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Sixth Circuit Rules Debt Collectors May Garnish Bank Accounts Without Subpoenaing Bank Records

April 26, 2010

As Chino Hills unfair debt collection attorneys, we were disappointed to see a federal appeals court ruling that removes liability from debt collectors who incorrectly garnish debtors' bank accounts. InsideARM reported April 20 that the appeals court ruled in favor of a collections law firm in Lee v. Javitch, Block & Rathbone LLP, No. 08-4485, (6th. Cir. April 13, 2010). The law firm, Javitch, had already won a default judgment against Norma Lee when it filed for a non-wage garnishment of her bank account. In order to do that, it had to sign an affidavit stating it had a reasonable basis to believe the bank had property of Lee's that was not exempt from garnishment under federal or Ohio state law. Unfortunately for Javitch, it turned out that Lee's bank account consisted only of Social Security disability payments, which are exempt from garnishment.

Lee proved this and had the money returned, then sued Javitch. The law firm did not have a reasonable basis to believe the account was not exempt, the claim said, and thus it had violated the Fair Debt Collection Practices Act. A federal jury in Ohio agreed with her and awarded $49,603 in damages, plus attorney fees. Javitch appealed, arguing that it did have a reasonable basis. On appeal, the dispute centered on whether Javitch should have further investigated the situation by subpoenaing Lee's bank records after the judgment was final. Javitch called an expert who argued that this was not at all the industry standard, and that some law firms didn't even believe it was legal. Lee called no witnesses to dispute this, and the Sixth Circuit concluded on the basis of this "unanimous testimony" that Javitch did have a reasonable basis to sign the affidavit.

This ruling is disappointing for our Azusa debt collection abuse lawyers, because it allows debt collection law firms to proceed with a garnishment before verifying that they are legally entitled to that money. In this case, Norma Lee racked up nearly $200 in bank fees due to bounced checks and was unable to access any of her Social Security disability payments until she got a court order returning the money. At trial, she claimed the stress from this situation affected her health, which was already poor because of a surgical complication that limited her use of one arm. Someone in this situation can't afford to have money disappear from a bank account, which is precisely why Social Security is exempt from garnishment. The Sixth Circuit's decision allows debt collectors to create many more Norma Lees, all of whom would have to go to court to regain the money that was always rightfully theirs.

Howard Law PC represents victims of all types of law-breaking by collection agencies, including incorrect garnishment of wages, bank accounts or other property. In our experience as Whittier debt collection abuse attorneys, debt collectors very frequently break the FDCPA and the California equivalent, the Rosenthal FDCPA, because they know threats and misleading statements work. They know that very few victims understand their legal rights under those laws, and they rely on that ignorance to keep them from facing responsibility for their actions. We help consumers fight back by filing FDCPA lawsuits against the companies and people responsible for the illegal behavior. These lawsuits can get victims up to $1,000 in statutory damages, plus attorney fees and any actual damages caused by the law-breaking.

If you believe you were harassed, intimidated, lied to or otherwise abused by a debt collector, call Howard Law and start fighting back now. To set up a free consultation, you can send us an email or call 1-800-872-5925 toll-free.