Monthly Archives: February 2023

Being Garnished on a 20-year-old Debt?

I’ve been getting a lot of calls from people who have just gotten a wage garnishment on a repo’d car that they had completely forgotten about. In most cases, these repos were 20 years ago or MORE! Excuse Me!?! How Does that happen?

The first time I got the call, I was as shocked as the person calling me. Twenty years is a seriously long time, and the worst part of it is that interest (at the contract rate and these don’t tend to be low interest loans) continued to accrue for that entire time.

So, how does that happen? Well, a judgment can be kept alive indefinitely if the creditor is willing to spend the time and money to do it. They have to either have a garnishment issue to a bank or an employer even if they don’t find anything, just issuing it is enough, at least every five years. So, it doesn’t have to go to your bank or your employer. It just has to go to some bank or some employer. The other alternative is to file a Notice of continuation, basically a statement that the creditor still intends to try to collect this judgment, and it needs to remain viable. That is pretty much it. Do that at least every five years for twenty years and then get lucky when you issue that renewing garnishment and it lands at the right bank or the right employer, and all of a sudden my phone is ringing.

Yep, it really does work that way. It used to be that it was rare to see someone trying to collect a judgment for much more than five years. That is changing, and I think it is something our Legislature needs to be looking into changing. Sorry, but a repo or an unpaid credit card in your twenties shouldn’t be able to jump out of nowhere and bite you in your forties.

Elaine

You DON’T Make Too Much Money to File for Bankruptcy

People frequently tell me that they are afraid that they make too much money to file for bankruptcy. Hogwash. If you have more debt than you can pay, you are going to qualify for at least one chapter of bankruptcy — the question is which one.

Virtually everyone can file either a Chapter 7 Bankruptcy or a Chapter 13 Bankruptcy. There is an income and expense qualifier for filing, generally called the Means Test; but it can’t bar you from the Bankruptcy Court, and it is not just income, it also includes reasonable and necessary expenses.

If you can’t pass the Means Test you are still eligible to file a Chapter 13 Bankruptcy, which is a form of reorganization intended for individuals — as opposed to the more widely recognized reorganization Chapter, Chapter 11, which is really intended for businesses (although, individuals can and do file Chapter 11 cases).

So, if you are putting off saving for retirement or your kids’ college, if you are robbing Peter to pay Paul, or losing sleep over how you will cover the next unexpected expense; it may be time to swallow hard and give me, or another experienced bankruptcy attorney a call. You work too hard not to give yourself a brighter future.

Elaine