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Garnishment Survival Guide

in Bankruptcy

“Your wages are subject to garnishment,”

That’s the first line in your most recent letter from HR. 

If You Do nothing 25% percent of your net earnings will be sent to whatever creditor has a judgement against you. 

Do something:  keep reading this if you live in Georgia and are subject to a wage garnishment.

I have three points to make here:

  • What to do in the short term,
  • What to do in the medium term, and
  • in the long run, what can we do to keep this from happening again. 

 

What is Wage garnishment 

A wage garnishment is an order from a judge, obtained after a judgement is secured against you, that allows a creditor to take money directly out of your check to satisfy the judgement they obtained.  

The fact that you are getting garnished means that a judgement has already been obtained by a creditor  and a judge has agreed that you are liable for an amount of money you owe to the creditor.  If everything happened the way it was supposed to, you should have gotten a copy of the complaint that was filed against you.  Due process requires that before the hearing to determine whether and how much you owe, you’re served with the complaint and have a chance to defend yourself against the complaint in court. That doesn’t always happen like it’s supposed to and we’ll discuss that later.

Georgia allows creditors, once they have a judgement, to take your wages directly from the source, your job, to collect on a judgement.  Your wages are protected to an extent by state and federal laws.  The cap is currently 25%. 

In this article we are going to look at the judgments you’re most likely to face.  Judgments for unpaid medical bills and credit cards.  There are a number of other judgments that we won’t worry about today.  

1.  Protect Your Paycheck 

The garnishment allows the creditor to take 25% of your paycheck, but that’s the max and that’s after other deductions are subtracted. 

There are a number of other exemptions under Georgia Law and you need to review them to find out if any of them apply to your situation. If you don’t fall under those exemptions there isn’t much you can do to stop a garnishment outside of bankruptcy.  

Notify your payroll department of your exemptions

If you pay falls under the scope of the exemption you need to make sure that your payroll is aware of it.  Theoretically, they should be aware of it as it is their job to follow the law, however, it’s always best to remind them of their duties and that you believe your income to be exempt from the garnishment. 

2.  Attack The Judgment

Your wages can only be garnished if a court has determined that you actually owe the money your creditor says you owe.  If you were at the hearing and lost, it is your job to appeal.  If you didn’t appeal, the matter is close and the judgement stands..  

However, If the judgement was a complete surprise to you (in other words, you weren’t properly served) you may have a chance to fight back.  This is a procedural attack on the judgement not one attacking the merit of the creditor’s claim. Attacking claims are hard though and will usually require the assistance of an attorney.  There are some legal aid societies that may be willing to help, but if you don’t qualify you’re on your own to either figure it out or hire an attorney. This is only a good thing to do if procedure truly wasn’t followed AND you have a good defense.  You don’t want to go to the trouble and potential expense of fighting the claim if you’re just going to lose anyways. 

3. Completely examine your finances. 

Your time is precious and limited.  Before you try to really hunker down and try to fight this, you need to take a look at your entire financial picture.  You need to ask yourself a question and it’s very important for you to reflect on it:

“If I handle this debt, will I still be able to pay all my other debts?”

If the answer is yes, there are a number of reputable credit counselors and social workers who can help people develop budgets.  Some organizations like the Salvation Army help people create budgets that, if adhered to, can help people to live within their means. 

If the answer is no, you need to look at other options, primarily bankruptcy.  There are tons of debt settlement companies out there and most of them are either outright scams or they don’t offer real, lasting solutions to your problems.

Bankruptcy attorneys are well versed in analyzing finances and determining whether or not you are able to get out of your financial troubles without the help of Bankruptcy. 

If you’re facing a garnishment, reach out to the attorneys at Harmon and Gorove.  They offer a free, no obligation consultation to help you decide your best course of action.

Foreclosure Plan B

in Bankruptcy

Bankruptcy stops foreclosures, that’s a given.  Thanks to the automatic stay, a bankruptcy stops foreclosures dead in their tracks. 

Bankruptcy is the silver bullet to stop a scheduled foreclosure sale, guaranteed. 

There’s only one problem though, and it is the single biggest reason why people are unable to stop a foreclosure and it’s something that we’re all guilty of at one time or another.  Procrastination. 

Procrastination hampers your ability to save your home when all else fails.  The moment you get a foreclosure notice, you should start interviewing bankruptcy lawyers, even if you think you can work something out with the mortgage company.  

There are a lot of ways that you can try to stop a foreclosure but those other ways usually involve liquidating assets or making some kind of deal with your existing lender or a new lender to save your bacon.  The problem with those outcomes is, the other party has a choice in the matter.  No matter what you do, they can choose to go back on what you discussed or not discuss anything with you at all.  

In the last few months we have seen a number of clients with mortgage forbearance that will come due all at once.  Meaning those payments you missed in March, April, May and June are all going to be due at one time.  I don’t know about you, but I don’t have enough money laying around to make 3-5 months worth of mortgage payments all at one time.  What we are seeing is that people are expecting to be able to refinance or get a mortgage modification.  The problem with all of that is, the lenders have a choice and they may choose to deny those, especially if you’ve suffered a recent job loss. More often than not, mortgage mods don’t go through and people are often left looking for a bankruptcy lawyer with only hours to spare before their house is sold on the courthouse steps. 

Last minute foreclosure defense

Filing bankruptcy, even just a skeletal one, is time consuming.  To file bankruptcy, you have to do things in a certain order.  You meet with an attorney, you take the credit counseling class, you pay your filing fees and then your case can be filed.  All of that takes time and if you skip a step, it can throw the whole case into limbo. Another thing you need to take time to decide is what chapter is best for me to file.  Beyond all of these other challenges, you’ve got to come up with the paperwork necessary to file bankruptcy.  You need to be able to put your hands on bills, pay stubs and tax returns at a minimum.  Like I said, the automatic stay puts a stop to all collection activities against you but once you’ve stopped it, then what?

What is the next step I need to take in order to save my home.  That’s where an experienced bankruptcy lawyer comes in.  They’ll figure out if you qualify for a Chapter 7 or 13.  They’ll help you figure out if you can afford the house going forward and they will provide you with an honest assessment of your situation so you can make an informed decision that can help you get the best outcome for your particular situation. 

Last lawyer on the bench

Here is where procrastination comes back to bite you.  If you wait until the last minute to file, you’re left with a lot fewer choices when it comes to an attorney.  Generally speaking, same day appointments aren’t going to be available for the best bankruptcy lawyers so you’ll be stuck with someone who may not be as reputable or frankly has no clue what they’re doing.  

Is that the person you want holding the fate of your single biggest asset in the palm of their hand.  A guy whose most appealing quality is the fact that they have some free time on their hands? The reality is, the best lawyers are going to be busy.  They’ve got other cases to work on and they frankly may not be willing or able to drop everything to handle your case.  

Line up help ahead of time

If you’re working on solutions to avoid foreclosure, whether that be a refinance or a mortgage modification, you need to be shopping around for a bankruptcy lawyer at the same time.  

You need to interview your lawyer and know what each of them will need to file your case (HINT: what they should need should pretty much be the same if they’re being honest with you). You need to understand your options and know how your choice will impact your overall financial picture.

If everything goes as planned you won’t need bankruptcy.  However, if something goes wrong at the last minute, you have a plan B.  If you find yourself needing to discuss your options, contact the caring attorneys at Harmon and Gorove today for a free, no obligation consultation to learn how bankruptcy can help you with your foreclosure issues. 

Collection Threats: What’s real?

in Bankruptcy, Credit and Credit Cards

When you think about debt collectors, you usually think of someone that isn’t very nice.  They call, they harass and they threaten.  In reality though, what threats to take seriously and what threats to ignore is something most people don’t understand.

The reality is, most of them are empty threats.  

  1. You’re not going to jail.  Debtors prisons are a relic of the distant past.  
  2. They’re not going to send people to pick you up.  That’s kidnapping and that’s illegal. 
  3. Chances are, they’re not going to “ruin” your credit. 
  4. So what if they, “refer it to an attorney to look at.”

 

The three threats with teeth

There are only three things you really need to be concerned about.

  1. They have a court judgement against you and they know where you work.  They can then file a garnishment and take your pay. 
  2. There is a lien against your house by your Homeowners Association or your  mortgage lender and they are threatening to foreclose on your house.  You need to be concerned about that and you need to take action to stop it.
  3. You’re behind on your car and they’re threatening to repossess it.

 

That’s what you need to be concerned with.  The rest, well, is just crap. Let’s be honest, the lender would really just rather make a deal. It’s cheaper, cleaner and keeps everyone happy.  

The debt collector who is legitimate will reach out to you in writing or dials you from a number that is from a real debt company. That said, just because they are from a “real company” doesn’t mean they won’t lie to you, call you at work, tell your loved ones about your debt or do other illegal things. 

If you find yourself drowning in debt and being harassed by legitimate debt collectors, reach out to us at Harmon and Gorove.  We can help you get your finances in order and bring some peace to your life.  Contact us today to learn how bankruptcy can help you achieve financial freedom and peace. 

Credit score increases rapidly after bankruptcy, says by the CFPB.

in Bankruptcy, Credit and Credit Cards

Our clients are often so very concerned about their credit score.  That’s natural, and frankly, we are too.  I check my credit score at least once every two weeks.  It’s a point of pride for many people.  For others however, it can be the difference in being able to get ahead in life or not being able to afford those things we need. 

We have some very good news to report for people who are worried about the impact that bankruptcy will have on their credit score. The good news is, and I say it boldly;

AFTER BANKRUPTCY, CREDIT SCORES GO STEADILY UP

That’s right.  All these years you’ve been lied to by people who have no idea what they’re talking about.  Telling you that if you file bankruptcy your finances are toast and you’re dead in the water. You’ll never get another loan again.  We’ve all heard it and it’s usually coming from the slime ball that charged you 97% interest on a $2,500 car loan.

We didn’t just make this up either, although we already knew this to be true, this is a report from the Consumer Financial Protection Bureau.  The study, which you can read here is completely legitimate and has been researched over the last 17 years. Another finding from the study is 

A PERSON’S CREDIT SCORES START IMPROVING THE SAME YEAR AS YOUR BANKRUPTCY FILING

Take a minute and absorb that.

How Creditors Use Fear

Creditors and all their hack buddies scream from the rooftops about bankruptcy trashing your credit score.  The data shows just the opposite.  In fact, there’s usually no dip in your score after filing.  The overwhelming amount of people who file bankruptcy see an IMMEDIATE increase in their score. Don’t believe us, just read what the CFPB says: 

Median credit scores increase steadily from year-to-year after consumers file a bankruptcy petition.

Median scores for Chapter 7 filers recover more quickly than those for Chapter 13 filers possibly due to the much quicker and more likely discharge of Chapter 7 filings.  

Bankruptcy improves your Financial Health

When it comes to your financial health, let’s get one thing straight. Your credit score is a vastly inadequate indicator of your financial health.  What really matters is your balance sheet.

A credit score is a distraction

In the grand scheme of loans and credit, lenders look at your balance sheet as much or more than your credit score.  In essence, they look at your net worth which is comprised of assets minus liabilities.  If you eliminate the liabilities you have via bankruptcy, your net worth looks even better. 

A credit score is just a number, most banks prefer a measure called the Debt to Income ratio or DTI.  If you wipe out unsecured debts, your DTI goes down as well, improving your likelihood of getting approved for a loan.  

Boost your credit score

You can take actions that can boost your score.  One of the best ways to do that is to check your credit report.  Not just your score, but what’s listed on your report.  When you look into credit reports, you’ll find that credit reports are notoriously inaccurate. Nearly 1 in 4 credit reports had factual inaccuracies that could negatively impact your credit score. That’s why its very important to check your credit report often, even more so than your score itself.  

Is bankruptcy right for me?

Just because you can file bankruptcy, doesn’t mean you should. It’s just one of the things you should consider if you find yourself needing to file.  Lots of different factors influence whether you should file bankruptcy.  We discuss those factors in one of our recent blog posts

If you’re ready to discuss filing bankruptcy with an experienced bankruptcy attorney, contact our office today for a free, no obligation consultation.  

Hold it, fold it or run

in Bankruptcy, Credit and Credit Cards

You’ve got to know when to hold ’em,

know when to fold ’em;

know when to walk away,

know when to run…

Thus is the advice that is given to a young protege of the Gambler in the hit Kenny Rogers song. This advice is also good for people who are facing problems with debt to consider.  One of the toughest things for people who are facing uncertainty about their finances is knowing when to fold and get the financial help they need. 

We often play a bad hand

Almost everyone wants to repay their debts. We feel like it’s the “right” thing to do.  Paying your debts fits the narrative of the hard working hero who scrimped and went without to pay your debt in full.  Lord knows the creditors who push these massive debt loads onto people with the false assumption that they’ll be able to pay want you to think that not paying your debts will be the financial ruin of you until the end of the world. 

If you’re in debt, it’s hard to know what your choices are and to know which debts are the best to get rid of and which ones you need to keep. 

The problem is that no one talks about the actual cost of paying off burdensome debt.

Nobody talks about people who have such a strong commitment to pay burdensome debt, get blinded to other needs and other financial pitfalls.

Certainly, no one mentions good people who sacrifice and still fail to find a way to pay off their debts.

Nobody seems to care about the elderly; drowning in debt with no hope of better times ahead.

So how do you know how to play your hand, so to speak, when choosing the best way to succeed at getting out of debt?

Just like the cards you have, the decision about what to pay (hold) or file bankruptcy on (fold) depends on a number of factors. 

What’s the amount you owe?  

HOLD:  the lower your total debt, the more likely you can succeed in paying it off.

FOLD:  If you have a very large amount of debt it will take longer to pay off and will likely cause other events to interfere.

What’s your age?

HOLD: If you’re young, you have more time, theoretically, to pay off your debts due to the amount of time you have left in life to work. 

FOLD:  If you’re close to retirement, now’s the time to seriously start looking at cleaning up your finances. 

Do you have critical debts?

HOLD:  Do you owe taxes, have a mortgage or owe some kind of domestic support? These critical kinds of debts should take priority over unsecured or other debts that could be discharged. If you don’t owe these types of debts, a payment plan for other debts can often succeed.

FOLD:  paying unsecured bills when you owe these critical types of debt is EXTREMELY risky.

What does your retirement savings look like?

HOLD: IF you have a pension or a substantial amount of money saved for retirement, you can try to get your debts paid.

FOLD:  If you’re way behind on saving money for your golden years, wouldn’t it be better to use that money to save for retirement instead of paying back unsecured creditors?

Do you have an emergency savings fund?

HOLD:  If you have a big enough cushion to sustain a loss of income, try to pay off debt.

FOLD:  If you’re like the majority of Americans and have very little saved, you make yourself even more vulnerable diverting money to existing debt.

How to succeed

The number one thing you want to avoid is spending money you don’t have on old debts when you have no reasonable chance of succeeding.  Living paycheck to paycheck with no savings isn’t a good way to live and it makes life very tough. The young protege got some good advice for that taste of whiskey.

Kenny Rogers’ gambler told him:

That the secret to survivin’

Is knowin’ what to throw away

And knowin’ what to keep

Keep paying on old debts only if you have the ability to succeed.  Otherwise… well you know how the rest of the song goes. 

If you feel lost and are unable to find a way out of debt, contact the attorneys at Harmon and Gorove.  We have helped tens of thousands of people get the help they need in order to get the fresh start they so desperately need.  

Business after COVID-19

in Bankruptcy

There will come a time when the coronavirus becomes a treatable disease.  Human patients will be recovered and we will have a treatment.  That’s just the inherent optimist in me.  However, many businesses will still be struggling long after the human toll has been realized.  These small businesses will have to make some tough decisions, including whether to continue in business or not.  I’m reminded of the Kenny Rogers song, “The Gambler.” In the song he sings about knowing when to hold ‘em and knowing when to fold ‘em. That’s what every struggling business owner has to consider.  

Here are some things to think about as you consider the future.

Do you even want to continue

The most important part of the small business is the owner of the business themselves.  They drive the business, create the products and supply the vision to make the business successful. If you’re drained and don’t feel like you can go on, now’s the time to look long and hard at whether you should continue operating the business.  

If you’re up for the challenge, there are more questions.

Can your business continue

Once this is over and we arrive at whatever “normal” is, we need to determine whether there is still a demand for the product or service you provide via your businesses. If there is a demand for your product, how long before that demand ramps up to the point that you can bring the business back to profitability.  How will you survive financially in the meantime? Because of these questions, you’ll need to look at the following instructions. . 

Reorganize your business to survive

COVID-19 has forced all of us to look at our situation and reevaluate how we operate, us included.  It causes us to look at what is and is not important and what is and isn’t essential. We have to take a tough look at our operations and ask ourselves:

Could the business continue with

  • More or less owners
  • fewer employees or restructured hours
  • Fewer locations or completely online

Take the time to reevaluate and embrace the opportunity to change the way things work, hopefully for the better

New debt 

Business loans are a part of the government’s recovery plan but one of the problems with this is the uncertainty about how the loans are to be repaid. You need to consider whether or not you’re able to float more debt.  Were you current on your debts or were you debt free?  Is borrowing essential to even keep the lights on.  If it is, then you have no other choice.

Winding down and moving on

Ending your business isn’t just an all or nothing choice.  If you fold the business you can still remain in the industry either as a manager or other type of operator.  It gives you the opportunity to re-enter the market in the event that the demand comes back without losing contacts in the industry.  

Challenges going forward

All of these issues are fluid and the situations are constantly changing.  We have helped hundreds of business owners wind down operations and get the piece of mind they need in order to move on with their lives.  If your business is failing or if it’s just overwhelming you, schedule an appointment with one of our award winning  bankruptcy attorneys to see if bankruptcy would be an option to help you move forward.