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Collection Actions: 3.7.8.2.1 Military service

Federal law specifies that the period of a servicemember’s military service is not included in the computing any limitations period under federal or state law.505 The provision applies to the period in which the consumer is on active duty military service and applies to debts incurred before and during the period of active duty military service.

Collection Actions: 3.7.8.2.2 Bankruptcy

The U.S. Bankruptcy Code sets out rules for the tolling effect of the bankruptcy. The collection action’s limitation period extends to the later of two dates: the state limitations period with no tolling effect of the bankruptcy or thirty days after notice to the collector regarding expiration of the automatic stay.507

Collection Actions: 3.7.8.2.3 Time spent out of state

Other grounds for tolling the statute of limitations will be based on state law. A common ground for such tolling is if the consumer moves out of state for some of the period. The period of the absence is not counted in computing the limitations period.510 The burden will be on the collector to show the dates the consumer was absent from the state. If the collector cannot meet this burden, then the limitations period will not be tolled.

Collection Actions: 3.7.8.2.5 Tolling Related to COVID-19

A number of statutes of limitations were suspended because of the COVID-19 public health emergency starting at the end of March 2020. The suspensions are typically for about a month or, in some cases, the duration of the emergency.

Collection Actions: 3.7.8.3.2 Acknowledgment of the debt

The consumer’s acknowledgment of the obligation may revive the statute of limitations. States establish standards as to what type of acknowledgment is sufficient to revive the limitations period. An oral statement that the money is owed may not be enough.

Collection Actions: 5.2.7.2 Developing the Consumer’s Evidence

Any documentation beyond the consumer’s testimony will clearly strengthen the consumer’s claim that the debt has been settled or that the amount due has been modified. Try to obtain a copy of the canceled check to see if the consumer noted on the check “payment in full,” or the like, and look for other contemporaneous writings that may prove helpful. The consumer may also seek to discover from the creditor or collector any telephone recordings or other collector notations reflecting the settlement conversation.

Collection Actions: 11.4.1 Introduction

Federal and state exemption laws141 allow debtors to retain property and income despite such involuntary collection processes as garnishment, attachment, and execution. Exemption laws may protect from seizure items such as tools of the trade, a homestead, personal earnings, money on deposit, a car, retirement benefits, public benefits, and other personal property.

Collection Actions: 11.4.2 Exemptions at the Imposition Stage

Exemptions apply when judgments are enforced, so they are not generally applicable to the imposition of criminal justice debt.143 Nevertheless, exemptions may provide a framework for ability-to-pay determinations at the imposition stage. For example, any debt that would be collectible only through seizure of exempt income or assets could be considered not within the debtor’s ability to pay.

Collection Actions: 11.4.3.1.1 Overview

Federal criminal justice debt can not only be collected through the criminal justice system, but also through judicial146 and administrative147 wage garnishment and administrative offset of federal benefits, tax refunds, and other payments.148 Federal exemptions limit what can be seized through these collection mechanisms.

Collection Actions: 11.4.3.1.4 Claims Collection Act

The Claims Collection Act, as amended by the Debt Collection Improvement Act,172 gives the federal government an array of extra-judicial collection powers. These include administrative wage garnishment173 and administrative offset of federal benefits, tax refunds, and other payments.174

Collection Actions: 11.4.4.2 Earnings

The Consumer Credit Protection Act’s (CCPA) protections against wage garnishment preempt less protective state law.222 One state court mistakenly held that the CCPA does not apply to state criminal justice debt at all on the theory that the CCPA deals only with consumer finance debt.223 This position is inconsistent with the statute, which applies broadly to garnishment for “any debt.”224 The statute does not make any distinctions about the t

Collection Actions: 11.4.4.4 Student Loan Disbursements

Federal student loan proceeds, grants, and work assistance are protected by federal law from garnishment and attachment to collect any debt, except a federal student loan debt owed to the Department of Education.244 Since the statute explicitly exempts just one kind of debt—federal student loans—there appears to be no reason it should not apply to criminal justice debt.

Collection Actions: 11.4.6 Due Process, Equal Protection, and Exemptions

Due process concerns are implicated if a state, when using judicial or administrative procedures to enforce criminal justice debt, fails to give the debtor reasonable notice of available exemptions and an opportunity to assert such exemptions or other defenses, such as inability to pay.270 For example, a statute that requires a state to misinform debtors about the availability of exemptions may result in denial of due process.271 The Third Circuit reversed the dismissal of a claim that seizu

Collection Actions: 11.5.1 Introduction

For criminal justice debtors, bankruptcy can be a powerful tool. It can eliminate the obligation to repay certain criminal justice debts or provide an orderly mechanism for repaying debts that cannot be discharged in bankruptcy.

Collection Actions: 11.5.3.1 Generally

The principal goal of most bankruptcies is the discharge, which frees the debtor from personal liability on most debts. However, the discharge is not absolute. Some types of debts, including many criminal justice debts, may not be discharged in a chapter 7 bankruptcy.298

Collection Actions: 11.5.3.2 Criminal Fines

Fines—which are financial obligations ostensibly established to serve a wholly punitive function—are not dischargeable in a chapter 7 bankruptcy.305 This includes traffic and parking fines.306 However, collection costs related to state criminal fines that are not for the benefit of a governmental unit may be dischargeable.307