Posted by Juleon Robinson
You’ve just been robbed. Worse yet, you know who did it. It was the last few dollars to your name and you don’t get paid for another month. Three weeks pass, and an envelope containing the stolen money appears on your doorstep. You go to court to demand justice, but the judge rules that no crime has been committed – after all, you got your money back. The judge says it’s no big deal you had to wait three weeks to get your money back.
Does this sound like justice?
This scenario is not unlike what happened to Franklin Arias, a New Yorker in his 70s. In late 2014, debt collection law firm Gutman, Mintz, Baker, and Sonnenfeldt (GMBS) unlawfully froze Mr. Arias’s Social Security funds for rent payments he allegedly owed. To get his money released, Mr. Arias followed rules spelled out in the Exempt Income Protection Act (EIPA), a New York law passed in 2008 to stop debt collectors from leaving people without enough money to live. Mr. Arias presented clear proof that GMBS had frozen his Social Security funds, which are legally exempt from debt collection.
Despite the clear evidence he presented, GMBS refused to release Mr. Arias’s funds, falsely claiming that his proof wasn’t good enough. Three weeks later, still without access to his Social Security funds, Mr. Arias again showed the same proof to a GMBS lawyer in court. This time, the lawyer agreed to release his account immediately.
Soon thereafter, we helped Mr. Arias file a federal lawsuit against GMBS for violating the Fair Debt Collection Practices Act, a federal law that seeks to protect people from unfair debt collection. He charged that GMBS refused to release his legally-exempt funds to squeeze him financially and pressure him into settling the alleged debt. The judge acknowledged that GMBS had made “false and deceptive” statements to Mr. Arias, but ruled that GMBS did not violate the law. The judge dismissed the 21 days Arias had to survive without access to his money, saying it had “minimal impact.”
The court’s decision would allow debt collectors to unlawfully hold the last few dollars in people’s bank accounts. Freezing these vital sources of income, such as government benefits, pension checks, and workers compensation, is precisely the type of abuse the EIPA seeks to address. If left to stand, the decision would force low-income New Yorkers to choose between meeting their basic needs and paying off an alleged debt.
This ruling is an affront to all New Yorkers who live on low or fixed incomes, and New Economy Project and co-counsel are now representing Mr. Arias in his appeal of the court’s decision. Recognizing just how much is at stake in the case, the federal Consumer Financial Protection Bureau has filed a “friend of the court” brief in support of Mr. Arias’s appeal, as has a group of ten New York-based legal services organizations.
As New Economy Project’s research shows, abusive debt collection is concentrated in low-income neighborhoods and communities of color, where large corporations extract wealth from the most marginalized New Yorkers. Fundamentally, this appeal seeks to take a stand against this kind of financial exploitation, and in so doing, reaffirm people over profit.