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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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  3. The practitioners and judges who hail E-filing as the Saviour of the West need to contain their respective excitements. E-filing is federal court requires the practitioner to cram his motion practice into pigeonholes created by IT people. Compound motions or those seeking alternative relief are effectively barred, unless the practitioner wants to receive a tart note from some functionary admonishing about the "problem". E-filing is just another method by which courts and judges transfer their burden to practitioners, who are the really the only powerless components of the system. Of COURSE it is easier for the court to require all of its imput to conform to certain formats, but this imposition does NOT improve the quality of the practice of law and does NOT improve the ability of the practitioner to advocate for his client or to fashion pleadings that exactly conform to his client's best interests. And we should be very wary of the disingenuous pablum about the costs. The courts will find a way to stick it to the practitioner. Lake County is a VERY good example of this rapaciousness. Any one who does not believe this is invited to review the various special fees that system imposes upon practitioners- as practitioners- and upon each case ON TOP of the court costs normal in every case manually filed. Jurisprudence according to Aldous Huxley.

  4. Any attorneys who practice in federal court should be able to say the same as I can ... efiling is great. I have been doing it in fed court since it started way back. Pacer has its drawbacks, but the ability to hit an e-docket and pull up anything and everything onscreen is a huge plus for a litigator, eps the sole practitioner, who lacks a filing clerk and the paralegal support of large firms. Were I an Indiana attorney I would welcome this great step forward.

  5. Can we get full disclosure on lobbyist's payments to legislatures such as Mr Buck? AS long as there are idiots that are disrespectful of neighbors and intent on shooting fireworks every night, some kind of regulations are needed.

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