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Published by the Indiana Office of Court Services

Brindle v. Arata, No. 02A05-1004-SC-239, __ N.E.2d __ (Ind. Ct. App., Dec. 7, 2010)

December 10, 2010 Filed Under: Civil Tagged With: Appeals, C. Bradford

BRADFORD, J.
United States Code Title 20, section 1095a(d) provides, in part that
no grant, loan, or work assistance awarded under this subchapter and part C of subchapter I of chapter 34 of Title 42, or property traceable to such assistance, shall be subject to garnishment or attachment in order to satisfy any debt owed by the student awarded such assistance, other than a debt owed to the Secretary and arising under this subchapter and part C of subchapter I of chapter 34 of Title 42.
The trial court concluded that Brindle’s student loan funds lost their exempt status when she deposited the funds in her private account, on the basis that there was no federal law specifically saying that they retained their exempt status when so disposed of. We do not reach the same conclusion.
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. Moreover, neither party directs our attention to any case law that might support a conclusion that deposit in a bank account automatically terminates the exempt status of student loan funds under federal law.  [Footnote omitted.]
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. We cannot imagine that Congress wishes those who receive student loans to stuff their mattresses with their rent money in order to prevent judgment creditors from attaching it. We conclude that the trial court erred in ruling that Arata could attach student loan funds that Brindle deposited into her bank account.
DARDEN, J. and BROWN, J., concur.

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