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16

Aug 2020

$45,000 garnishment from a $3,500 29% interest loan

Posted by / in Weekly Posts /

At 29% interest adds up fast

A $3500 loan at 29% grows to a $11,000 judgment and then a $45,000 garnishment.

A $3500 loan at 29% interest grows to a $45,000 garnishment.

How fast does at debt at 29% interest add up? For Wilson a $3500 loan grew to a $45,000 garnishment in ten years.

Wilson borrowed $3500 from a Finance Company in 2004.  He took out that loan to pay off some collections and raise his credit score.  The interest rate, which no one should agree to, was 29%.  With four years of interest and late fees, Wilson owed $11,997.17 when the Finance Company got a judgment against him in May 1, 2008.

Prince William court records show Wilson got hit with twelve garnishments between 2008 and 2013. But they only collected $1134.79.  Wilson figured out he couldn’t be garnished working at a restaurant, because he got paid cash tips. So he was safe working for restaurants.

For five years, the Finance Company gave up. But during those five years, the debt kept growing.  It kept growing at 29% interest. Then, in September 2018, when they tried to hit him again, the Finance Company’s garnishment had grown to $45,582.82. Fifteen years after taking out a $3500 loan (five years after getting a judgment for 11,991.17) Wilson owed $45,582.82!

At long last, Wilson decided enough was enough. Wilson came to see me and filed bankruptcy in January 2020.

It’s now, finally, safe for Wilson to take a job with a steady paycheck–instead of working for cash tips–and not have to worry about getting garnished.

After Bankruptcy: Better Credit on His Next Car

As a bonus, in a couple years, Wilson will be able to get a car loan at a decent interest rate. His last car loan, with the judgment showing on his credit, had been at 22.9%. In a couple years, he’ll be able to get a car loan at 4%.  The difference between 22.9% and 4% on a $20,000 car is $185 a month: $13,200 total over a six year car loan.

What the lesson?

Judgments do NOT go away.  If you are getting a judgment against you for a finance company loan or a credit card, the time to file bankruptcy is now.

 

 

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Robert Weed has helped fifteen thousand people file bankruptcy in Northern Virginia. Robert Weed is a frequent panelist and speaker at the meetings of the National Association of Consumer Bankruptcy Attorneys. He is one of Northern Virginia’s most experienced personal bankruptcy lawyers. As an expert on changing consumer bankruptcy laws, Robert Weed has been interviewed on local and national TV and quoted in newspapers across the country.

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