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02

Jan 2014

Virginia Garnishment Law Article in Virginia Bankruptcy Law News

Posted by / in Before Bankruptcy, Weekly Posts / 1 comment

Is it legal to get garnished under Virginia garnishment law in a county that you don’t live in any more?

I’m a Virginia bankruptcy lawyer.  I see people all the time who get garnished with no notice.  (You NEVER get enough notice–I explain that here.  But you SHOULD get a copy of the Virginia garnishment in the mail about the time your paycheck or bank account gets hit.)

If you get no notice at all, maybe you’ve moved from the address where they got the judgment.  Maybe you moved years ago.  The Virginia garnishment notice goes to the old address and never gets to you.

Is that legal?  Is it legal to garnish somebody by sending notice to an address they no longer live at?

Virginia bankruptcy lawyer Kaitlin Vaillancourt

Virginia bankruptcy lawyer Kaitlin Vaillancourt

Many courts around the country, say that’s ok.  I think, under Virginia garnishment law, it’s a violation.  Specifically it’s a violation of the Fair Debt Collection Practices Act.  At least if you’ve moved to a different county.

 Kaitlin Vaillancourt and I had an article about that last week in the Virginia Bankruptcy Law News.  The Virginia Bankruptcy Law News is published by the Virginia State Bar Bankruptcy Law Section.  You can read it here.

The Fair Debt Collection Practices Act says debt collectors can’t bring “any action” against you collect a debt in a judicial district where you don’t live.  (Or where you lived when you signed the contract.)  (In Northern Virginia, each county is usually a different judicial district.)

Some courts have decided that a garnishment is not an legal action “against” you.  It sure feels like it’s against you, if you’re the person whose pay is getting garnished.  The Ninth Circuit says of course it is.  Fox v Citicorp.    A recent case in Ohio said the same thing.  Adkins v Weltman, Weinberg & Reis.  I’m reprinting their explanation in full.

“Thus, resolution of the motion to dismiss hinges on whether a garnishment action is “against” the consumer who is a judgment debtor. Only the judgment creditor and the judgment debtor have any beneficial interest at stake in a garnishment action. The nominal “defendant” in a wage garnishment, the employer-debtor of the employee-judgment debtor, has no claim to the money garnisheed. The employer’s only interest is in not becoming liable to pay the wages to both the employee and the employee’s judgment creditor.[1] That danger is avoided by paying the wages into the court, which then determines who is entitled to those funds. The garnishment is not against the employer, it is against the employee-judgment debtor.”

But many judges have said it’s against your employer (or bank), not against you.  (The First Circuit, in Smith v Solomon & Solomon, held that a garnishment is an act against the employer, because Massachusetts law requires that it be brought in the country where the employer does business.  Bu contrast in Virginia, it has never been thought necessary to send a writ of fieri facias to the county where the garnishee resides.   Burks.  On the other hand, Virginia law does allow the garnishment to issue from the court where the debtor now resides.  Code of Virginia 8.01-511.)

Kate and I looked at Virginia garnishment law, and found something called the fieri facias.   That’s Latin, and it goes back to the time in England when lawyers used Latin a lot.  Even if  the Virginia garnishment is not against you, the fieri facias is.  And they can’t get a garnishment without doing a fieri facias first.  (Fieri facias is is “the ordinary judicial process for enforcing the collection of a money judgment by the sale of the property of the defendant.” Burks Pleading and Practice in Actions at Common Law.)

Next time somebody gets a fieri facias and a Virginia garnishment against one of my clients who’s moved to a different county, we’ll sue.

PS  Here’s a Fourth Circuit opinion, Powell v Palisades, which describes garnishment as a step taken to collect a debt.  That was under Maryland law, but it’s still very helpful.  This was decided December 18, 2014.  It probably means that garnishing you in the wrong county violated 11 USC 1692f–it’s an unfair means to collect a debt.

PPS  We’re going to trial on this issue against the debt collection law firm, Caudle & Caudle in March 2016. I’m gathering up useful information.

Take a look at the Virginia Summons to Answer form.  It also has a fieri facias, and is obviously only against the debtor.  DC-440.  The attorney General of Virginia has ruled that “writs of fieri facias, debtor interrogatories and garnishments are distinct, though related, proceedings.”  To issue a Summons to Answer there must be named in both a judgment and fieri facias. Here’s just a fieri facias form.  cc-1477.

Let’s look at the US Supreme Court decision in Mitchell v St Maxent’s Lease, 71 US 237 (1866).  A fieri facias was issued against St Maxent the day after he died.  The Supreme Court said it was void under the common law.  Even though the property sought to be levied was still there, St Maxent was not.

PPS  Had a bad day today in Fairfax General District Court.  We did not get to whether we were right on our legal theory.  Although she got a garnishment, our client was never actually garnished.  (She was on leave from her job, so the employer didn’t have a paycheck to garnish.)  No harm, no foul said the judge.  There needs to be “actual damage.”

(We thought there was a decision in the U.S. District Court last fall was controlling.  That case is Brown v Transurban.   Federal Judge Cacheris said this:  “The “injury in fact” suffered by Plaintiffs under the FDCPA is not any actual economic loss, but rather being subjected to the allegedly “unfair and abusive practices” of the Collection Defendants.”  That wasn’t enough to persuade the Fairfax General District Court, today.  

Well, that issue is now in front of the U S Supreme Court in a case called Spokeo v Robins.  (That is a Fair Credit Reporting Case; these internet people search companies are covered as credit bureaus.  Was there any evidence that the mistake caused Robins to lose a date, a job, a loan, anything?  Or is just being wrong–and not fixing it–enough.)

We may hear from the Supreme Court sometime this spring.  Until then, we need a case where somebody actually got garnished from the wrong county.

PPS  Another circuit court said the the garnishment is not an action “against the consumer.”  Here. Hageman v Barton   That does not control whether the fi fa is “against” the consumer.  But it doesn’t help.

 

 

 

 

 

 

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30

Apr 2013

Getting Sued After a Short Sale?

Posted by / in Before Bankruptcy, Chapter 7, The 2005 Bankruptcy Law / No comments yet

Getting Sued After Short Sale?

Getting sued after a short sale is highly probable.  Saw three couples this month who needed to file bankruptcy, because they were getting sued–garnished in one case–by the second mortgage after a short sale.

It was surprising that they were surprised.   At the peak of the crisis, four or five years ago, second mortgages would take what they could get at a short sale and let the rest of it go.  But they don’t often do that anymore.  (At least not without intense negotiation.  I’ve seen it once in the last year.)

And usually they make you sign that you KNOW that you still owe the money.  So, where’s the surprise?

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24

Feb 2013

How to Tell Your Bank to Stop Payday Loan Automatic Withdrawals

Posted by / in Before Bankruptcy / 144 comments

Before bankruptcy, I tell my clients to stop the automatic withdrawals to those internet payday loans.  They always find it’s so hard to get their banks to help.  Today’s  New York Times says the same thing.  The Times says that’s because the banks love those overdraft fees.

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