Tuesday, October 13, 2009

Debt Collection Job Search Orders: A Survey of Jurisdictions

The Marianas Office of Micronesian Legal Services conducted a survey to see if orders to find work in ordinary debt cases (especially consumer debt cases) exist outside of the CNMI.

We sent an e-mail in July and August, 2009 to 163 Legal Services Corporation (LSC) providers nationwide and in Micronesia with a simple poll. LSC's 2008 annual report, indicates that LSC providers nationwide handled 85,605 debt collection and debt relief cases, which accounted for approximately 9.6% of all 2008 LSC cases. Responses from these organizations would be helpful in assessing the existence of job search orders in consumer cases.

Here is the questionnaire we used:
Micronesian Legal Services Corporation (MLSC) is conducting a brief and informal survey of LSC offices and their experience, if any, with court orders to seek employment for the enforcement of judgments on consumer debts. This effort is in response to a recent Commonwealth of the Northern Mariana Islands (CNMI, USA) Supreme Court decision legitimating such orders (2009 MP 7).
MLSC is seeking your assistance in forwarding this e-mail to local LSC service providers and staff in order to answer the following three questions:
1. Has your office handled cases involving orders to seek employment to satisfy a consumer debt? If so, in what context? For example, is it in a bankruptcy case?

2. If no, why not? For example, is there a constitutional prohibition? Any case law? Or is it because creditors find it cost prohibitive to collect from judgment proof debtors?

3. If yes, please describe. Is it pursuant to statute? How frequently are these orders to seek employment issued? Do they tend to be successful for creditors? Can you forward a copy of a sample order?

Below is a summary of the responses we received.

All LSC providers who have responded say they have no experience with orders to find work pursuant to their judgment enforcement statutes to satisfy a consumer debt. Only 2 jurisdictions have seen such orders in contempt proceedings.

• To date (October 15, 2009), a total of 51 responses have been received from 37 jurisdictions as follows:

33 states: Alaska, Arkansas, Arizona, California, Connecticut, Florida, Georgia, Hawaii, Iowa, Indiana, Illinois, Kansas, Kentucky, Massachusetts, Maryland, Michigan, Minnesota, Missouri, Mississippi, Nebraska, New York, North Dakota, New Jersey, New Mexico, Nevada, Ohio, Pennsylvania, Rhode Island, South Carolina, South Dakota, Tennessee, Utah, Virginia.

1 U.S. territory: Guam.

3 Micronesian political entities: Palau, Kosrae, Yap.

• 15 LSC providers commented on how their jurisdiction does not provide for such authority. 7 out of those 15 providers commented that their state law only allows for either a garnishment or attachment.
• 11 LSC providers commented that orders to find work are found in domestic support enforcement proceedings.
• 8 LSC providers commented on how orders to find work would not pass constitutional muster.

(From Ohio:

"Both the United States and the State of Ohio have constitutional prohibitions against involuntary servitude, which is basically what you are describing. Ohio law prescribes the rights and remedies of creditors. Creditors are limited to garnishing wages or bank accounts, or seizing property or other assets in their efforts to collect debts.")

• According to 2 LSC providers in Illinois, orders to find work are rare since the decision Business Service Bureau v. Martin, 715 N.E. 2d 764, 767 (Ill. App. Ct. 1999) was rendered. Occasionally, they see these from vindictive judges in contempt proceedings, where a judgment debtor fails to pay after becoming unemployed.

Guam Legal Services commented that it has only observed small claims courts using their contempt authority to require judgment debtors to seek employment, but the success of these actions, in all practicality, has been contingent on the debtor’s willingness to become employed.

• South Carolina Legal Services commented that it is one of only a few states that prohibits wage garnishment.

Conclusions: It appears from this empirical data that in fact, the opinion of Professor Vern Countryman, given in testimony before the House Judiciary Committee in 1975, is indeed true.
Compulsory wage earner plans would be inconsistent with the policy and traditions of a country which has abolished involuntary servitude by the Thirteenth Amendment to its Federal Constitution, has abolished peonage, or debt slavery by federal statute...and has abolished all but a few vestiges of imprisonment for debt by state constitutions and statutes.

Bankruptcy Act Revision: Hearings on H.R. 31 and H.R. 32 before the Subcomm. on Civil And Constitutional Rights of the H. Comm. on the Judiciary, 94th Cong. 347 (1975).

The only two jurisdictions (besides the CNMI) that seem to have ventured into job search orders in consumer debt cases are Illinois and Guam; and both have issued written court decisions determining that such practices are not authorized by law. See, Business Service Bureau, Inc. vs. Martin, supra, and Zurich Insurance (Guam,)Inc., v. Santos, 2007 Guam 23, 2007 Guam LEXIS 21.

I will keep these results updated. No responses have been received since 9/12/09.

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