Volume 19, Number 7
October/November 2002
Poverty Law
By John Roska
You've worked hard to get your client a nice accident
settlement, and the client, who's on disability as a result of
the accident, can't thank you enough. A few weeks later, though,
she calls in a very different mood. That settlement money
disappeared faster than she expected, she says-and not only that,
it got her disability benefits cut off, along with the medical
benefits that paid for her treatment. Now she's got nothing to
live on and blames you and the settlement for it.
You can dismiss your client as simply being ungrateful, but
better financial planning on your part might have kept her happy.
If you'd known in advance that the settlement money would affect
her benefits, you could have made arrangements to keep her
eligible.
This is just one example of how the different and unexpected
legal problems of low-income clients can be pitfalls for the
unwary practitioner. Whether you're a private attorney handling a
PI or a pro bono case for a low-income client or a staff attorney
in a legal services office, it pays to be aware that what you're
doing could affect your client's overall situation. The examples
discussed here at least can help with the right questions to
ask.
Can You Be Too Rich?
Too much money is a particular problem for people receiving
low-income benefits. Eligibility rules limit what they can have.
Big recoveries may make it unnecessary to worry about protecting
someone's benefits, but modest ones that don't last long can be
very disruptive.
o Always review benefit eligibility limits. A
$5,000 settlement paid directly to someone getting $500 per month
as an SSI benefit (supplemental security income, Social
Security's disability program for those "uninsured" by their
employer's contributions) could render the person ineligible for
10 months-even if the $5,000 is gone long before that. Instead of
paying a lump sum directly to the client, use the settlement to
repair things like the house or car or to buy big-ticket
furniture and appliances; these avoid a cutoff of benefits. More
than once, buying a much-needed washer and dryer, rather than
handing the client a check, was all it took to avoid eligibility
problems.
o Ask the experts. You don't need to become a
government benefits specialist. A quick call to the experts at
your local legal aid office can help guide you through your
client's specific requirements.
o Check exemption laws. If your clients have
outstanding debts, be sure to check the portion of a recovery
that's protected by state exemption laws. Illinois law, for
example, protects from creditors all of a wrongful death recovery
but only $7,500 of a personal injury recovery. Lump sums from
sources like Social Security and Workers' Comp are completely
exempt.
Knowing the basics of your state's exemption law also will help
you accurately advise people who owe money. Sometimes the biggest
help you can give debtor clients is to reassure them that because
of the exemption laws, they won't lose everything or go to jail.
Even if you think all debts should be repaid without exception,
you're not competently advising debtor clients if you fail to
inform them about exemption rights.
o Review existing contracts. A correct
understanding of an often-misunderstood consumer law nugget may
help you save someone's home. Although the widespread belief that
all contracts can be cancelled within three days is actually
false, some contracts can be. For door-to-door sales and home
equity loans, consumers do have a three-day cooling-off period,
and agreements can be canceled for any reason during that time.
Consumers must be told of this right and should have been given
forms for cancellations. If they were not, they may be able to
cancel after the three-day period.
o Know about statutes of limitations. An
often-overlooked statute of limitations may apply to clients with
sales contract cases. The UCC's four-year statute of limitations
on those contracts might be a defense, although the longer
statute of limitations on other written contracts would not. This
could make all the difference in a collections case.
When dealing with statutes of limitations, remember that the
clock for consumer debts starts running from the time of the
consumer's default, which is usually their last payment. Be
careful about advising someone to make payments on an old debt,
which could give new life to a stale claim. Sometimes, in fact,
creditors and collectors reappear just as the statute of
limitations is expiring, hoping to coax a rejuvenating payment
from the debtor.
o Select cases carefully. A permanent pitfall in
practicing law for poor people, especially in a legal services
office, is case selection. Everything that makes you want to help
makes it hard to say no, and the "if I don't do it, nobody else
will" refrain is too often true. But the fact is, you can't help
everyone. A time-consuming and ultimately unsuccessful case for
someone you had doubts about in the first place simply grinds you
down and keeps you from helping others who need you just as
much.
John Roska is senior staff attorney at
Land of Lincoln Legal Assistance Foundation in Champaign,
Illinois.
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