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Almost without exception my clients who are subject to wage garnishment in Georgia report that they feel “violated” or “horrified” by discovering that 25% of their take home pay 1 has been seized by a creditor.  I can certainly understand this emotion – especially if you depend on every penny of your paycheck to cover monthly expenses like rent, utilities, car payments and insurance costs.How Wage Garnishment Happens in GeorgiaWith limited exceptions, you can only be wage garnished in Georgia if your creditor has first filed a lawsuit and obtained a judgment.  More than a few of my garnishment clients claim that they do not remember being sued – this is an issue for another blog post but anytime you find out that a sheriff’s deputy or process server is looking for you, it is time to take action because this means that you have been sued.Most collection lawsuits are not answered and go into default.  If you do not respond to a lawsuit, the creditor wins automatically and gains the legal right to seize 25% of your take home pay and 100% of any other liquid asset he can find (such as bank accounts).How to Stop Wage GarnishmentsOnce the garnishment has started, you do have options to stop it but you need to move quickly.One option is called a “collateral attack” on the judgment that gave rise to the garnishment.  In a collateral attack you must file a lawsuit in the court that issued the judgment and prove that there was a defect in procedure – usually a problem with service of the lawsuit.  For example, if the lawsuit was actually served on another person with your name, and you can prove that you were never served, you can go into court after the fact and “undo” the judgment.The collateral attack approach has several drawbacks.  First, you must have legitimate grounds to attack the judgment.  It is not enough to go into court and claim that you did get served.  Evidence can be a problem.  Secondly you will need to hire a lawyer to pursue your collateral attack on the judgment.  This type of litigation can get expensive and the garnishment will continue until such time as you can get into court and convince a judge to grant your motion.The second option is the bankruptcy option.  Assuming that bankruptcy otherwise makes sense, you can file Chapter 7 or Chapter 13 and stop the garnishment immediately thanks to the automatic stay in bankruptcy.  Our experience has been that many (but not all) creditors will voluntarily return garnished funds upon notice of the bankruptcy filing.  If the creditor will not cooperate, you can file a complaint in bankruptcy court under some circumstances to force the creditor to return your money.As always, it is much easier to prevent a garnishment than to get your money back, so it is in your best interest to seek legal advice as soon as you become aware of a wage garnishment.If your wages are being garnished and you would like to discuss your options with an experienced bankruptcy and debt relief lawyer, please call Susan Blum or Jonathan Ginsberg at 770-393-4985.  We do not charge for phone consultations and we are standing by to help you.

1. Click here to review the details about wage garnishment in Georgia. ↩

The post How to Stop a Wage Garnishment in Georgia and Get Your Money Back appeared first on theBKBlog.

Former NFL quarterback Vince Young, who recently filed bankruptcy, is now seeking to have his case dismissed. Attorneys representing Young claim they have reached a settlement with his largest creditor, Pro Player Funding in regards to a loan he took out with the company during the NFL lockout in 2011. Young had filed Chapter 11 [...]

The bankruptcy petition is the document that gets filed with the clerk of the United States bankruptcy court. The petition is basically everything about you financially. It encompasses all of your assets, your liabilities, your income, your expenses and your statement of financial affairs. The bankruptcy petition is what the chapter 7 trustee is going+ Read MoreThe post What Is Involved In Preparing The Bankruptcy Petition? appeared first on David M. Siegel.

With the new year California homeowners who might suffer a foreclosure now will have enhanced protections against mortgage lenders or debt buyers trying to collect on a foreclosed first mortgage or sold-out junior mortgage. Senate Bill 426, signed into law in July 2013 and effective on January 1, 2014, strengthens California’s existing anti-deficiency statutes. Specifically, SB 426 amends CCP Sections 580b and 580d. This follows on the relatively recent addition of Section 580e applicable to the short sale context, which prevented second mortgage lenders (usually home equity line lenders) from using the short sale as leverage to coerce homeowners into agreeing to remain liable for the balance of the second mortgage after the short sale. SB 426 also follows last year’s amendments to California’s anti-deficiency rules that included refinanced purchase money loans (where there is no advance of principal) to be given the same protections as original purchase money loans.
To understand the new protections afforded to foreclosed homeowners in California, let’s recall what the two existing anti-deficiency statues amended by SB 426 already provided.
CCP Section 580b, is commonly referred to as the “Purchase Money Prohibition.” The basic prohibition contained in 580b is against deficiency judgments after a foreclosure sale of property securing a “purchase money” loan, regardless of the foreclosure method used by the lender (i.e., trustee sale or judicial foreclosure). 580b makes purchase money loans “non-recourse.” Note that the Purchase Money Prohibition does not apply to construction loans on commercial property and may not apply to construction loans on residential property.
On the other hand CCP Section 580d, which is commonly called the “Private Sale Deficiency Prohibition,” bars a mortgage lender from seeking a deficiency judgment for a balance owed after electing to foreclose using a non-judicial foreclosure sale. Non-judicial foreclosures are the foreclosure method of choice among mortgage lenders in California. This is essentially an election of remedies statute. The basic bargain of that statute is that if the lender (the beneficiary under the deed of trust) elects a trustee sale rather than the more cumbersome judicial process, then the lender cannot later seek a deficiency judgment against the homeowner. Note, however, that Section 580d does not protect against sold-out junior mortgage lenders—most often home equity lines. This is the basic problem with continuing liability for home equity lines or “HELOCs” after a foreclosure.
So what changes to California’s anti-deficiency rules became effective in 2014 as a result of SB 426? Prior to enacting SB 426, CCP Section 580b did not prohibit a lender from claiming that a deficiency was due or from attempting to collect that deficiency from the borrower using extra-judicial methods of collection like credit reporting or selling the debt to collection agencies. Sure, they couldn’t sue the foreclosed homeowner, but that didn’t mean they couldn’t harass her into paying. So, in effect SB 426 extends the anti-deficiency protections of 580b to more closely resemble a bankruptcy “discharge” of the underlying debt rather than simply preventing a lender from obtaining a judgment for the deficiency. The new language of 580b wipes out the debt period. The lender of a purchase money mortgage lender—or a collection agency who later buys the deficiency “debt”—can no longer try to collect that “debt” by any means.
Similarly, SB 426 amended Section 580d to expressly state that after a non-judicial foreclosure, no deficiency shall be owed or collected by any other means. In other words, the prohibition extends to other methods of collection such as by phone calls, credit reporting, etc., and like the language added to Section 580b, the effect is to essentially wipe out the debt for the deficiency, not just prohibit a judgment by the mortgage lender or a debt buyer or collection agency for the mortgage lender. If you are in danger of foreclosure, you should call us for a free consultation to see whether Chapter 13 bankruptcy may be able to help.