Posts Tagged ‘garnishment’

Our most popular blog posts of 2011

Monday, December 12th, 2011

As consumer lawyers we like to know what kinds of issues are on our clients’ minds. So we took a look at our blog to see which posts got the most action. Below we run down the top five of 2011.

Can a second mortgage company sue after foreclosure? This was (by far) our most visited post of 2011. In the post we describe how second mortgage companies often wait a couple of years after foreclosure before they go after the homeowner for a deficiency judgment. They probably figure that there’s no point in trying to collect money from people who are in such dire straits. So it was no surprise, since the foreclosure crisis peaked around 2008-2009, that people were dealing with second mortgage companies two years later.

Can I run up my credit cards before filing bankruptcy? This was a popular question on the blog and in the office. And I know people don’t really mean that they want to go on spending sprees and then wipe the debt out in bankruptcy. The questions were more from people who had been living off their credit cards before coming to see us, and wanted to know whether they’d be cut off from credit right away. We advised clients to wean themselves off plastic, and to definitely avoid buying luxury goods and services before filing bankruptcy.

A debt collector is taking my paycheck–what do I do? Garnishment was a killer in 2011. You wanted to know how to get your money back from debt collectors who had taken money out of your paycheck or bank account. We told you about the garnishment exemptions. We told you about the new rule that protects federal benefits. And then we reminded you that if you file bankruptcy, any funds taken from you within the 90 days before filing had to be returned.

How much will my Chapter 13 payments be? One of our biggest trends in 2011 was a big uptick in Chapter 13 filers. A lot were people wh0 had used up every other option, and wanted to use Chapter 13 to catch up on mortgage payments. Others had heard about the magic of lien stripping and wanted to know if we could wipe out their second mortgage (for the most part, we could). But a big part of deciding whether to file Chapter 13 is to know whether the payments would be affordable. We spoke. You clicked.

The payday loan scam Finally, we told you about debt collectors who use nasty practices to collect payday loans that you probably don’t owe. We reminded you never to pay a debt collector without having the deal in writing. We also reminded you that debt collectors (even the ones collecting fake debts) need to follow the Fair Debt Collection Practices Act, and gave you some tips for stopping debt harassment.

The best part was when clients told us that they used our blog to figure out how to get out of a jam. What other topics should we be writing about in 2012? Leave your ideas in the comments.

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Posted in Bankruptcy, Debt Collection, Foreclosure, Levy/Garnishment, News | No Comments »

New rule protects federal benefits from bank levies

Wednesday, March 9th, 2011

Starting May 1, 2011, banks will no longer be able to turn over some federal benefits held in their accounts to creditors. Previously, when a creditor got a bank levy against a consumer, they could take all the funds in an account, and the consumer would have to use a time-intensive process to claim a state or federal exemption to get the funds back. But in the meantime, the consumer could not access that money.

The new rule issued by the U.S. Treasury Department will require banks to check, before turning funds over to a creditor, whether federal benefits (Social Security, SSI, VA benefits, etc.) were deposited into the account within the previous two months. If so, the banks will not be able to send those two months of federal benefits to the creditor. The new rule does not apply to garnishment by a child support agency.

In addition to the new protection, money not protected by the new rule may still be protected under state law. Consumers will still need to fill out the exemption notice for exempt benefits beyond the ones covered by the new rule.

One very important note–this new protection will not apply to federal benefits deposited by paper check. To get the protections, a recipient must sign up for direct deposit or a Direct Express card. Also, the protection wil not apply to funds transferred to another bank account. So if you receive the money in your checking account, and transfer it to your savings account, it is no longer protected by the new rule.

If your bank account is being levied, give us a call.

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Posted in Debt Collection, Levy/Garnishment | No Comments »

How to deal with a levy (and I’m not talking about the dad from American Pie)

Tuesday, March 1st, 2011

When a creditor gets a judgment against you, one of the ways that they might try to collect it is to levy your bank account. This means that they freeze some or all of the funds in your account without warning. Once the money has been frozen, you will receive two copies of the notice of the levy as well as an exemption worksheet from the bank.  This worksheet is very important as it gives you the opportunity to claim that some or all of the money that was seized is exempt (meaning the creditor can’t take it). You only have 14 days to fill out the exemption worksheet and send copies of it (along with copies of two months of your bank statements) to your bank and the creditor’s attorney, so acting quickly is very important.

So what kinds of funds in your account are exempt?  The exemption worksheet will provide a more detailed list, but it includes any money you receive as government assistance, child support, proceeds from a life insurance policy, and pension payments. A portion of your wages are also exempt. Frankly, almost every levy we see includes exempt funds. The key here is to move swiftly and make sure that you are honest and accurate in claiming exemptions (you may be committing perjury if you claim an exemption you aren’t entitled to).

As always, I suggest contacting an attorney to discuss your particular situation. We provide free consultations on these matters. Also, those of you facing multiple judgments or buried under a mountain of credit card debt might be interested to learn that funds levied within 90 days of a bankruptcy filing must be returned to the debtor.

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Posted in Debt Collection, Levy/Garnishment | 2 Comments »

A debt collector is taking my paycheck–what do I do?

Tuesday, January 11th, 2011

One of the most frequent reasons we get called to help people fight debt collectors is when a person’s wages are taken hostage. It’s called garnishment, and it’s one of the most powerful ways a debt collector can get your money. A garnishment can hit unexpectedly, and can cause lots of problems, especially that you might not be able to make your bills for the next month. Here are some of the rules around garnishment, and some tips to help you deal with it.

1. You can’t be garnished unless you’ve been sued. To get a wage garnishment against you, a debt collector must first sue you and win. They can win their case by fighting you in court, but more often, you didn’t get notice of the lawsuit and the collector can get a default judgment because you didn’t show up for court. If a debt collector takes your wages before you’ve been sued, it’s most likely not a garnishment, and therefore is probably illegal. To see if you have a judgment against you, check out the Minnesota courts judgment search.

2. They can’t take your whole paycheck. In Minnesota, if a credit wants to take your wages, it must send you a “wage exemption notice” at least 10 days before it takes your money. You may be exempt from garnishment if you received public benefits in the past six months or if you were recently released from prison). If that’s the case, you must fill out the exemption notice and return it to the collector’s attorney within 10 days.

If you aren’t fully exempt, there are still limits to what can be taken. You can keep 75 percent of your “disposable earnings”–i.e. your gross income minus your taxes–or 40 x the minimum wage per week (currently $290).

3. Child support has different rules. If you are being garnished for child support, forget everything I’ve said. More than 50 percent of your wages can be taken, and there are very few ways to escape being garnished.

4. There are ways to put a stop to garnishment. One way to stop a garnishment if you haven’t appeared in court yet is to reopen a default judgment. This may be something you can do on your own, but it’s best to consult an attorney because it can be tricky.

Another remedy is bankruptcy. Not only will a Chapter 7 or Chapter 13 bankruptcy stop wage garnishment in progress, but you also can recover money that was garnished within the last 90 days. Consult a bankruptcy attorney for more details.

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Posted in Debt Collection | 3 Comments »