When the debt collectors start calling for credit card bills or medical debt, it's only a matter of time before they get a hold of someone's bank account. In many cases, the debt collectors can zero out the bank accounts of people who are already in crisis.
"When a creditor garnishes a bank account, it can really be devastating," says Jay Speer at the Virginia Poverty Law Center. "The account holder is notified that their funds are frozen, and then you can't pay your rent and you can't pay your utilities. And so for some people it becomes a downward spiral."
That's why Delegate Phil Hernandez of Norfolk has a bill that would preserve the last $5,000 in a bank account.
"People still have to pay for their mortgage or pay for their rent or pay for child care so that they are able to work and earn an income. When you are living paycheck to paycheck, any hiccup can push you off the cliff and that's what we are trying to avoid. We are trying to give some stability so people can have financial security and ultimately be in a better position to pay off their debts."
He says current law already allows for protecting the last $5,000 of a bank account, although most people have to hire a lawyer to make it happen. His bill would make it automatic, so people who are already struggling to make ends meet won't have to hire a lawyer to have some breathing room.
This report, provided by Virginia Public Radio, was made possible with support from the Virginia Education Association.
