Social security income, pension benefits, or other federal benefits are exempt from collection agencies in the state of Oklahoma. Most seniors are unaware and fall prey to threatening methods used by some debt collection agencies.
Debt collectors know that senior citizens desire to pay bills and will forgo necessary household expenses to satisfy aggressive collection methods. A senior that has co-signed for a family member under collection status, opens themselves up to their bank account being frozen to satisfy the credit card debt of the family member.
Frozen Bank Accounts
Debt collectors have the ability, through a court ordered judgment, to garnishee individual bank accounts for collections. Banks freeze an entire account, unable to distinguish exempt assets from non-exempt assets. This action leaves a senior citizen with no available funds for necessities.
The burden of proof then falls to the social security recipient, who can file exemption status at the county courthouse. By the time a hearing occurs, it can be days or weeks before essential funds are available.
Exemptions by State Law
Federal and Oklahoma law provides safety nets to individuals who are unable to pay their debts. The protections date to statehood. Statutes exempting the homestead, one gun, 20 chickens, a milk cow, and other property was exempt to leave a minimum substance for a family to survive and stay off the state welfare rolls. Newer exemptions including a vehicle, household furniture, and household items have been included in state statutes.
In addition, in most instances the Oklahoma Statutes of Limitations is three years on uncollected debts. Citizens should contact the state Legal Aid Services to obtain individual state exemptions on garnishment. The OSHA government web site lists information on federal exemptions.
Federal Bank Regulations Forthcoming
The United States Treasury Department is considering regulation against banks unlawfully freezing bank accounts containing exempt funds. The proposed regulations could be in effect by the end of 2010. Since social security recipients will soon be required to receive their funds by electronic deposit or use a debit card issued by the government, fears are that collection agencies will be even more aggressive in obtaining court orders to freeze assets.
The new regulation eliminates this unlawful seizure of senior citizen funds by requiring banks to determine if any exempt funds were deposited within the last 60 days. If so, the account is exempt from satisfying a court order of garnishment.
Solutions by Senior Citizens
Individual senior citizens can avoid unnecessary frozen bank accounts by not allowing co-mingling of funds in one account. Federal assistance income funds should be in a separate account from rental income, for example, since rental income is not exempt from garnishment. By placing protected income in a separate account from unprotected income, the bank can easily identify exempt funds.
Senior citizens should recognize creditors illegally prey on social security income. Children and friends should be aware, help, and protect vulnerable senior citizens from harassment tactics by debt collectors and illegal seizure of federal income funds.
Sources:
Occupational Health and Safety Administration (OSHA), accessed August 15, 2010
Fair Debt Collection by state, accessed August 15, 2010
Article by "National Consumer Law Center," Disabled-World Disability and Health News, April 15, 2010, accessed August 16, 2010
Article by Paula Burkes, "Creditors unlawfully prey on seniors' Social Security benefits," NewsOK, August 15, 2010, accessed August 15, 2010
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