Tag Archives: judgment

There’s a Judgment Against Me – What Are My Options?

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Many people face civil judgments for debt collection. Here’s a guide to your options for addressing this problem.

What is a Debt-Collection Judgment?

A debt-collection judgment is basically a court order signed by a judge stating that you owe the plaintiff, who may be the original creditor or a debt collector, a specific sum of money. The judgment may or may not say that you owe continuing interest and/or attorney fees to the plaintiff.

How Do I Know if There’s a Judgment Against Me?

Typically, you would have been served with legal papers – a lawsuit – at some point. You may or may not have chosen to handle the lawsuit somehow, either by contacting the other side’s attorneys yourself or by getting your own attorney. Or maybe you ignored it. If a judgment was entered, you should have received a copy of the judgment itself or some notification that a judgment was entered against you, along with some indication of how much money the judgment was for.

If you were not served with any legal papers, it’s possible that you might have missed them in the mail somehow – some courts allow for service by mail, under certain circumstances – or maybe you’ve moved over the last few years. Try looking on the court’s website to see if you can locate a lawsuit against you. If you find one, make a note of the county in which it was filed, the plaintiff’s name, and the court’s docket number. These pieces of information will come in handy if you need to call an attorney or the court clerk.

If you knew about the lawsuit early on and you settled it with the plaintiff’s law firm, you might be required to make payments on the debt over time. In that case, there should not be a judgment against you, at least not if the debt-collection lawsuit took place in New Jersey. A debt-collection settlement is not the same as a debt-collection judgment in the New Jersey civil court system.

There’s a Judgment Against Me – What Are the Risks?

If there is a debt-collection judgment against you in New Jersey, you face some potential problems. The most likely issues are the following:

  • Wage garnishment: Only a certain percentage of your wages can be garnished, but it might be more than you can afford;
  • Bank levy: This is the most dangerous, in my opinion, because the plaintiff can get up to the full amount of the judgment at one time – meaning that your bank account could be cleared out; and/or
  • Lien on real estate: If you own property in New Jersey, the plaintiff could have a lien placed on it, which means that, when you sell the property, the plaintiff will have to be paid from the sale proceeds.

I Can’t Afford to Pay the Judgment (Or the Settlement) – What Now?

If there is a debt-collection judgment against you and you can’t afford to pay it, you have a few options:

  • Do nothing: Let it get paid through one of the judgment collection methods listed above;
  • Settle it: You can settle a judgment, although it’s not likely to be on great terms – try settling it yourself, or if it’s for a high dollar amount, you might want to pay an attorney to settle it for you;
  • File for bankruptcy: Get a free bankruptcy consultation and tell the attorney as many details about the judgment as possible. Most debt-collection judgments are dischargeable in bankruptcy. Provide information about all of your debts, income, and assets with the bankruptcy attorney and see if you qualify.

If you’d like to discuss your debt situation, book a phone consultation now by scheduling it on my calendar.

Wage Garnishments: Can bankruptcy stop them?

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Paycheck

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.

Be sure you file bankruptcy at the right time

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Sometimes the timing of your bankruptcy filing hardly matters, but other times it’s huge. The two examples in this post should convince you that you do not want to be rushed to file because a creditor got a judgment against you is now garnishing your wages. Since the timing of your bankruptcy filing can be a strategic decision, you should preserve the ability to file bankruptcy at a time that’s best for you.

1. Choosing between Chapter 7 and 13:  Being able to file a Chapter 7 generally requires you to pass the means test. This test largely turns on a very special definition of “income.” For many people, means test income can change every month. So you may not qualify to file a Chapter 7 one month but maybe you can the next month. Being able to delay filing means being able to file when you are likelier to pass the means test and not be forced into a Chapter 13. Chapter 7 cases are usually shorter and normally cost less than Chapter 13 cases.

2. Discharging debts:  Getting certain debts discharged can be more difficult if you incurred them within a certain amount of time before your bankruptcy case was filed. Delaying the filing of your case makes it less likely that the dischargeability of one of these debts would be successfully challenged. If a creditor is successful in challenging the dischargeability of a debt, you would still owe the debt, possibly along with the creditor’s costs and attorney fees and your attorney’s fees.

If you get sued, what do you do to avoid getting a judgment against you, so that you’re not rushed into filing bankruptcy at a bad time? See a bankruptcy attorney as soon as possible. The earlier you get advice, the more options you will have.

Photo by: mao_lini.

Is a Creditor Getting a Judgment Against You?

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If you have a judgement against you from a creditor, it can hurt you. Judgments can hurt in three ways:  1) They allow the creditor to use powerful collection tools against you; 2) A judgment can make you rush into bankruptcy at a bad time; and 3) Under some circumstances, a judgment can make it harder to discharge the debt in your bankruptcy.  This post addresses only the first of these three.

Most creditor and collection-agency lawsuits for debt collection result in judgments against those who owe the debts. That’s because the reason for debt collection suits is to legally establish that the debt is owed, which is usually not in dispute. Also, much of the time the debtors are at the ends of their financial ropes and can’t afford an attorney to find out their options or to defend the lawsuit. So judgments are entered “by default”—meaning the deadline for the debtors to respond passed without any action by them, allowing the creditor to get a judgment. Sometimes debtors do not receive notice that a judgment has been entered against them or they receive notice and do not recognize it for what it is. Thus, many debtors do not realize there are judgments against them, especially when nothing apparently happens for months or even years afterwards. And very few people are fully aware of the possible consequences.

Most people know that a judgment gives a creditor the power to garnish wages and/or to levy against bank accounts. But preventing garnishments by keeping your bank account empty and by not being paid a regular wage often are not enough to make you “judgment proof.” For example, a judgment usually becomes a lien against any real estate you own now or will own in the future. That includes not only property held in your own name but also your rights to property held jointly with a spouse, parent, or through a trust or estate. A creditor has other tools available, including getting a judge to order you to answer questions under oath, in writing, about what you own – in New Jersey, this is called an “information subpoena”.

Beyond the direct damage a creditor with a judgment can do to you before you file your case, such a creditor can cause you problems in your bankruptcy case.

If you file bankruptcy quickly to stop a garnishment or other collection activity, you lose one of your most important advantages: the timing of your bankruptcy filing. Much of what happens in your bankruptcy case turns on exactly when it was filed. Not having the flexibility to pick the best timing can, among other things, turn a Chapter 7 into a Chapter 13, can mean a difference of many thousands of dollars, and can turn a straightforward case that meets your goals into a more complicated matter.

The lesson here is, whenever possible, take the time to see a bankruptcy attorney if you have overall financial problems, particularly if you are being sued. Try not to wait until after a judgment has been entered against you.

Photo by Dennis Wong.