The Learning Curve

New tricks for an old dog.

Exempt Income Protection Act – New York

Under the alternative exemption provisions of the Bankruptcy Act (11 U.S.C. §522(d)), and under the laws of many states, various subsistence stipends are protected from the claims of creditors.  These may include such payments as social security benefits, unemployment compensation, local public assistance benefits, veterans’ benefits, and disability benefits.

There is a strong public policy that the recipients of these payments not starve, even at the cost that commercial lenders and other creditors not be repaid.

However, these types of payments frequently end up being deposited, for however brief a time, in individual checking accounts.  There has been a great deal of litigation over the years resulting from creditors and debt collectors who try to garnish a debtors bank accounts.  The results of these lawsuits have been divergent.  Some courts have decided that the funds lose their exempt status once deposited in a bank account, and other courts have held the reverse.

New Yorks’ Exempt Income Protection Act (EIPA) went into effect on January 1, 2009 .  If a bank account receives subsistence funds by way of direct deposit, up to $2500 is safeguarded from creditors, or up to $1716 in other accounts.


Written by Tom Fox

02/28/2009 at 4:14 am

Posted in Debt collection, Legal

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