Question about the 5k non-wage garnishment exemptin we have in WI.

[hopeforus]

After doing searching yesterday, it looks as if Wisconsin allows 5k to be exempt in personal bank accounts from garnishment. What I need to know is... if a levy is put on my account, does that 5k start off exempt and is unfrozen or is that exemption something I have to prove and have released just as if I would have to prove that SSI income in there?

I went and took most of our money out yesterday after learning that they don't need to let me know that they are garnishing my accounts. (which makes sense so you can't go take it out, even though it sucks!) Then started freaking out over how I'm going to get our GI Bill educational money out each month because I don't think they will switch to paper checks. Would hate for that to freeze. I also get my student loan money but that's going to be automatically put on a OneAccount card from the university. Hopefully no one finds that... ugh. Tax refund will be like 8k. Will be requesting a papercheck.

(Edited to add that yes, we have 3 judgments on us right now and hoping to file in the next month. For various reasons it took us longer to get our stuff together. I knew we were garnishment proof wage-wise... so didn't worry about it, esp since I wasn't considering our bank accounts. )

Anyway I was mostly hoping that I wouldn't have to worry about the GI Bill money being taken from us as long as our account is below 5k in the bank. But need to know if that 5k is still frozen from the beginning or not...

anyone know?

[ValleYum]

I wonder if your GI Bill monies are vulnerable in a non-wage garnishment...

[hopeforus]

I get confused ... it *is* a VA Benefit I guess and I know VA benefits are exempt. I guess I got confused since I was thinking VA Benefits as in disability or pension...

I just really wonder how long it takes after submitting the exemption forms until an account is unfrozen.

For now I think we will go to Check into Cash and get our tax refund put onto one of those cards. Part of it. Part of it will be cash. Then we will still keep some money in our regular bank account so that if they do freeze it... it's not all of our money. Also if I'm reading the statutes correctly it would appear that hubby and I both get the 5k depository account exemption. This is what it says...

"
(8) MARITAL PROPERTY RIGHTS. Each spouse is entitled to and

may claim the exemptions under this section. If the property

exempt under this section is limited to a specified maximum dollar

amount, each spouse is entitled to one exemption. That exemption
is limited to the specified maximum dollar amount, which may be

combined with the other spouse’s exemption in the same property

or applied to different property included under the same exemption. The exemption under sub. (3) (h) may not be combined with

the other spouse’"

Here is the part on depository accounts:

"
(k) Depository accounts. Depository accounts in the aggregate value of $5,000, but only to the extent that the account is for

the debtor’s personal use and is not used as a business account"


We also have my son's SSI check coming monthly but I'll just put those on the Check into Cash card maybe too. I know it's exempt but I still don't want to mess with not having access to it. Although they allow for SSI to be put on their own prepaid card now so maybe I might do that.

[ValleYum]

Put the SSI funds for your son on its own prepaid card!!

My vision of the worst case scenario appears to be that they might have to freeze the entire account in order to see to see what qualifies as exempted funds and what doesn't if your monies are co-mingled.

[hopeforus]

The *only* reason why I haven't done that yet is because we are able to use his SSI to help pay the rent right now while we make hardly anything... it was either use his SSI or be homeless (hard decision there!) and if it was on the card it would have been harder to add to our money to write a check. But we have enough money pulled out in cash in plan to have cash to write money orders from the tax refund. Thankfully we have used the unused homestead exemption to save all of this cash when we do file. Hopefully I'll have all these papers gathered by tomorrow. Also the Check into Cash card is from a bank in Illinois so they will have to get an order for that state too I think right?

[ValleYum]

I am not sure on the Check into Cash card issue - particularly with it being in a different state.

Don't rush your papers - double check them before you file them!!! Good luck to you!! I hope this all works in your favor.

[treehugger1]

here is my bottom line, in my opinion. Many collection attorneys and/or judgment creditors will shoot first and ask questions later. You can't begrudge them that. I live in a state that allows up to $7500 of exempt funds to be retained in a bank account. This would not stop a judgment creditor from getting these dollars and forcing me to go to the court and argue my exemptions with proof. As a result, I keep all my exempt "deposit" funds on prepaid card accounts. Why take chances? I don't want the hassle of arguing against funds that have been levied. Life is too short.

[WhatMoney]

here is my bottom line, in my opinion. Many collection attorneys and/or judgment creditors will shoot first and ask questions later. You can't begrudge them that. I live in a state that allows up to $7500 of exempt funds to be retained in a bank account. This would not stop a judgment creditor from getting these dollars and forcing me to go to the court and argue my exemptions with proof. As a result, I keep all my exempt "deposit" funds on prepaid card accounts. Why take chances? I don't want the hassle of arguing against funds that have been levied. Life is too short.

But in Oregon there were new statutes passed in December 2009 that required banks to not honor any levies on exempt deposit funds. No co-mingling and direct deposit required. The banks are required to accept and approve a letter from you (or their own form) that forces them to acknowledge the new ORS law and not freeze direct deposited exempt funds. There was another statute passed that also prevents the bank from charging any legal fees if they levy an exempt account. There is nothing in it for the banks now to illegally, against new specific state statutes, freeze exempt funds if they are notified the funds are exempt.

I've posted the OR statutes in here somewhere last year when they first came out.

I don't know if Wisconsin has any such specific law against levies, probably not.

If an OR bank now freezes exempt funds they are in direct violation of a State statute specifically written to protect depositors. It was written so elderly SSA and disabled people do not need to go through the hassle of filing exemption forms with the court to get their funds released.

I can't say if this new law is working yet. I may be a test case if I ever get sued.

[treehugger1]

Except I have ben told the law is a bit like a "laundry list." It does not refer to funds that are exempt after wage garnishment. I will have to go review the statute. Thanks for the reminder.

[WhatMoney]

Except I have ben told the law is a bit like a "laundry list." It does not refer to funds that are exempt after wage garnishment. I will have to go review the statute. Thanks for the reminder.

The new 2009 Statutes are ORS 18.619 (Certain financial institution deposits not subject to garnishment), and ORS 18.790 (7) (garnishment processing fee).

Wages exempt after garnishment (75% of takehome pay or $196/workweek) are exempt in bank accounts by ORS 18.385 and 18.348, but an exemption form must be submitted in this case - you are not protected from exempt wages by ORS 18.619 as you point out.

ORS 18.619 lists those direct deposits where no exemption form is needed since the bank is responsible for not freezing these funds. (Certain pension plans, SSA, SSI, SSD, UE compensation, veterans benefits, and workers' compensation, basically.)