By Eric Olsen Executive Director, HELPS Nonprofit Law Firm
According to the Kaiser Foundation, almost half (21 million) of American seniors have incomes below 200% of the poverty line. Many have debt they can't afford to pay. When debt is not paid, collectors call, send demand letters, and sometimes file a lawsuit. Being served legal papers can be a scary experience for a senior.
I recently spoke with a concerned couple served by a sheriff's deputy with a lawsuit for an old credit card debt. This had never happened to them before. I promised that they would feel much better after I explained things.This couple's only income was Social Security and a modest pension. After their basic needs, there was no money left over.
My name is Eric Olsen. I have been an attorney for nearly forty years and am the Executive Director of HELPS Nonprofit Law Firm, a nationwide charitable law firm that helps lower-income seniors and disabled persons who owe debt they can't afford to pay.The most important message I had for this couple and seniors everywhere is that federal law protects their Social Security, pensions, disability and VA benefits. It can't be taken from them, even if there is a judgment. I explained that the credit card company filed a lawsuit to establish that a debt was owed. When the period expired in the notice, the creditor would obtain a judgment. The couple had a right to contest the lawsuit, but since they owed the money, there was nothing to contest. They did not need to worry; their income was safe.
Sometimes seniors are concerned because a sheriff is the one serving the lawsuit papers. I explained this was what is called a civil matter, not anything criminal at all. All sheriff's offices have a civil deputy, whose job it is to serve papers like a lawsuit to collect money.
They had questions about what would happen after a judgment. Could the judgment holder garnish or take money from their bank account? Federal banking regulations instruct banks to automatically disregard a garnishment of a bank account into which Social Security is electronically deposited, up to twice the amount of monthly Social Security benefits deposited into the account, no matter the source of funds in the account at the time of the garnishment. Together they received Social Security of $1,800 and pension of around $600 per month. As long as there was less than $3,600 in their joint checking account into which their Social Security was deposited, their bank would automatically disregard any garnishment. Every state has laws that protect a person's personal property, like furniture and cars. When there is nothing to take, it is sometimes called being "judgment proof."
Sometimes seniors worry about judgments and their home. A judgment normally becomes a lien on a person's real property, such as a home on land. That is almost never a concern. Most states have homestead exemption laws that protect a specified amount of equity in a person's home. Even if there is equity beyond the homestead exemption, judgment creditors for consumer debts virtually never take steps against a person's home. It is too complicated and there are means to stop that. They let a judgment sit and hope there is enough equity that they get paid if the home is sold some day.
Collectors never tell a senior about their protected income. Instead, they make threatening telephone calls, send demands and file lawsuits, designed to intimidate seniors into paying. Even debt settlement companies and nonprofit credit counseling debt management companies will seldom tell a senior that their income is protected by federal law. Unfortunately, many lower-income seniors are placed in utter poverty by these companies, making payments on old debt they legally don't have to pay.
Unwanted collector phone calls and letters can be stopped. Federal law provides that a person can send a debt collector what is called a "cease and desist" letter. A debt collector can no longer call or send collection demands after receipt of that letter. You can find a blank template copy of a "cease and desist" letter on the Internet, such as on the HELPS website.
Federal law provides that when a person is represented by an attorney, collectors can no longer call or send demand letters to that person. Many lower-income and poor seniors have difficulty dealing with collectors on their own. HELPS is a nationwide charitable nonprofit law firm that represents seniors to stop unwanted collector contact. HELPS also educates seniors and disabled persons on how they can maintain their financial independence. HELPS turns no qualified senior or disabled person away. Seniors can rest assured, that even though they might receive a judgment for a debt they can't pay, their income is safe. Unwanted collector contact can be stopped. Seniors can learn more about this topic by visiting HELPS at www.helpsishere.org.
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