claim to be denied because of a simple mistake or oversight here, especially if the creditor files an opposition and it has to go to a hearing before the judge.

Thanks for the help so far, CSO. Because of your suggestion, he did edit his declaration to include that he is receiving the SNAP/CalFresh benefits. I sure hope it helps.
Best of luck, sandy.
 

Zigner

Senior Member, Non-Attorney
http://www.leginfo.ca.gov/cgi-bin/displaycode?section=ccp&group=00001-01000&file=703.010-703.150

I don't see anything specific to California. Can the relative afford (even if by loan/gift) a consultation with a debt counselor/attorney for advice? The $ spent may save him much more.
 

sandyclaus

Senior Member
http://www.leginfo.ca.gov/cgi-bin/displaycode?section=ccp&group=00001-01000&file=703.010-703.150

I don't see anything specific to California. Can the relative afford (even if by loan/gift) a consultation with a debt counselor/attorney for advice? The $ spent may save him much more.
I seriously doubt it. His paycheck was about $150, and that's gone now. <SIGH>

SO nothing in California law. Perhaps in US Code then? Maybe something under "necessities of life"? I'll keep looking.
 

CSO286

Senior Member
I seriously doubt it. His paycheck was about $150, and that's gone now. <SIGH>

SO nothing in California law. Perhaps in US Code then? Maybe something under "necessities of life"? I'll keep looking.
Sandy, if i were you, I'd go back and review the public benenfits portions of the CA statutes. I know this is from my state (MN), but it is possilbe that there are similar lines in CA code:

Subd. 14.Public assistance.

All government assistance based on need, and the earnings or salary of a person who is a recipient of government assistance based on need, shall be exempt from all claims of creditors including any contractual setoff or security interest asserted by a financial institution. For the purposes of this chapter, government assistance based on need includes but is not limited to Minnesota family investment program, general assistance medical care, Supplemental Security Income, medical assistance, MinnesotaCare, payment of Medicare part B premiums or receipt of part D extra help, MFIP diversionary work program, work participation cash benefit, Minnesota supplemental assistance, emergency Minnesota supplemental assistance, general assistance, emergency general assistance, emergency assistance or county crisis funds, energy or fuel assistance, and food support. The salary or earnings of any debtor who is or has been an eligible recipient of government assistance based on need, or an inmate of a correctional institution shall, upon the debtor's return to private employment or farming after having been an eligible recipient of government assistance based on need, or an inmate of a correctional institution, be exempt from attachment, garnishment, or levy of execution for a period of six months after the debtor's return to employment or farming and after all public assistance for which eligibility existed has been terminated. The exemption provisions contained in this subdivision also apply for 60 days after deposit in any financial institution, whether in a single or joint account. In tracing the funds, the first-in first-out method of accounting shall be used. The burden of establishing that funds are exempt rests upon the debtor. Agencies distributing government assistance and the correctional institutions shall, at the request of creditors, inform them whether or not any debtor has been an eligible recipient of government assistance based on need, or an inmate of a correctional institution, within the preceding six months.
 

Zigner

Senior Member, Non-Attorney
Sandy, if i were you, I'd go back and review the public benenfits portions of the CA statutes. I know this is from my state (MN), but it is possilbe that there are similar lines in CA code:
I posted a link to the code section. It's a bit long to paste in here...
 

CSO286

Senior Member
Oh, I reveiwed the claim of exemption info http://www.saclaw.org/uploads/files/Step-by-Step/SbS COE Bank Levy.pdf, and it seems to me that the claim would need to be made under section 7, and then providing the supporting info in the financial disclosure. I, too, am having a bit of trouble finding a statute to cite.

Question: Up here the courts are pretty lenient with pro se litigants when it comes to providing case law/statutes, if the litigant's position is backed up by law and the judge already knows it with little/minimal research. Any idea what the court climate there is like? Would the court be kind if your family member went in with his financial disclosure, proof of his public assistance, etc., and threw himself on the mercy of the court?
 

Chien

Senior Member
Solely for your post, if I may join the forenamed august company, since Zig is not an attorney, trang is not a creditors’ rights practitioner and DC, while amply familiar with creditors’ rights, may not be intimately familiar with CA statutes: I believe you’re taking the whole business of EJ-160 compliance too literally. Remember, a fundamental tenet when evaluating a Claim of Exemption is to leave the debtor with the “fundamental necessities of life” to the extent possible without prejudicing the creditor’s rights. It will be the Court’s charge to “do law and equity”. If there is no statute fitting the exigent circumstances, there is no statute. According to your chronology, the hours had not been cut when the wage levy was initiated. Fit the facts to the statutes and the statutes to your needs.

I would do exactly the same as was suggested by the reference to Sacramento’s package and do it with alacrity with the same forms and for the same reason. As it is (allow the court to [“do law”], you don’t give the court the chance to [“do equity”], because, when it’s not for wage garnishment, EJ-160 doesn’t require a court hearing. Make it for a court hearing! Make it so that [current] financial records are filed! Make it so that the debtor gets a chance to testify as to changed circumstances! Court’s like to “do equity” and changed circumstances justify it. You would apparently deprive it of the chance to wear a white hat. I would remind it at every turn that’s exactly what it gets to do and still be within the law. It’s a mistake if you fail to. Write a Declaration explaining why “basic necessities” are now jeopardized. Attach a Declaration to EJ-160 for the levying officer and again for the court, with only a brief allusion to reason for the departure from the norm and then proceed as if it was your right from the start.

Explain it again at the hearing. The creditor has the option of attending, but won’t 99% of the time, particularly if they are not proximate to the court. That’s to your benefit.

In spite of what you’ve posted, don’t think the creditor won’t garnish and hasn’t started with paperwork already. Anything they’re entitled to go after, they should and they can do both on the same writ. It’s good for 6 mos. It’s not like a ticket to a ride – use it one time for one thing and you go back for a new one for the next.

Act quickly. The levy officer holds funds for a max. of 30 days, turns them over to the county auditor for an average of 10-15 days, and they get disbursed. Get the papers in and the exemption hearing set or they’re beyond your reach.

If you must have a statute, use something CCP 703.010 – 703.050 and CCP 706.032. That’s what the latter is for. Argue by analogy. Unless there was something absolutely dispositive, I’d rely on “equity” more than a benefits program but nothing prevents mentioning it as an aside and tangible proof of the obvious.
 

sandyclaus

Senior Member
Solely for your post, if I may join the forenamed august company, since Zig is not an attorney, trang is not a creditors’ rights practitioner and DC, while amply familiar with creditors’ rights, may not be intimately familiar with CA statutes: I believe you’re taking the whole business of EJ-160 compliance too literally. Remember, a fundamental tenet when evaluating a Claim of Exemption is to leave the debtor with the “fundamental necessities of life” to the extent possible without prejudicing the creditor’s rights. It will be the Court’s charge to “do law and equity”. If there is no statute fitting the exigent circumstances, there is no statute. According to your chronology, the hours had not been cut when the wage levy was initiated. Fit the facts to the statutes and the statutes to your needs.

I would do exactly the same as was suggested by the reference to Sacramento’s package and do it with alacrity with the same forms and for the same reason. As it is (allow the court to [“do law”], you don’t give the court the chance to [“do equity”], because, when it’s not for wage garnishment, EJ-160 doesn’t require a court hearing. Make it for a court hearing! Make it so that [current] financial records are filed! Make it so that the debtor gets a chance to testify as to changed circumstances! Court’s like to “do equity” and changed circumstances justify it. You would apparently deprive it of the chance to wear a white hat. I would remind it at every turn that’s exactly what it gets to do and still be within the law. It’s a mistake if you fail to. Write a Declaration explaining why “basic necessities” are now jeopardized. Attach a Declaration to EJ-160 for the levying officer and again for the court, with only a brief allusion to reason for the departure from the norm and then proceed as if it was your right from the start.

Explain it again at the hearing. The creditor has the option of attending, but won’t 99% of the time, particularly if they are not proximate to the court. That’s to your benefit.

In spite of what you’ve posted, don’t think the creditor won’t garnish and hasn’t started with paperwork already. Anything they’re entitled to go after, they should and they can do both on the same writ. It’s good for 6 mos. It’s not like a ticket to a ride – use it one time for one thing and you go back for a new one for the next.

Act quickly. The levy officer holds funds for a max. of 30 days, turns them over to the county auditor for an average of 10-15 days, and they get disbursed. Get the papers in and the exemption hearing set or they’re beyond your reach.

If you must have a statute, use something CCP 703.010 – 703.050 and CCP 706.032. That’s what the latter is for. Argue by analogy. Unless there was something absolutely dispositive, I’d rely on “equity” more than a benefits program but nothing prevents mentioning it as an aside and tangible proof of the obvious.
I absolutely appreciate the information.

And he found out only today that the creditor has ALSO filed for garnishment in addition to the bank levy. That was served upon his employer, but the employer hasn't notified him yet, nor have they executed the wage garnishment yet. Perhaps he should also file a Claim of Exemption for that as well at the same time?

Out of curiosity, if the funds taken in the bank levy were entirely from his wages, and a wage garnishment was also executed, wouldn't that be considered double-dipping? The garnishment allows them to take 25% of his wages, then the bank levy allows them take the rest - over and above the 25% they would already have taken. Is that even permitted?
 

Zigner

Senior Member, Non-Attorney
Yes, that is permitted. I would REALLY suggest that your relative find a way to consult with a pro. Maybe a small loan from family members? I really don't see anything you've listed as giving him an exemption.

On the garnishment - there are limits as to how much they can take from the paycheck. I believe that, federally, the amount that equals 30x the federal minimum wage for a week is exempt. But, this needs to be researched...
 

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