Articles

The Difference Between Wage Assignment and Garnishment

Monday, 12 September 2011 11:49

Client: What is the difference between a wage assignment and a wage garnishment?

Attorney: In a nutshell, the biggest difference is that a wage assignment is something you voluntarily give a creditor. For example, if you take out a loan or a payday loan or something like that, you authorize a wage assignment voluntarily saying that if you don't make payments, they can take it out of your paycheck. A wage garnishment is a court order.

What most people don't know is that when you voluntarily give a wage assignment, you can also revoke that authority and take it away from them so that they can't take the money from your paycheck. What most employers don't realize is that wage garnishments are court ordered and they do have to honor those; they have to make the deductions if the income guidelines are met. If I am the employer and I receive a wage assignment in my office, human resource department, payroll department, or whatever it may be, I don't have to take that money out of your paycheck. With a wage garnishment, there is a court order in place, so you don't have a choice. That wage garnishment is coming out of your check, your employer has to take it out, there is no choice.

Client: Is it worse to have a wage assignment or a wage garnishment?

Attorney: If you don't earn a certain amount of money, then you can’t be garnished. There is a mathematical formula - you put in your income and deductions and things like that and if you don't earn a certain dollar amount, then you don't earn enough money to be garnished. They can't garnish you and even if they were trying to get a court order, it wouldn't happen.

However, in a wage assignment, you agreed when you signed the original contract that if you don't make payments, they can take say maybe one hundred dollars a week from your paycheck. In that wage assignment, the amount doesn't fluctuate and it doesn't change no matter how much you've earned.

So there is a danger that if you have given a wage assignment that you don't revoke and that your employer does honor, you could be making two hundred dollars a week and they could take out a hundred. With a wage garnishment, they can take fifteen percent of your gross income, but only if you make over a certain amount of money each pay period. You can have fifteen different creditors garnishing one percent each, but the maximum is fifteen percent in a garnishment. Once that happens, the only answer at that point is that you either have to pay the debt and work out something with the creditor, or you have to file the bankruptcy and then the wage assignment will stop and the wage garnishment will stop coming out of your paycheck.

What Should Soldiers Facing Creditors Do?

Monday, 12 September 2011 11:48

Client: I have a son who is stationed in Iraq, and he owes creditors money that he can't afford to pay right now. What do you recommend that he do in that situation?

Attorney: Well, right now, probably nothing. Be at ease that we have what is called the “Soldiers and Sailors Act.” Basically what the act says is that while he is deployed and he is overseas, his creditors can't collect or pursue him for collection of any kind of debts, so they can't take him to court. For a soldier who is deployed and overseas, they can't collect from him because it would be an undue burden for that soldier to have to come back to the United States every time a creditor wanted him to defend a collection lawsuit in court or to dispute a debt in some way. Once he returns, his obligation to make payment or dispute the debts or to defend the debts, that will all return. So once he is back, he will either have to make payment arrangements or, if he can't afford to make the payments, then he may need to consider filing a bankruptcy at that point. He should come in and talk to one of us so that we can make an assessment based on his individual finances and what course of action would be best for him.

What Can Seniors Facing Creditors Do?

Monday, 12 September 2011 11:47

Client: My father had a recent had a health scare, he has recovered and thankfully he is doing well. But he accumulated a lot of medical bills and the only income he has is social security. Is there anything you can suggest that someone in his situation can do?

Attorney: It's not necessarily what he can do, but what he should do, and we have to make that determination. Most often the case is when we are dealing with elderly people and there are a lot of medical bills and things like that, they also don't have any assets to speak of. They are on a fixed income like your Dad where they are receiving Social Security or maybe they are just receiving a pension or something like that. So there is nothing that the creditors can go after because you can't garnish Social Security, you can't garnish a pension, and if there are no assets to can go after or put liens on, there's nothing that anyone can do to collect from them. They are what we consider to be “judgment proof.” Basically what that term is saying is that even though the creditors can call, send letters, and even file law suits and go to court and get a judgment against them, the creditor can never collect anything on it. It's meaningless because they have nothing, they own nothing. You can't garnish Social Security, you can't garnish a pension, and the bottom line is that you can't get blood from a turnip. So the issue in his situation becomes what he can handle. If he is in fact “judgment proof,” and he can handle those phone calls and the mail and deal with the collection letters and the lawsuits, then he doesn't need to file for bankruptcy. For a lot of people that is the case. But some people make a choice that even though they don't legally have to file a bankruptcy because they are not protecting anything, they want the peace of mind, they want peace and quiet, they want their phone to stop ringing at 9 o' clock at night, they want their mailbox to not be full every day with collection letters. Sometimes they just want to do it [file a bankruptcy]. Each case has to be assessed individually to make sure they are in fact judgment proof. So again, you should probably have him make an appointment to come in and talk with one of us so that we can just verify that he is judgment proof and then let him make the decision on how he wants to proceed.

Questions Regarding Filing for Bankruptcy

Monday, 12 September 2011 11:46

Client: I have been thinking about filing bankruptcy for a while now but I am afraid I am going to lose my house or car, is that true?

Attorney: No, in most cases keeping a house or car is not a problem. Just because you own one or the other or maybe both does not mean you do not qualify for a chapter 7. If filing a chapter 7 is not an option because there is too much value to your house or to your car, then what we do is look toward a chapter 13 because people file a chapter 13 in order to protect those things and you can still keep the house and the car or one or the other or both however you choose. What we do is we make an individual assessment in each and every case and what your best course of action is in order to meet the needs that you are looking to fulfill.

Client: Ok. That makes sense. But you know I'm afraid if I file bankruptcy, isn't my credit ruined for the rest of my life?

Attorney: Credit reports will reflect the bankruptcy for up to 10 years, but that doesn't mean during that period of time that you are not eligible to apply for credit or actually get loans or things like that. Typically immediately after filing you start rebuilding your credit, you can apply for credit cards, you can apply for car loans. Now houses and things like that, given the current state of the economy, are maybe more difficult and may take a little longer, but in time, that will happen too.

The Difference Between Chapter 7 and Chapter 13 Bankruptcy

Monday, 12 September 2011 11:40

Client: Can you tell me what the difference is between the different kinds of bankruptcies? I have seen on TV they will talk about a Chapter 7, they will talk about a Chapter 13 and I don't know what the difference is. How do I know which one is right for me?

Attorney: Basically a Chapter 7 is a liquidation eliminating all of the unsecured debts that you have (credit cards, medical bills, pay day loans, personal loans, unsecured loans like that), and then treating secured creditors as you want them to be treated. If you have a house that has no equity, you can keep the house and make the payments, or if you don't want it you can surrender it and walk away from the house. Same thing with a car. As long as you don't have any property that has any value or equity to it, or claims against anyone or any money that anybody owes you -- any way that the court can get funds that they can liquidate and use to pay your creditors  -- Chapter 7 is the typical choice. What a Chapter 13 does is basically reorganize your debt. You make payments to pay back a percentage of the debt that you have over a period of time. So typically Chapter 7 is for people who don't have assets, whereas Chapter 13 is for people who do.

Chapter 13 Bankruptcy Information

Wednesday, 29 June 2011 13:05

No Money Down to File Your Case! Chicago Illinois

One reason a great majority of people file Chapter 13 is to save their home or car. Chapter 13 allows someone who has fallen significantly behind on one of these to become current over a period of 3 to 5 years as opposed to the short time the creditor would normally allow. Furthermore, Chapter 13 stops foreclosure and/or repossession, in most cases, giving a person the opportunity to get back on their feet.

Read more: Chapter 13 Bankruptcy Information

Chapter 7 Bankruptcy Information

Wednesday, 29 June 2011 13:04

The purpose of a Chapter 7 is to discharge (wipe out) most debts and allow the debtor a “fresh start”. A person can file a Chapter 7 bankruptcy once every eight years.

Read more: Chapter 7 Bankruptcy Information