A recent class action suit resulted in a large number of debt collectors paying a combined settlement of $59 million to the people of New York that were impacted by illegal debt collection practices.
These tactics included freezing bank accounts and garnishing wages without the legal consent or right to do so. While this particular ruling is a step in the right direction when it comes to making sure debt collectors play by the rules, many states still need to update debt collection laws.
As a recent New York Times article points out (see link to New York Times piece at the bottom of this article), various states have debt recovery laws that were clearly developed a long time ago. Vermont, for example, allows someone that owes a vast amount of debt to keep two goats, one cow, and three swarms of bees following debt collection.
While groups like the National Consumer Law Center have suggested that all states allow a person to keep a reasonable amount of money (around $1200), a car of moderate value, and other items that make it possible for someone to live while paying back debt, these standards are only suggestions and have largely not been adopted by states like Vermont.
Vermont isn’t alone when it comes to laughable debt recovery laws, but state lawmakers are not entirely focused on changing these laws for a number of reasons. A quick Google search will lead you to a number of silly or outdated state laws, and debt collection laws tend to fall into the same category in many states.
So why are these laws still intact? Simply put, it’s too costly and too time consuming to change them – and requests to change these laws are never or rarely put forth. These outdated laws allow debt collectors to take full advantage of people in states where the laws are outdated.
Keeping Your Bank Account Safe
Some states have debt collection laws that are stringent, but it’s hard to prevent debt collectors from seizing bank accounts even in these states. You have to know how to file the right paperwork, and you have to know how the debt collection process works. Debt collectors will keep getting away with illegal debt collection actions unless state laws change and those that are in debt are aware of their rights.
If you are in debt right now, do not assume that your state laws protect you – or that a debt collection company is playing by the rules. It’s safer to assume that your bank account can be seized and your assets can be taken from you (unless, of course, you live in Vermont and can find a lot of good use for three swarms of bees!). To protect yourself and your money, contact a reputable lawyer and find out your rights.
Source: New York Times article