Maybe it’s a coincidence or maybe it’s a sign of the expected ramp-up in enforcement and attention that state attorneys general are going to be paying to the financial services industry broadly, including companies in credit and collections, but the Attorney General of New York has issued a guide aimed at protecting residents of The Empire State from “predatory” debt collectors.
New York Attorney General Letitia James last week released a comprehensive guide to help residents protect their bank accounts from garnishments and seizures. The guide is focused on the state’s Exempt Income Protection Act (EIPA), a law designed to ensure that debt collectors cannot freeze or seize essential funds from consumers, leaving them unable to meet basic living expenses.
The EIPA law, enacted in 2008, automatically exempts a certain amount of money in a consumer’s bank account from being frozen or seized. In 2025, the law will protect up to $3,960 for residents of New York City, Long Island, or Westchester, and $3,720 for those living elsewhere in the state. This protection ensures that individuals retain access to essential funds, even in the event of a court judgment that allows debt collectors to levy their accounts.
“When banks allow debt collectors to wipe out New Yorkers’ bank accounts, they’re not only throwing vulnerable people into financial chaos, they’re breaking the law,” said Attorney General James in a statement. “New Yorkers should know how to protect their money from debt collectors so they can continue to pay their bills while they manage their debt.”
Additionally, the law safeguards crucial government benefits, including Social Security, disability benefits, unemployment insurance, and veterans’ benefits. These protections also extend to retirement funds like 401(k)s and IRAs, ensuring that these vital sources of income are shielded from aggressive collection tactics.
Attorney General James’s office has been proactive in enforcing these protections. Earlier this year, the AG secured over $1 million in settlements from Netspend and Pathward Bank for violations of EIPA. These companies were found to have unlawfully turned over protected funds to debt collectors, violating the law’s provisions.
Consumers who find their bank accounts frozen or funds improperly seized can now turn to the Attorney General’s office for help. The guide provides clear instructions for claiming exemptions under EIPA and reporting violations. The OAG has made it clear that it is committed to holding banks and debt collectors accountable, reinforcing the importance of compliance within the financial services industry.
