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COA: student loan funds exempt from garnishment

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The Court of Appeals today found that student loan funds that had been deposited in a personal account were exempt when it came to whether those funds could be taken from a defendant’s bank account to satisfy a judgment regarding legal fees the defendant owed to the plaintiff.

In the case Nikki Brindle v. Patrick J. Arata , No. 02A05-1004-SC-239, in June 2009, Nikki Brindle and Patrick Arata “entered into an agreed judgment in favor of Arata on a debt incurred for provision of legal services,” wrote Court of Appeals Judge Cale J. Bradford.

On March 11, Arata initiated proceedings to seek funds from Brindle’s bank account at National City Bank. The bank replied March 22 that she had $3,367.01 in her account.

But on March 17, Brindle filed an exemption claim and requested a hearing where she introduced a voucher, dated Feb. 10, from the Academy of Art University.

That voucher indicated she would receive a check for $3,268, the amount left over after her student loan provider paid tuition to the university. Her bank records indicated a deposit for $3,271 into her account that occurred on March 1. She said the deposit was from her student loan.

On March 26, the trial court denied her exemption claim and ordered National City Bank to send to the Allen County Clerk of Courts all funds in her account except $300.

Although the trial court found that by depositing her student loan check into an account with personal funds those funds lost their exempt status under federal law regarding wage garnishments, section 1095a, the Court of Appeals disagreed.

“Simply put, the plain language of section 1095a exempts student loan funds and property traceable to those funds from garnishment or attachment, and there is no provision to which either party points us, or of which we are aware, that terminates this status, whether by deposit in a personal bank account or otherwise. … We believe that a contrary conclusion would effectively eviscerate the protections of section 1095a and render it all but meaningless, a result we doubt was intended by Congress. If the protections of section 1095a were lost upon deposit into a personal bank account, one is left to wonder what the point of the section is, when almost every recipient of student funds will surely do just that,” Judge Bradford wrote.
 

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  1. KUDOS to the Indiana Supreme Court for realizing that some bureacracies need to go to the stake. Recall what RWR said: "No government ever voluntarily reduces itself in size. Government programs, once launched, never disappear. Actually, a government bureau is the nearest thing to eternal life we'll ever see on this earth!" NOW ... what next to this rare and inspiring chopping block? Well, the Commission on Gender and Race (but not religion!?!) is way overdue. And some other Board's could be cut with a positive for State and the reputation of the Indiana judiciary.

  2. During a visit where an informant with police wears audio and video, does the video necessary have to show hand to hand transaction of money and narcotics?

  3. I will agree with that as soon as law schools stop lying to prospective students about salaries and employment opportunities in the legal profession. There is no defense to the fraudulent numbers first year salaries they post to mislead people into going to law school.

  4. The sad thing is that no fish were thrown overboard The "greenhorn" who had never fished before those 5 days was interrogated for over 4 hours by 5 officers until his statement was illicited, "I don't want to go to prison....." The truth is that these fish were measured frozen off shore and thawed on shore. The FWC (state) officer did not know fish shrink, so the only reason that these fish could be bigger was a swap. There is no difference between a 19 1/2 fish or 19 3/4 fish, short fish is short fish, the ticket was written. In addition the FWC officer testified at trial, he does not measure fish in accordance with federal law. There was a document prepared by the FWC expert that said yes, fish shrink and if these had been measured correctly they averaged over 20 inches (offshore frozen). This was a smoke and mirror prosecution.

  5. I love this, Dave! Many congrats to you! We've come a long way from studying for the bar together! :)

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