Debt collectors won’t necessarily leave you alone just because your income is exempt from garnishment

Alpha Consumer’s article about dealing with debt for a disabled son reminded me of a number of phone calls I have received from consumers in a similar position to the disable son’s:

About eight months ago our son, who is 45, suffered a brain injury, resulting in the loss of short-term memory. He was between jobs, which caught him with no assets and no insurance but about $20,000 in credit card obligations. He is unmarried and has no children.

Although he may get some rehabilitation to develop coping skills, it is also quite likely he will spend many of his future years in some sort of institution. He is presently receiving Medicaid and Supplemental Security Income disability payments. The prospect for greater earnings is not good.

Since it is very probable that he will never earn significant income and most likely will remain unable to manage debt, is there any reason to worry about his current financial predicament?

Kimberly Palmer, who writes Alpha Consmer, said that “another option is, in fact, to ignore it. As crazy as that may sound, it may not matter if your son has a bad credit score. In fact, says Cunningham, it could even help him receive more government benefits down the road.” While true, debt collectors don’t necessarily stop collecting just because a consumer’s income is exempt from garnishment.

I have seen numerous instances of debt collectors and debt collection law firms obtaining a default or other judgment through the courts, and then pursuing garnishment. The bank pulls the funds immediately, and the consumer must then serve an exemption notice to get the funds returned.

Here’s the important part: the debt collector may object to the claim of exemption. The consumer must then request a hearing to determine whether or not she is exempt from garnishent. If she does not, the garnishment goes ahead as planned, whether or not the funds were exempt.

The law is clearly biased in favor of the debt collectors, who will garnish again and again, and get paid with those disability benefits they are not entitled to take.

If you take Alpha Consumer’s advice, be prepared to litigate your exemption claims, possibly numerous times. You can do this yourself, but you need to move quickly and stay on top of things. This can be extremely difficult, especially for those living on exempt public benefits who are suffering from physical or mental disability or are otherwise unable to advocate on their own behalf.

Bankruptcy may be a better option, but then, bankruptcy will not stop a determined debt collector, either.