SSDI & Bank Levy

[moburkes]

What is the name of your state? Ohio

Not for me, since I'm not on SSDI. Someone's bank account was levied because of a judgment. $18X were removed. Their only income is SSDI. I did a search for "bank levy", but cannot find the link for a form that you print and present to the bank (I think) or the collector as proof or explanation that the account only holds SSDI funds.

Can you help you?

 

[Chien]

Mo - it's going to have to be done by proof submitted to the court at an exemption hearing that the account holder will have to request and have scheduled. The court will review evidence and rule the funds exempt. (I couldn't find an online form to start that either.)

Until then, the bank must obey the levy or garnishment order that was presented to it.

The attorney for the creditor COULD review the same evidence and COULD allow the funds to be released without the hearing, but the attorney is the only one who could do it without the court order, and it would be an uncommonly accommodating gesture (to the point that I've seen it happen once).

 

[moburkes]

Sh!t! Alright, I'll tell him. Thanks!

 

[BL]

They can try a letter the collector first sending copies of all relevant proofs and demanding the levy be lifted and monies returned to the account , sent RRR Certified mail . Keep copies and the receipt of delivery .

Can Social Security benefits be garnished to pay a debt? Answer
Section 207 of the Social Security Act (42 U.S.C. 407) protects Social Security benefits from assignment, levy, or garnishment. However, the law provides five exceptions:
Section 459 of the Act (42 U.S.C. 659) allows Social Security benefits to be garnished to enforce child support and/or alimony obligations;
Section 6334 (c) of the Internal Revenue Code (26 U.S.C. 6334 (c)) allows benefits to be garnished to collect unpaid Federal taxes;
Section 3402 (P) of the Internal Revenue Code allows beneficiaries to elect to have a percentage of their benefits withheld and paid to the Internal Revenue Service to satisfy their Federal income tax liability for the current year;
The Debt Collection Act of 1996 (Public Law 104-134) allows benefits to be withheld and paid to another Federal agency to pay a non-tax debt the beneficiary owes to that agency: and
The Tax Payer Relief Act of 1997 (Public Law 105-34) authorizes the Internal Revenue Service to collect overdue federal tax debts of beneficiaries by levying up to 15 percent of each monthly payment until the debt is paid.
The Social Security Administration's responsibility for protecting benefits against legal process and assignment usually ends when the beneficiary is paid. However, once paid, benefits continue to be protected under section 207 of the Act only as long as they are identifiable as Social Security benefits. This applies to money in a bank account where the only payments into the account are from direct deposit of Social Security benefits.
NOTE: Supplemental Security Income payments cannot be levied or garnished.

 

[moburkes]

It's worth a shot, you're right. Thanks!

 

[Chien]

He can ASK the attorney, what if . . . .

It's a court appearance that the creditor is not going to win - it just stretches the time for return of frozen funds.

I've explained to a client that we should release funds that weren't exempt, because the judgement debtor showed me that they were needed for insurance premiums to cover his wife's cancer treatment. We did. Everybody has their own moral compass. You don't know until you ask.
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Plus the attorney could be on the other side of the state. Nobody wants to travel or hire a surrogate for an appearance where the outcome is pre-determined that you lose.

 

[moburkes]

He can ASK the attorney, what if . . . .

It's a court appearance that the creditor is not going to win - it just stretches the time for return of frozen funds.
I've explained to a client that we should release funds that weren't exempt, because the judgement debtor showed me that they were needed for insurance premiums to cover his wife's cancer treatment. We did. Everybody has their own moral compass. You don't know until you ask.
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Plus the attorney could be on the other side of the state. Nobody wants to travel or hire a surrogate for an appearance where the outcome is pre-determined that you lose.

I don't understand the highlighted portion above. Are you just saying that by filing a motion through the courts, since the creditor knows it will lose, that the letter does sound pretty reasonable?

 

[Chien]

The letter sounds reasonable and a call sounds reasonable.

It’s not a motion through the courts; it’s an exemption hearing. The latter is normally a more expedited process, conducted in a shorter time frame. The reason being that the underlying theory is that funds that rightfully belong to the debtor are at stake.

The normal garnishment sequence is that the bank freezes and holds funds for a time (to see if there will be superior third-party claims, such as from a taxing authority). The funds are then released to the Sheriff/Marshal, who holds them an additional period of time to see if there will be exemption revisions. Finally, the funds are sent to the creditor. The whole process can take 30-40 days.

A court’s exemption order short-circuits that. The order tells the Sheriff, “You can’t keep and release to the creditor $X. That much is exempt. Return it to the bank for the benefit of the account holder.”

The creditor’s attorney is the only other one able to do the same thing. The attorney can say to the bank or Sheriff, “I know you froze $X. I also now know that’s all exempt. I’m changing the instructions that I gave you and authorizing you to give it back to the account holder”. The attorney can short-circuit the process too.

Aside from a court order or the attorney’s instructions, the money goes all the way through the pipeline, and the account holder uses the exemption order to get a refund from the creditor.

The faster an order, a letter, a call can turn things around, the better. My thinking was that, if the attorney can be persuaded that all frozen funds can be shown to be exempt, he/she could decide, “Why bother with an exemption hearing? I can’t change the outcome or keep the money. If I believe that now, why go to court to have a judge tell me? Just cut it loose.”

There’s no guarantee, but it can’t hurt to try.

 

[moburkes]

Thanks very much. On my lunch, I passed along the previous information, including the letter, but with much less detail, since I didn't have it. I will pass along the rest.

I'm sure he appreciates the help as much as I appreciate the education!

Thanks!!!!!!!!!!!!!!