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Mar 2018

Still garnished after 15 Years!

Posted by / in Weekly Posts /

Fifteen years later, Lilly is still getting garnished!

Lilly came to see me in my Sterling office last Friday.  When she was much younger, she got a high interest car loans from Ford Motor Credit.

The car got repossessed, and in 2003, Ford got a judgment against her for $8,051.35.  Plus $1,207.70 for Ford’s lawyer and $33.00 filing fees.

Like many people, she wanted to protect what was left of her “good credit,” so she never talked to a lawyer about it.

She works in a medical office and has had different jobs, each lasting a few years.  Periodically Ford Credit would catch up with her job and put a garnishment on her pay.

Fast forward to 2018. Lilly has paid $23,955.42 in garnishment against that $8,051.35 judgment.  And she still owes $15,814.38!  How can that be?  $29,768.25 in interest of the judgment. Plus $709.50 filing fees for the garnishments.  (Most courts in Virginia charge about $73.00 for a garnishment, it used to be less. So from that calculation Lilly was probably garnished nine times over the 15 years.)  You can see it for yourself, here.

Symphony Claims Her New Start

A week after I saw Lilly. Symphony came to see me, also in my Sterling office. Just like Lilly, Symphony had a high interest car loan with Ford Motor Credit, and her car got repossessed in 2016.  Ford got a judgment against her in July 2017. They started garnishing her in January 2018.

As soon as that garnishment hit her payroll office, Symphony came running into see me.  We got her bankruptcy filed before her first short-check payday, although the day after the check was cut.

garnishment refund

Under Virginia law, filing bankruptcy stops a garnishment and sends that money back to your paycheck.

Filing Bankruptcy Stops and Garnishment and Gets that Money Back

Filing a Chapter 7 bankruptcy stops a Virginia garnishment and gets back to you the money taken. Both Lilly and Symphony now have their money back. (Not for Lilly the whole $23,000–just the money they had gotten from her for this garnishment, which started in January 2018.)

Filing Bankruptcy Helps Your Credit

Both Lilly and Symphony are getting a benefit they didn’t expect.  Like most people, they believe the bank’s propaganda that filing bankruptcy hurts your credit score.  For them, like most people, filing bankruptcy helps.

Fair Isaac, who invented the FICO score, say that if your credit score is in the mid 700’s, filing bankruptcy will drop you about 100 points. With a repossession and judgment, Lilly and Symphony had made their credit about as bad as you can make it.  There scores were nowhere near 700.  For them, and for most people, filing bankruptcy improves your credit.

A study by the Federal Reserve Bank of Philadelphia showed that the average person who file bankruptcy had an average credit score of 538.  And those people saw a 90 point improvement in their credit score in the next six months or so.

The Lesson of All This

If you have a repossession, go talk to a bankruptcy lawyer right away.  Don’t wait for that garnishment that’s surely gonna come. Take advantage of the new start you have a right to, under the law.



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Oct 2017

U S Senate Ignores The Seventh Amendment

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U S Senate Votes to Override Bill of Rights

Last night, the United States Senate blocked an effort to restore a neglected part of America’s Bill of Rights: The Seventh Amendment to the Constitution.

The Seventh Amendment grantees a jury in civil cases; cases where people are suing other people, or corporations. (The better known Sixth Amendment guarantees your right to trial by jury in a criminal case.)

The erosion of the Seventh Amendment goes back to 1925. That’s when Congress passed the Federal Arbitration Act.  The Federal Arbitration Act allowed parties to a contract to agree to resolve disputes in a private, secret proceeding. In the last twenty years, big businesses of all stripes have gotten you to “agree” in fine print. That fine print is in the terms and conditions you sign almost every time you do business with a big business. Your constitutional right is lost.

After the financial crisis, in 2010, Congress specifically asked the CFPB to look at arbitration clauses.

After five years of study, on July 10, 2017, the Consumer Finance Protection Bureau outlawed that fine print surrender of your right to a jury. Starting in 2019 banks and other consumer finance companies and credit bureaus would NOT be allowed to force consumers away from as trial by jury into an arbitration.  The Senate, voting 51-50, blocked the CFPB rule. The Senate let the banks, finance companies and credit bureaus to keep doing what they’ve been doing. Taking away your trial by jury right in fine print.

Consumer advocates loudly supported the CFPB rule and denounced the Senate vote. But the people who like to talk about the constitution were silent. Sen. Mike Crapo (R-ID) sponsored the law, saying there is no evidence that consumer are better off with the right to a jury trial. He wants to see “evidence” that we need that right. According to Sen. Crapo, the fact that a right is in the constitution is not evidence enough

Trial By Jury Was Important to the Founders


Patrick Henry said that trial by jury was essential to keep the wealthy from oppressing the poor.

During the ratification of the constitution, the right to a jury trial kept coming up in the debates. Trial by jury was long established in English law, but the Crown had narrowed those rights for the American colonies. The states feared that the Federal government might someday start acting like the king. The specific right to a jury trial in civil cases was demanded as protection for the average citizen against the power of the wealthy. Patrick Henry was one of those who made that argument. Today the Federal Arbitration Act and fine print agreement have swept away the right to a jury trial.  Just as Henry, and the others feared.

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Oct 2017

Two years after bankruptcy, Jim gets 3.25% car loan

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Two years after bankruptcy, Jim gets 3.25% car loan

Just got an email from Jim, who filed Chapter 7 bankruptcy with me in 2015.  His case was approved and discharged in May 2015.  In August 2017, he got a car loan at 3.25%.

I tell people to try to get three years after the bankruptcy, to get the best rate on a car loan, but even two years—well, two years and two months—Jim was able to get a really good rate.

Jim got that really good rate from his credit union. It was State Department Federal Credit Union.  sdfcu-logoThat’s  something else I tell people.  Sometimes the factory is having trouble selling their cars; then you want to get a loan from the dealer.  Otherwise a credit union is the best place to get a car loan.

Now Jim is Getting Ready to Buy A House

Jim had seen that it’s possible to get approved on a mortgage. insured by Fannie Mae, just two years after BK.  He wanted to know if I had heard of that.

Yep,  lots of people get approved for mortgages two years or so after filing Chapter 7 bankruptcy.

The best way to have good credit is to have good credit. But once you get into trouble (Jim has a medical emergency that had wrecked his credit) filing bankruptcy is nearly always the fastest way back.  People struggle with damaged credit for years, I talked to three people like that just today, when they could get out of trouble and back to good credit far more easily.  Take it from Jim.

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