The Neighborhood Economic Development Advocacy Project (NEDAP) praises the New York
State Senate and Assembly for passing a new law that will protect seniors, veterans, people
with disabilities, and other New Yorkers on fixed incomes from abusive debt collection
practices. We particularly commend Senator Dale Volker and Assemblywoman Helene
Weinstein for their leadership in passing the new law (S.6203B, A.8527A).
Nearly 3.5 million New Yorkers receive Social Security or SSI benefits. Many more receive
Veterans Benefits, pensions, workers compensation, unemployment insurance, child support,
and other subsistence income that is exempt from debt collection under federal and state law.
Despite these exemptions, a loophole in New York law has allowed debt collectors to freeze the bank accounts and seize the subsistence income of thousands of New Yorkers every year.
NEDAP’s Consumer Law Project has received hundreds of calls each year from seniors,
people with disabilities, and other lower income clients whose subsistence income has been
unlawfully frozen by debt collectors. Once our clients lose access to their subsistence income,
they often fall behind in rent and utility payments or go without food. They have to borrow
money to survive, and face a devastating psychological toll from losing access to funds that
represent a lifeline.
The new law will go a long way toward rectifying this serious problem. It will prevent debt
collectors from freezing the first $2,500 in a bank account when the account contains directlydeposited
Social Security, Veterans Benefits, and other subsistence income.
The law will
extend the same protection for earned income up to $1,716, which is the equivalent of 8 weeks
of minimum wage earnings. The law will also make it easier for New Yorkers to unfreeze
their bank accounts when those accounts have been unlawfully frozen by debt collectors.
In short, the new law will eliminate one of the worst debt collection abuses in New York State.
NEDAP commends the Senate and Assembly for passing this bill and looks forward to Governor
Paterson’s signing the bill into law.
