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01

Sep 2016

Why Filing Bankruptcy Stops Payroll Garnishment: Virginia Law

Posted by / in Virginia Bankruptcy, Weekly Posts /

Why Filing Bankruptcy Stops Payroll Garnishment: Virginia Law, Virginia Form

I’m surprised a couple times each month by Virginia employers who don’t know that bankruptcy stops payroll garnishment. Some employers think they need to keep on garnishing, until they get an order from a judge saying to stop. But if you read the Garnishee’s Answer Form, it tells you exactly what to do.  

(If you don’t have the form handy, please check the link so you can follow along. I’ve inserted the form down below, but it’s too small to read.)

Please Mail Checks or Responses

If you read the form, up at the top, point 4 says, “Please mail checks or responses….” That tells you right there, you can mail a “check” or a “response.” So you don’t have to mail a check. You can mail a response.

Below that, you have ten boxes you can select. The first one is “Enclosed is a check…” 

There are 9 Excuses for Not Mailing Checks

After “enclosed is a check,” there are nine other responses. Those nine are your excuses for not mailing a check. Those nine excuses are listed right on the form. They are called responses. Responses you can legally send in instead of checks.

After the “Enclosed is a check” response, look at the nine other boxes. The first one is pretty obvious: “the garnishee holds no money…” If the debtor does not work for you, or bank with you, you don’t have to send in any money. That’s clear.

The second one is slightly different: “The garnishee does not have sufficient information to reasonably identify…” If the garnishment is for John Smith, your company might have eight John Smith’s. If there’s no social security number and the address doesn’t match any of the eight, you’d select that box. (Or if your company only has one John Smith, but there’s no social security number and the address doesn’t match.) 

Then there are other boxes for: doesn’t work here anymore; the amount of the garnishment isn’t filled in; not making enough money to be garnished; already being garnished by someone else.

“The judgment debtor has filed a bankruptcy petition”

Bankruptcy stops payroll garnishment

“Judgment debtor filed bankruptcy” is one of the nine reasons to NOT send checks. Sorry this is so small, but you can see the form full size, here.

The eighth box is “the judgment debtor has filed a bankruptcy petition…” Like the other boxes, the debtor’s bankruptcy is a legal answer to the garnishment. Filing bankruptcy is a legal excuse for not sending in a check. It’s a response that’s right on the form that asks you to mail “checks or responses.” 

So if you get notice that your employee has filed bankruptcy, you don’t need to wonder what to do. Pick up the form. Select the box that says “The judgment debtor has filed a bankruptcy petition.” Mail that response. That’s it; you’ve done what the court asked you to do. Finished. You are supposed to send checks or responses. You’ve sent your response. 

You’ve checked the box you are supposed to check and done what you’re supposed to do.

Bankruptcy Stops Payroll Garnishment: Does The Form Seem Too Simple?

Even if you didn’t have the form, you should know (or your lawyer, anyway, should know) that bankruptcy stops payroll garnishment. Bankruptcy Judge Stephen S. Mitchell explained why that is, in 18 pages, in the case of Madge Lebrun. (I was Ms. Lebrun’s lawyer.) If you don’t believe the form, you—or your lawyer—can read, here how Judge Mitchell explained bankruptcy stops payroll garnishment. 

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27

Aug 2016

Fast Track Debt Relief Violates Virginia Consumer Law

Posted by / in Weekly Posts /

Fast Track Debt Relief Violates Virginia Consumer Protection Law

I’m a bankruptcy lawyer, in Woodbridge Virginia. I see a lot of people ripped off by debt settlement scams, before they come to see me. Last month, a judge in Fairfax County agreed with me that Fast Track Debt Relief violated the Virginia Consumer Protection Act.

When the Sheriff knocks, is anybody home?

Figuring out who to sue in this case was a tangled mess. Our client saw an advertisement from Fast Track Debt Relief. Stacy Singer, on behalf of Fast Track Debt Relief, emailed back and forth with our client.

8-27-2016 1-52-41 PM Hoffman Stacy

Stacy Singer sent this email on behalf of Fast Track. Her letterhead is Cornerstone. The contract is with Credit Advocates. When the sheriff knocks, who answers the door?

Stacy Singer listed Cornerstone Legal Group on her letter head, but she signed the contract on behalf of Credit Advocates Law Firm.  Her email letterhead was Cornerstone Legal Group. Stacy Singer listed three different debt settlement firms in just one email!

Credit Advocates is rated F by the Better Business Bureau.  It looks like they are out of business. Same with Cornerstone. What’s going on here?

It looks to me like Fast Track reels in the consumers, and then assigns the “debt settlement” work to somebody else.

We showed the court that the contract, with Credit Advocates, had a lot of false promises. And that there was no way it could work. And that Credit Advocates listed phony addresses, pretending they had lawyers in Virginia, where they didn’t.

But could we make Fast Track pay for the false promises of Credit Advocates?

The Virginia Consumer Protection Act helped us out. That law says we can go after sellers, suppliers, manufacturers and distributors of consumer services. So we were able to keep Fast Track in the case and get a judgment against them.

Fast Track seems to still be in business, and has a B+ from the Better Business Bureau. The judge said they owed $3400.44 to the consumer, and $1700 to my law firm. Credit Advocates sent us the check.

Credit Advocates claimed they had lawyers at these Virginia addresses, when they didn't.

Credit Advocates claimed they had lawyers at these Virginia addresses, when they didn’t.

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14

Aug 2016

Bankruptcy: The Best Credit Repair for Most People

Posted by / in Weekly Posts /

Bankruptcy is The Best Credit Repair for Most People

Is bad credit costing you thousands of dollars every year?  It is, if you are paying more than 5% on your car loan.  People with great credit are paying less than 3.0%.  The difference between 3% car loan and an 18% car loan on a $24,000 car is $178 a month–$10,680 over a five year loan.

Some people try to fix this problem with “Credit Repair.”

What is Credit Repair Anyway?

Lexington Law says they are “the leading credit repair law firm.” 

Lexington Law does credit repair. I explain why bankruptcy is usually better.

Lexington Law does “credit repair.” I explain why bankruptcy is usually better.

They say you have “the legal right to dispute inaccurate items on your credit reports with the credit bureaus and your individual creditors.”

Is your bad credit caused by inaccurate items—or accurate items?

From what I see, as a bankruptcy lawyer, most of the bad credit on most people’s credit reports is accurate. Credit repair firms hint, but don’t dare say, they can remove accurate items from your credit report. (Sometimes they do, obviously, but they can’t promise it.) So, they mostly don’t do much good.

Lexington Law admits as much, if you read closely. They say on average their clients have “24% of their presenting negatives, removed within 4 months.” That means that 76% of the negatives are still there!

How is bankruptcy better?

Bankruptcy repairs your credit because it gets rid of your debts. The Federal Reserve, in two different studies, found that filing bankruptcy helps your credit score. Why is that a surprise? Your credit is better because you don’t have all those bad debts!

Isn’t bankruptcy is black mark on your credit? Of course it is. Then why does you credit score go up?

Evan Hendricks explained how it works in a case where I used him as an expert witness in a case against Capital One. He testified that the credit scoring models support the fresh start in bankruptcy, because bankruptcy counts as only one “derogatory” no matter how many debts it covered. 

Suppose your credit is wrecked. You have a repossession, three charge offs, three collections, and two accounts that are 60 days past due. That means you have seven derogatories, and two delinquencies. Try credit repair? On average, that gets rid of two of your nine problems. You still have seven.

Bankruptcy changes those nine problems into just one: the bankruptcy. (No, your credit history is NOT wiped clean; the bad credit is still there. But it does NOT drag down your score the way it did—because while the bad history is there, the debts are gone.)

Credit repair, on average, changes your nine black marks into seven. Bankruptcy can change them into one!

The Fresh Start is a second reason bankruptcy is better

Some of the time, credit repair does knock accurate information off your credit report. But that does NOT mean the debt is gone. 

Suppose you have a $5000 credit card that went to charge off, and is now owned by a debt buyer like Midland. Credit repair may some of the time knock Midland off your credit report. But that doesn’t help you if the sheriff bring a warrant in debt to your door.

When you file bankruptcy, the law gives you a fresh start. Besides helping your credit score, the creditors can’t call you, they can’t send you bills, they can’t take you to court or garnish you. Credit repair can never do all that.

For most people, bankruptcy is better for your credit score than “credit repair.” And the bankruptcy “fresh start” give you so much more.

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NORTHERN VIRGINIA BANKRUPTCY LAW OFFICES