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Before bankruptcy, does Navy Federal violate Virginia law?

Posted by Robert Weed / in Before Bankruptcy, Virginia Bankruptcy / 3 comments

Before you file bankruptcy, once you have a lawyer, you should tell your creditors when they call, “call my bankruptcy lawyer.”  The law assumes that most companies with a good name will leave you alone at that point.

In my experience that’s true of just about everybody, but not Navy Federal.

Navy Federal’s collection department says they will keep calling you day and night, until the bankruptcy is filed with the court.  And they do.  (Some people told us Navy Federal calls almost hourly until the bankruptcy is filed.)

I think this is a violation of Virginia law.  Code of Virginia § 18.2-429 makes it a class 3 misdemeanor to cause someone’s phone to ring with the “intent to annoy.”  And the law expressly says that it can still be illegal even if there is also an “intent to communicate.”

The punishment in Virignia for a class 3 misdemeanor is a fine of up to $500.

I think its pretty clear that when Navy Federal calls four or five times a day, after being told, “I can’t pay, call my bankruptcy lawyer, I have to file bankruptcy”–that’s calling with the intent to annoy.

This spring, we helped one of our clients sue Navy Federal to get them to stop violating Virginia law.  We didn’t get far.  Just because something is a criminal law violation,  does not mean a private citizen can sue to enforce it.

So, the judge made it clear we would lose, unless we dropped the case.  (Which we did.  We are going after them under Florida law, but that’s for another day.)  But the judge suggested, here on page 13, that we could “bring it back as a criminal offense.”

My before-bankruptcy clients seem to have fewer complaints about Navy Federal than they did this time last year.  Maybe that’s because they have gotten nicer.

Maybe it’s because their lawyers were listening to that judge.  I hope so.

PS October 2016, CFPB slams Navy Fed

Saw in this morning’s Washington Post that the Consumer Finance Protection Bureau went after Navy Fed.  Hit them for $23 million to unfair collection procedures.  I was really glad to see it.  You can read the Post story, here: Navy-Federal-to-pay-23-million.

PPS  January 2018, Navy Fed suddenly polite.

The last week of January brought a nice letter from a now very polite Navy FCU.  

NFCU was writing to tell me that Woodbridge resident “Stevie” asked them to stop calling her, and that they’d do it!  That’s a big change. 

Thank you Navy Federal.  I take back half the bad things I’ve said about you.

 

Here’s the polite letter

Here’s a sample of the polite letter Navy Federal sends now, when you tell them to “call my lawyer.”

 

 

Filing bankruptcy in Virginia to stop garnishment? You have rights.

Posted by Robert Weed / in Virginia Bankruptcy / No comments yet

Many people keep hoping they can avoid filing bankruptcy in Virginia, until they get a garnishment.   If filing bankruptcy is a last resort, garnishment tells you that you’ve arrived.

Garnishment law is one of the few places where Virginia law is better for the consumer than most other places.  (Well, better than most places that allow garnishments.  In North Carolina, for example, they can’t garnish your pay at all.  Except for taxes, child support and that kind of thing. )

Virginia garnishment law is better because of the “return date.”  In many states, a garnishment starts and just keeps running until they have squeezed the whole debt out of you.   If your being garnished for say an $8,000 credit card, that could take a long time.  Virginia garnishment law is not like that.

A Virginia garnishment usually runs for six to twelve weeks, and it ends on the return date.  (When you first get the garnishment, you might think the return date is the start date.  It’s not,  it’s the stop date.  For more information on garnishments generally, see my website on Virginia garnishment law.)

If you file bankruptcy in Virginia, before that return date, you can get that money back.  Everything they have taken during that six to twelve week period comes back to you.  (As long as you haven’t used up your $5000 Virginia “homestead exemption.”)

If you need to file bankruptcy in Virginia, but can’t get it done before the return date, here’s what to do.   Your lawyers can give you a homestead deed, to record in the county where you live.  (There’s a $31.00 filing fee.)

Then you can take the recorded homestead deed to the return date on your garnishment, and get your money back yourself.  (More details are here.)

I help two people a month get back their garnished money that way.  Then they usually use part of what they get back to pay for filing bankruptcy.

Virginia garnishment law is one of the few areas where Virginia gives rights to the consumer, better than a lot of places.

 

PS  I’m attaching some of the leading cases on this area of the law.  My thanks to Linda Jennings, a bankruptcy lawyer in Colonial Heights, for these cases.

In re Wilkinson.  In_re_Wilkinson[1]

In re Banks.  In Re Banks. WDof VA

Wilson v VA Nat. Bank  Wilson vs. VA Nat. Bank

Here’s more info on why filing bankruptcy stops a Virginia garnishment.

 

Bankruptcy Reform Law Causes Mortgage Default to Rise?

Posted by Robert Weed / in Virginia Bankruptcy, Weekly Posts / No comments yet

A new study by the National Bureau of Economic Research suggests that the 2005 bankruptcy reform law added to the housing crisis 200,000 more mortgage defaults each year.

“Bankruptcy reform squeezed homeowners’ budgets by raising the cost of filing for bankruptcy and reducing the amount of debt discharged in bankruptcy,” according to the report by Wenli Li of the Federal Reserve Bank of Philadelphia, Michelle J. White of the University of California at San Diego and Ning Zhu of the Graduate School of Management at the University of California.

This study was cited on foxnews.com and the American Bankruptcy Institute.

I agree with both their points

Bankruptcy reform added to the housing crisis because it made filing bankruptcy harder and more expensive.   Some people, who could have filed bankruptcy to lose the credit cards and save the house, couldn’t move fast enough.  By the time they got rid of the credit cards, the house was too far gone.

Bankruptcy reform also added to the housing crisis in a second way.  The budget in the 2005 law is unrealistically low for people with big families.  Especially in expensive urban areas.  So, some people who tried to use Chapter 13 to catch up the house could not make the Chapter 13  payment and also feed their children.  The food budget is just too low.  The only way people could feed the kids was to let the house go.

I think there’s a third point.  People were scared by news coverage of bankruptcy reform.  They believed that bankruptcy could no longer help them.  They thought the door of the courthouse was locked.  Many of those people got caught in foreclosure rescue scams and debt settlement scams, and never talked to a competent bankruptcy lawyer.

The country is paying a big price.  The banks got their bailout loans when they needed them, but rising defaults and falling real estate values hurt every homeowner in America.  Bankruptcy reform is a part, only a small part, of what triggered this crisis.