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Collection Actions: 11.4.3.5 Bank Accounts

If the federal government is proceeding under the Federal Debt Collection Procedures Act (Procedures Act) to collect criminal justice debt, the debtor has a choice between the bankruptcy exemptions and a combination of state exemptions and non-bankruptcy federal exemptions.212 These protections may allow the debtor to exempt some amount of funds in a bank account.

Collection Actions: 10.3.1.1 Generally

In 1990, Congress passed the Federal Debt Collection Procedures Act (Procedures Act).464 Congress intended the Act to create a new statutory framework for the judicial enforcement of most debts owed to the U.S. government. The sponsors believed this would facilitate the collection of U.S. government debts and reduce the federal budget deficit.465

Collection Actions: 10.2.9.1 Generally

The Debt Collection Improvement Act significantly expanded federal agencies’ ability to offset nontax debts against federal benefits and other payments due the debtor.173 Most administrative offsets are handled centrally by the Treasury Department, but individual agencies also have authority to make offsets,174 including ad hoc, non-centralized offsets.175 In addition, a number of decisions recognize a common law right of offset on t

Collection Actions: 10.4.5 Steps the IRS Can Take to Force Payment; Exemptions

If a taxpayer does not set up a payment plan, negotiate an offer-in-compromise, or secure “currently not collectible” status, the IRS can force payment. Before the IRS actually forces payment, it will generally send a series of threatening letters—for example, a Notice of Tax Due and Demand for Payment or Final Notice of Intent to Levy. These notices announce the IRS’s intent to levy on or seize the income and assets of the taxpayer.

Collection Actions: 10.4.3.2 Installment Agreements

The IRS allows a taxpayer to pay taxes that are owed in monthly installments. A taxpayer who owes less than $50,000 has up to seventy-two months to pay, and one who owes between $50,001 and $100,000 has up to eighty-four months to pay.

Collection Actions: 17.3.2 Exceptions to the Prohibition

Many of the state prohibitions make an exception for nonpayment of judgments involving fraud34 or tort.35 Some states allow imprisonment for debt when the debtor is about to leave the jurisdiction,36 or when the debtor “refuses to deliver up his estate for the benefit of his creditors.”37 A number of states restrict the protection to civil actions.38

Collection Actions: 17.3.4 Federal Constitutional Limits on Punishment for Contempt

The U.S. Constitution places some limits on imprisoning a judgment debtor on a contempt charge for failing to abide by a payment order. In evaluating what the Constitution requires, the first question is whether the debtor is being imprisoned for civil contempt or criminal contempt—that is, whether it is remedial or punitive.

Collection Actions: 11.3.9.2 Effect of Limitations Period on State Collection Remedies

A statute of limitations generally extinguishes the remedy, not the underlying right. While a debt may only be recoverable by lawsuit for a certain number of years, the debt itself may continue indefinitely, albeit unenforceable by lawsuit.130 This leaves unresolved in many states the question of whether the expiration of the limitations period extinguishes state remedies to enforce the debt, such as driver’s license suspensions, administrative garnishments, or tax intercepts.

Collection Actions: 11.3.9.3 Laches

The equitable defense of laches is established by proving both an unreasonable delay in asserting a right and prejudice against the party raising the defense. The general rule is that laches is not available in circumstances to which a clear statute of limitations applies.134

Collection Actions: 11.1.4 Joining the Court Debt Listserv

Litigators working on criminal justice debt issues may find it helpful to consult with other attorneys practicing in this space. The National Legal Aid & Defender Association maintains a court debt listserv for attorneys to discuss criminal justice debt issues and share legal developments. Interested attorneys must be vetted prior to joining the listserv.18

Collection Actions: 11.2.1 Introduction

The imposition and collection of criminal justice debt often raise complex questions of local, state, and federal law. Behind many of these questions are a set of underlying constitutional principles. In the 1970s, the U.S. Supreme Court began to address the limits on the government’s extraordinary power to collect debts through mechanisms unavailable to private creditors. These principles are discussed below.

Collection Actions: 11.2.2 Debtors’ Prisons

The U.S. Supreme Court addressed the problem of debtors’ prisons in Tate v. Short.19 Tate was unable to pay $425 in fines arising from various traffic offenses. A local court ordered that Tate be imprisoned pursuant to Texas law authorizing incarceration for nonpayment of fines and costs to “satisfy” the debt at a rate of $5 per day spent in prison. Tate argued that he was too poor to pay the fines, but the state courts held that his indigence did not justify his release.

Collection Actions: 11.2.4 Constitutionally Required Procedural Safeguards

The U.S. Constitution is also implicated if a state fails to afford meaningful procedural safeguards against erroneous deprivation of liberty for nonpayment, including in the course of making ability-to-pay determinations. Turner v. Rogers45 is an important 2011 Supreme Court decision on this issue, even though it does not directly address criminal justice debt.

Collection Actions: 11.3.1 Introduction

In at least forty-five jurisdictions, individuals may be incarcerated for “willful” nonpayment of criminal justice debts.50 Incarceration may result, for example, through:

Collection Actions: 11.3.2.1 Generally

Too often, attorneys are not involved in proceedings to enforce criminal justice debt. Some states do not recognize a right to counsel in civil contempt proceedings under state law, even when incarceration may result.57 Often the right to counsel for indigent defendants varies by jurisdiction and on case-by-case factors.58