THINGS YOU SHOULD KNOW ABOUT EXEMPT INCOME
What does it mean to be exempt from debt collection?
Under state and federal law, certain kinds of income and property are classified as exempt from debt collection. A creditor or debt collector cannot force you to use exempt income or property to pay a debt. Also: If you are a New York Resident You Need To Know The Following:
Governor Paterson signed the Exempt Income Protection Act (S6302B/A8527A) into law September 26, 2008!
Starting January 1, 2009, your bank account cannot be frozen if the balance is less than:
$2,500 – if your account contains directly deposited exempt benefits, including Social Security, SSI, disability, pensions, child support, spousal maintenance, workers compensation, unemployment, Public Assistance, etc. or: $1,716 – all other accounts.
The old law will remain in effect until December 31, 2008. If you have a frozen bank account right now, the new law will not automatically unfreeze your account on January 1. If you want to unfreeze your account, you must take specific action. Please refer to Frozen Bank Accounts to learn how to unfreeze your account.
UPDATE: A RECENT NEW LAW protects your exempt funds from attempts of attachment as banks are on notice that these funds are exempt, however, if the funds are not direct deposited the funds could still be mistakenly frozen.
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Some of the biggest problems every consumer faces when in debt are Debt Collectors who violate the Fair Debt Collection Practices Act. The problem is these calls do not simply go away, many times equaling as many as 20 calls per day from the same collector.
We have a solution called “Collection Protection.” It is designed not only to reduce the call volume from collectors, but also to seek out those who are violating the FDCPA Laws. In this program you will not only be educated as to what these laws are,
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Attorney representation will be included on any violation we can prove, and the great feature with this program is that if your rights are violated in this program and we can prove it, your collector may have to pay you! These awards can be as much as 500 dollars per violation.
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More On Exempt Income–THE FOLLOWING APPLIES TO ALL STATES:
What does it mean to be exempt from debt collection?
Under state and federal law, certain kinds of income and property are classified as exempt from debt collection. A creditor or debt collector cannot force you to use exempt income or property to pay a debt.
What kinds of benefits are exempt from debt collection?
- Public Assistance (PA)
- Supplemental Security Income (SSI)
- Social Security
- Social Security Disability (SSD)
- Veterans benefits (VA)
- Child Support
- Spousal Maintenance
- Workers Compensation
- Unemployment Insurance
- Railroad Retirement benefits
- Black Lung benefits
What kinds of retirement funds are exempt from debt collection?
- Public and private pensions.
- Retirement saving accounts like 401(k), 403(b), and Individual Retirement Accounts (IRA)
- All of the principal and 90% of the payments from a private trust
How much earned income is exempt from debt collection?
If you receive PA or SSI, all of your earned income is exempt from debt collection. Earned income up to 30 times the federal minimum wage per week, after taxes, is exempt. The federal minimum wage is currently $6.55 an hour. If you take home $196.50 per week or less, all of your earned income is exempt from debt collection.
If you take home more than $196.50 per week, 90% of your gross income or 75% of your disposable income, whichever is greater, is exempt from debt collection.
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The information contained on this page is not intended to be legal advice. American Debt Enders is not a law firm, and as such, cannot advise on the law.