Category Archives: Debt Collection

In debt? You’re not alone

A new study shows that a whopping 77 million Americans has debt that’s listed on their credit report as being “in collections.” That’s 35% of adults who have credit files. And this debt is spread around all over the country, even though a higher percentage of it is in the South. The student was released by the nonprofit Urban Institute.

So if you have bad debt on your credit report, you’re not alone. Millions of Americans have the same problem. The difference boils down to, can you do anything about it? Is bankruptcy or debt settlement right for you?

Whether you can (or should) start the ball rolling toward a clean bill of health for your credit depends on your particular situation. You can keep on spinning your wheels, wondering what to do about your debt, or you can call a competent consumer debt attorney and find out exactly where you stand.

Call consumer debt attorney Jennifer N. Weil, Esq. at (201) 676-0722.

Film Review of Spent: Looking For Change

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A recent documentary available on YouTube highlights the high cost of being poor. Spent: Looking For Change, a film sponsored by American Express, explores the financial lives of people who lack access to banks or who have bad credit or no credit. Here is a basic summary of the important topics covered:

According to the film, approximately 70 million Americans lack access to the traditional financial system.

Why don’t these people have access to banks or to credit? For a variety of reasons – medical problems resulted in lost income, bad financial decisions were made, etc. Then bank accounts were overdrawn and eventually closed. Once debts have gone unpaid, credit gets ruined and it’s hard to fix, even where there is currently a good income and all monthly bills are being paid. Where a person has large student loans relative to their income, their credit is weakened. Or those who have never had a credit card or taken out a loan are invisible to the credit reporting agencies and have no available credit.

When people lack access to the traditional financial system, they often turn to check cashing businesses, payday loans, and title loans in order to make ends meet. These types of financial products cost more in fees and interest than traditional products. The film tells us that Americans spend about $89 billion a year on fees and interest.

When people don’t have a bank account or a debit card, they must physically go around and pay monthly bills, which costs a lot in terms of gas and time. Even prepaid debit cards that are funded with cash carry large costs in fees charged for buying and using the card.

People turn to payday loans, which are designed to be paid back on the next paycheck; and title loans, which are loans that use your car for collateral. If you don’t pay the loan, they take your car. Many will pay the fee over time instead of paying the original loan off because they can’t afford it. The original loan is never paid off.

My take on the film is that it is a good overview of how financial products that are designed to take advantage of poor people actually set them farther and farther back. It’s worth watching because it’s an unbiased presentation of a lot of information in only about 40 minutes.

When to consult a student loan lawyer

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Sometimes it’s obvious when you need to see a lawyer who practices student loan law: When you are being sued, when your wages are being garnished, when some form of collection activity is being threatened or has already been instituted. But “an ounce of prevention is worth a pound of cure,” as the saying, attributed to Benjamin Franklin, goes. Franklin’s advice on firefighting is equally applicable to debt payments, especially student loans, since student loans are usually not dischargeable in bankruptcy.

When you find yourself in a situation where you are no longer able to regularly and reliably make your student loan payments on time, it’s probably time to find a student loan lawyer. Someone who practices in the area of student loan debt can help explore and explain your options to you.

Exploring your options with student loans necessarily begins with finding out exactly what type of student loan you are dealing with. Many people are unaware of exactly the kind of loans they have, or they think they know but they may be mistaken. Also, some people have different kinds of loans – private, Federal, state – making it difficult to sort out what is going on with all of them.

Honestly, whether anything at all can be done to make your student loan payments more affordable depends almost entirely on the type of loan you have. So when a lawyer asks you what type of loan you have and you are unsure, please understand that the answer to this question is of utmost importance and that your lawyer will likely do whatever it takes to find out this information. Surprisingly, it may take a bit of research and digging to discover the origin of your particular student loans, so unless you are absolutely certain about what type of student loan you have, your attorney may have to spend some time finding out.

In short – seek out legal help, be willing to explore your options, have patience. Feel free to call me about your student loan problems if you are in New Jersey, at (201) 676-0722.

Photo credit: variationblogr

Wage Garnishments: Can bankruptcy stop them?

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Are you facing wage garnishment and seeking swift relief through bankruptcy? Discover how bankruptcy can quickly halt wage garnishment and provide much-needed financial relief.

Wage garnishment can be a distressing experience, leaving individuals struggling to make ends meet while creditors seize a portion of their earnings. Fortunately, bankruptcy offers a powerful solution to stop wage garnishment and regain control over your financial situation.

In this comprehensive guide, we’ll explore how bankruptcy works to stop wage garnishment, the timeline for achieving relief, and the steps you can take to navigate the process effectively.

Understanding Wage Garnishment

Wage garnishment is a legal process through which a creditor can collect debts by deducting money directly from an individual’s paycheck. Common reasons for wage garnishment include unpaid medical bills, credit card debts, and outstanding loans.

While wage garnishment laws vary by state, creditors typically must obtain a court order before initiating garnishment. Once in effect, wage garnishment can significantly impact an individual’s finances, making it challenging to cover essential expenses and maintain a decent standard of living.

How Bankruptcy Stops Wage Garnishment

Bankruptcy provides immediate relief from wage garnishment through the automatic stay—a legal injunction that halts creditor actions, including wage garnishment, upon filing for bankruptcy. The automatic stay goes into effect as soon as the bankruptcy petition is filed with the court, providing instant protection against further garnishment.

Chapter 7 vs. Chapter 13 Bankruptcy

Both Chapter 7 and Chapter 13 bankruptcy offer protection against wage garnishment, but they differ in how they address debt repayment:

Chapter 7 Bankruptcy: Also known as liquidation bankruptcy, Chapter 7 involves the sale of non-exempt assets to repay creditors. Once the bankruptcy petition is filed, the automatic stay immediately stops wage garnishment. However, if the debt that led to garnishment is dischargeable, it will be eliminated entirely, providing long-term relief from wage garnishment.

Chapter 13 Bankruptcy: In contrast, Chapter 13 bankruptcy allows individuals to restructure their debts through a court-approved repayment plan. The automatic stay stops wage garnishment upon filing, and the repayment plan provides a structured framework for repaying debts over three to five years. This can offer a more sustainable solution for individuals who want to keep their assets and repay debts over time.

The Timeline for Stopping Wage Garnishment with Bankruptcy

The timeline for stopping wage garnishment with bankruptcy can vary depending on several factors, including the type of bankruptcy filed and the specifics of the individual’s financial situation:

Immediate Relief: The automatic stay goes into effect as soon as the bankruptcy petition is filed with the court, providing immediate relief from wage garnishment. Creditors are legally required to cease all garnishment activities once they receive notice of the bankruptcy filing.

Notification to Employer: Once the automatic stay is in place, the bankruptcy trustee will notify the individual’s employer to halt wage garnishment. Employers typically receive notification within a few days of the bankruptcy filing and must comply with the court order to stop garnishing wages.

Resolution of Garnishment: In some cases, it may take additional time for the employer to process the notification and stop wage garnishment entirely. However, the automatic stay prevents creditors from continuing garnishment efforts during this period, providing temporary relief until the matter is fully resolved.

Long-Term Debt Relief: Beyond stopping wage garnishment, bankruptcy offers individuals the opportunity for long-term debt relief and financial stability. Whether through Chapter 7 or Chapter 13 bankruptcy, individuals can eliminate or restructure debts, regain control over their finances, and work towards a brighter financial future.

Navigating the Bankruptcy Process

Navigating the bankruptcy process can be complex, especially when seeking relief from wage garnishment. To ensure a smooth and successful outcome, consider the following steps:

Consult with a Bankruptcy Attorney: A knowledgeable bankruptcy attorney can provide valuable guidance and assistance throughout the bankruptcy process. From determining the best type of bankruptcy for your situation to preparing and filing the necessary paperwork, an attorney can help you navigate the process with confidence.

Gather Financial Documentation: Be prepared to provide detailed information about your financial situation, including income, expenses, assets, and debts. This information will be essential for completing the bankruptcy petition and developing a repayment plan (if applicable).

Attend Credit Counseling: Individuals filing for bankruptcy must complete a credit counseling course from an approved provider before filing. This course offers valuable financial education and guidance to help individuals make informed decisions about their financial future.

Follow Court Orders: Once the bankruptcy petition is filed, it’s essential to comply with all court orders and requirements. This includes attending scheduled court hearings, providing requested documentation, and adhering to the terms of the bankruptcy process.

Monitor Progress: Stay informed about the progress of your bankruptcy case and communicate regularly with your attorney and the bankruptcy trustee. This will ensure that you stay on track and address any issues or concerns promptly.

Conclusion

Wage garnishment can have a significant impact on your financial well-being, but bankruptcy offers a powerful solution for stopping garnishment and regaining control over your finances. Whether through Chapter 7 or Chapter 13 bankruptcy, individuals can achieve immediate relief from wage garnishment and work towards long-term debt relief and financial stability.

If you’re facing wage garnishment and considering bankruptcy, consult with a qualified bankruptcy attorney to explore your options and determine the best course of action for your financial situation. With the right guidance and support, you can navigate the bankruptcy process successfully and take steps towards a brighter financial future.

Schedule a free bankruptcy consultation with Jennifer Weil, a New Jersey bankruptcy attorney, to discuss your options.

Photo by AZAdam.

When a bankruptcy filing does NOT stop collection actions

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Your bankruptcy filing can stop all your creditors’ collection actions against you. Or can it?

Isn’t a bankruptcy filing supposed to stop all your creditors’ collection efforts against you and your property? Yes, and in fact in many cases a bankruptcy filing does exactly that. Stopping collection efforts is a benefit of filing bankruptcy called the “automatic stay,” because at the moment of the bankruptcy filing, a legal injunction automatically goes into effect “staying,” or stopping, most creditors’ actions against you. But because the automatic stay is something we count on, we had better know its exceptions.

Today I’m just going to list some of the most important exceptions. Then in the next couple of posts I will explain in practical terms these and other important aspects of the automatic stay.

So creditors CAN do the following in spite of your bankruptcy filing:

1) A district attorney or other governmental authority can begin or continue a criminal case against you, such as an indictment, a criminal trial, or a sentencing hearing. This includes not just felonies and misdemeanors, but also lesser matters like traffic infractions that you might not think of as “criminal.”

2) Your ex-spouse, or about-to-be ex-spouse, or somebody on his or her behalf, can start or continue a variety of divorce and family court proceedings. These include legal procedures to establish paternity of a child, determine or change the amount of child or spousal support to be paid, settle child custody or visitation issues, address domestic violence disputes, and even dissolve the marriage. (Although a marriage dissolution usually cannot include a determination about how assets or debts would be divided between the spouses.)

3) Specifically about child or spousal support, the person owed ongoing support can continue collecting it. If there is back support owed, then in spite of a Chapter 7 filing, the person who is owed the support can in most cases start or continue collecting it. This includes not only collection through wage withholdings and garnishment of bank accounts, but also through seizure of a tax refund and suspension of a driver’s license, an occupational or professional license, or even a hunting or other recreational license. In contrast, a Chapter 13 filing can stop these aggressive methods of collecting back support.

4) Taxing authorities can start or finish a tax audit, can send you a notice that you owe taxes, can demand you to file your tax returns, can assess your taxes and demand you to pay them, and in some situations can even file tax liens against you and your property.

Notice that each of these exceptions involves a special kind of creditor. As I said, the automatic stay stops actions against you by most creditors. But if you are involved in a court proceeding or collection efforts by the criminal or taxing authorities, or by an ex-spouse, be especially aware of these exceptions.

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Debt collection: Can a creditor clean out your bank account?

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Bankruptcy work is rife with questions about debt collection. The most common question for me is: Help, I owe [fill in the blank] a lot of money! Can a creditor just take money out of my bank account?

At least in New Jersey, the answer to this question is yes and no. Unless you’ve been sued and a judgment has been entered against you, don’t worry, because a creditor cannot just take your money or property. That’s what due process is all about.

But if a creditor has sued you in court and you either failed to answer the lawsuit or you answered but lost the lawsuit somehow, a judgment can (and probably will) be entered against you. Then, a New Jersey creditor could obtain permission from the court to pursue your assets to satisfy the judgment. This creditor can go after money you have sitting in a bank account, which will result in all of your account’s funds being frozen, at least temporarily. They can also obtain a wage garnishment order to take money directly out of your paycheck before you get paid. While there are other remedies a creditor can technically pursue, these are the two that are used most often. For example, it’s unlikely that a credit-card company is going to take and sell your items of personal property – that’s just too much work for too little return.

Be careful if you have moved recently, or if you never updated your address with your creditors. They might legitimately believe that you live somewhere else and try to serve you with a lawsuit at your old address. The problem is that you might not be aware of a judgment against you. While you might have a legitimate argument that you were not properly served with the lawsuit, it’s highly unlikely to be worth your time and money finding and hiring an attorney to challenge the judgment. If the challenge works, you still have to defend against the lawsuit. If your challenge to the judgment does not work, you are still faced with owing money to your judgment creditor, after having paid an attorney to represent you. Many attorneys (myself included) just don’t think it’s worth even taking these types of cases, especially if the judgment debtor would benefit from a bankruptcy instead.

Bankruptcy can wipe out your personal liability on a judgment debt. However, if the creditor’s enforcement of its judgment rights has resulted in a lien being placed on your property, you may wish to consider taking the extra step of having the lien removed, since bankruptcy cannot wipe out the lien. You don’t need to worry about the lien if you do not own any real estate or if you think you won’t purchase any real estate in the future.

If you are calling attorneys for help because you owe money and you are scared that a creditor is going to sue you and you want to know exactly when this might happen and when it does, how long it will take them to get your bank account/wages/whatever, STOP. Unless you are prepared to do something about it right then and there (such as hiring the attorney to help you file for bankruptcy or to defend against the lawsuit you have already been served with), you have no reason to call attorneys, because they can’t help you. I say this because I often get these kind of calls, where the person calling is just exploding with worry, but has completely closed off any possible remedy because, for whatever reason, they won’t file for bankruptcy, at least not right now.

If you actually wish to discuss the pros and cons of personal bankruptcy, I (and many other attorneys) would be happy to take your call. But if you have done your research and you have closed off the possibility of bankruptcy and you already know what all of your non-bankruptcy options are, please save yourself (and me) the time and don’t call.

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Tip income can’t necessarily be garnished in New Jersey

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I have to admit, I picked this case for this post mainly because of its cool name, Big M, Inc. t/a Annie Sez v. Texas Roadhouse Holding, LLC. But it also has something interesting to say about debt collection.

The New Jersey Supreme Court decided Big M on July 16, 2010. The issue in the case was whether tips and gratuities are subject to garnishment. As you may recall, a garnishment can happen when a debt collector who has a judgment against you gets a court order to take part of your pay to satisfy the judgment.

Big M involved a waitress working for Texas Roadhouse Holding, LLC whose wages were being garnished. When her creditor, Big M, got a check for only $4.21 from its $672 wage garnishment, it sued her employer. In the course of deciding the case, the trial court judge determined that tips placed on credit cards are garnishable, but cash tips are not. Then the New Jersey Supreme Court considered the case on appeal.

Looking at both New Jersey law and the Federal Consumer Credit Protection Act (CCPA), the court did not find any law directly speaking to the issue of whether tips were subject to garnishment. So it examined an opinion letter and field operations handbook from the Department of Labor, which enforces the CCPA, and found the opinion that tips, whether paid in cash or charged, are not subject to garnishment. Although the New Jersey Supreme Court is not required to follow a Department of Labor opinion, the court chose to give the opinion consideration and deference.

Big M, the creditor, argued that all tips should be subject to garnishment because they are taxable income for state and federal tax purposes. The court did not find this argument persuasive because the process of counting and recording tip income and reporting it for tax purposes does not allow the employer to exercise enough control over tip income to make it garnishable. The whole idea behind wage garnishment is to capture the income while it is still in the employer’s hands, before it gets paid to the employee.

The court held that the amount of control an employer exercises over tip income determines whether those tips are subject to wage garnishment. If the employer pools all the tips and then divides the pooled amount amongst the employees, then tip income could be garnished. But if the tips are generally paid directly to the employee, even if the tips are charged on a credit card, they are not subject to garnishment.

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Bank of America drops arbitrations for cardholders

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Bank of America recently agreed to drop the requirement that cardholders resolve disputes in arbitration. The bank did this as part of a settlement of a lawsuit in which they were accused of conspiring with other banks to require credit-card holders to arbitrate disputes instead of going to court.

Other banks are still involved in the lawsuit, which is in Federal Court in New York. These other banks include Capital One, Chase, Citibank, Discover and HSBC. The lawsuit accuses them of violating antitrust laws by requiring cardholders to enter into arbitration for all disputes.

Many believe that credit card arbitrations are biased in favor of the credit card company.

Earlier this year, National Arbitration Forum, a large arbitration company, dropped out of the credit-card arbitration business as a result of a lawsuit against it.

How to get your creditors to stop harrassing you

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: Image by ladybeames via Flickr

One way to get your creditors to stop harassing you is by filing for bankruptcy. But how does filing for bankruptcy stop creditor calls and letters? Through something called the “automatic stay”.

The automatic stay in bankruptcy can be a powerful benefit for debtors who feel that they are being hounded by creditor phone calls and letters. It can prevent further harassment from debt collectors.

After a bankruptcy is filed, creditors must stop attempting to collect on debts as a result of the automatic stay, which takes effect just after filing. Practically speaking, you should wait until creditors receive notice of the filing before they know to stop contacting you.

Or, your lawyer may send out letters of representation to your creditors, which can put a stop to the creditor calls and letters for a while prior to your bankruptcy filing. For example, if the credit card companies are really annoying you, have a talk with your lawyer and see whether letters of representation can be arranged.

Exactly what does the automatic stay protect the debtor from? Debt collection calls, wage garnishment, lawsuits, foreclosure sales, and repossessions.

What types of actions are NOT stayed? Actions regarding family support, such as child support or alimony; criminal prosecutions; and tax assessments or audits.

How long does the automatic stay last? Until the debtor’s bankruptcy discharge comes through or until a creditor asks a judge and successfully gets the automatic stay lifted.

What happens when a creditor violates the automatic stay? Then that creditor may be subject to civil penalties, such as the payment of damages.

If you have a question about bankruptcy, feel free to contact the Hoboken Bankruptcy Attorney at 201-676-0722 or at jweil@jenlawyer.com.

Lawsuit: Debt Collector Harassment Contributed To Man’s Death [Debt Collectors] (consumerist.com)

Inadequate protection from debt collection law

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On October 21, the Government Accountability Office (GAO) released a new report on debt collection abuses and the current state of legal consumer protections against those abuses.

The GAO found that current legal protections for consumers facing abuses by the debt collection industry fall short of actually protecting those consumers. Problems such as excessive phone calls and unauthorized fees still exist. In addition, debt buyers often do not have sufficient information about a debt such that they try to collect the wrong amount or try to collect the debt from the wrong person. And enforcement of the existing Federal consumer protection law is lax.

Sen. Carl Levin is citing the GAO report in his call for the creation of a Consumer Financial Protection Agency. He wants such an agency to enforce the laws, modernize consumer protections to bring them up-to-date with current communications technology, and to monitor compliance with existing law.

The Federal law protecting consumers against debt collection abuses, the Fair Debt Collection Practices Act (FDCPA), was made law in 1977. That law prohibits the disclosure that a communication is being made in an attempt to collect a debt, which creates a problem with the use of answering machines, voice mail, email, faxes, mobile phones, and caller ID. If the Federal Trade Commission (FTC) had rulemaking authority, the report states, it would be easier for the law to keep up with technological changes and to regulate the debt collectors.

Also, the FDCPA does not clarify the account information that should be provided when debt buyer purchases a debt, which creates a problem when attempting to verify the debt. The likelihood of a wrongful lawsuit (on the wrong debt or suing the wrong party) increases.

A Classic Debt Collection Story (bargaineering.com)
When Debt Collectors Violate the FDCPA (bargaineering.com)
Debt Collector On Tape: “I’m Gonna F**** You Up” [Audio] (consumerist.com)
Debt Collectors Inspire The Most Complaints, Say Attorneys General (huffingtonpost.com)

New Jersey Debt Attorney – (201) 676-0722

New Jersey Bankruptcy and Student Loan Attorney

Category Archives: Debt Collection

In debt? You’re not alone

Film Review of Spent: Looking For Change

When to consult a student loan lawyer