November 23, 2017

Georgia’s Likely New Pre-Garnishment Notice Not All Good News

wage garnishment; bank account levyGeorgia may soon have a new law governing wage garnishments and bank account levies.  But the news is not all good.

You may recall that back in September, 2015, I reported that federal judge Marvin Shoob had issued a ruling that invalidated on Constitutional grounds bank account levies in Gwinnett County, Georgia. A man named Tony Strickland sued the Gwinnett County clerk of court after his bank account containing workers compensation and Social Security funds was seized by a credit card company that had sued him. Mr. Strickland argued, and Judge Shoob agreed, that the credit card company had an affirmative obligation to notify debtors like Mr. Strickland that certain funds (like workers’ compensation benefits, Social Security benefits, welfare payment and similar benefits) were exempt from garnishment. [Read more…]

How to Avoid Credit Card Interest, Penalties and Fees

how-to-avoid-credit-card-interestHave you ever opened your credit card statement only to find that despite last month’s payment, your unpaid balance has actually increased because of credit card interest, penalties or fees?

As a practicing consumer bankruptcy attorney in Atlanta, Georgia for over 25 years, I know that out of control credit card debt can force people in to Chapter 7 or Chapter 13 bankruptcy. In many cases credit card debt that was manageable becomes unmanageable because of common mistakes made by individuals in how they handle their credit card debt.

If you can avoid these mistakes you may be able to avoid the stress and financial distress caused by excessive credit card debt.

How Credit Card Debt and Credit Card Interest can Get Out of Control

The first step towards controlling your credit card debt involves your spending. This may seem obvious but many of my bankruptcy clients fail to recognize this reality. If you find yourself carrying a balance (rather than paying off your debt in full at the end of the month) you need o change your usage habits.  If you carry a balance you will end up paying unnecessary and expensive credit card interest.

Your credit card is not a substitute for cash – instead your credit cards represent a high interest loan with a 20 days repayment term. Interest on unpaid balances will eat you alive. Most cards obligate you to pay an 18 to 20% annual interest rate on balances carried more than 20 days. To give you some perspective, your interest rate on mortgage debt will end up in the 3 to 4% per year range, and the annual percentage rate on your car note will generally be 5 to 6% per year.

As a rule, if you make only the minimum payment, your balance will stay the same, or actually increase month to month indefinitely. And if you are 1 day late, you will likely get hit with a penalty (often $35 or more) plus your interest rate may be increased to 28% or higher. [Read more…]

Don’t Fall Prey to Illegal and Immoral Behavior by Debt Buyers

debt buyerIf you have never heard the term “debt buyer,” you might be amazed to learn that large companies exist solely for the purpose of buying and selling consumer debt. These companies buy and sell billions of dollars of debt. Some are part of public companies that trade shares of stock on stock exchanges.

In other words, credit card companies, hospitals, personal loan companies, banks and other lenders regularly sell and resell debt – and this may include debt owed by you.

Here’s how it works. Let’s say that you open a Mastercard or Visa account with a local bank. Over the years you may start running a balance – perhaps $2,000 or $3,000. You are able to make the minimum monthly payment but the balance grows slowly. At some point, you find yourself with a problem – you miss one or two monthly payments and your account becomes two or three months past due. The credit card company cancels your account and starts sending you collection letters.

At that point, the credit card company may decide that it would rather sell your delinquent debt for cash before it gets too much older. Depending on how delinquent the debt is, a debt buyer may pay only 4 or 5 cents on the dollar. Your 2 month delinquent debt of $3,000 will be packaged along with other similar debt and sold in bulk to a debt buyer at this discounted rate.

The debt buyer may attempt to collect the debt by dunning you (calling repeatedly) or the buyer may retain a lawyer and sue you. [Read more…]

Live Longer After Filing Bankruptcy? Economists Say “Yes”

health after bankruptcyA recent study by economists suggests that Chapter 13 debtors whose cases were confirmed and completed through discharge derive significant economic and health benefits from their filings as compared to Chapter 13 debtors whose cases were dismissed.

This report, published on the National Bureau of Economic Research – a professional organization for economists – compared 500,000 bankruptcy records with tax records and foreclosure records.

The study compared Chapter 13 debtors whose cases were approved and completed successfully to discharge to Chapter 13 debtors whose cases were dismissed. Successful Chapter 13 debtors:

  • saw annual earnings 25% higher after bankruptcy – compared to their pre-bankruptcy earnings. Dismissed filers saw no increase in earnings
  • had a higher employment rate
  • had a 30% lower mortality rate compared to filers whose cases were dismissed
  • were 19% less likely than dismissed filers to lose a home to foreclosure

The study authors suggest that successful Chapter 13 filers have an increased incentive to work and increased economic stability following receipt of bankruptcy protection. [Read more…]

Statutes of Limitation in Georgia: Credit Card Debts

statute of limitationsIn Georgia, the statute of limitations for filing a lawsuit to collect credit card debt is 6 years. This means that if your account is inactive for six years, you have a winning defense to any credit card collection lawsuit.

The clock on this statute of limitations begins to run when you last use the card or when you last make a payment. There is some authority to suggest that the creditor can restart the statute of limitations clock if you acknowledge that you owe the debt, enter a payment plan, or accept a settlement offer.

If you get a collection call or letter from a creditor or collection agency on a credit card debt that has been dormant for almost 6 years, it would not be wise for you to accept the call or say anything to the caller. Instead you should contact a lawyer to speak on your behalf. [Read more…]

Free Budgeting Resources to Help You Recover from Bankruptcy

post bankruptcy family budgetOne of the issues that many of my bankruptcy clients have in common has to do with lack of budgeting. Most of us have a general idea about our income and expenses but very few people sit down and write out a formal budget.

When preparing a bankruptcy petition, I use my petition preparation software to create a budget, which, of course, I discuss with my clients. Many of my clients are surprised or even shocked to discover how much they spend each month and how far in the red they are.

In many cases, bankruptcy can help solve this problem by consolidating payments in a Chapter 13, or by eliminating debt (and sometime surrendering property) in a Chapter 7.

Obviously bankruptcy can function to solve an immediate problem but filing a Chapter 7 or Chapter 13 won’t help you if you revert back to the same old bad spending and savings habits after receiving your bankruptcy discharge. [Read more…]

Bankruptcy Often the Least Desireable Option to Eliminate Student Loan Debt

elimination of debtI recently received this email from a prospective client (“Jane”) seeking to have her student loans discharged in bankruptcy.  Do you see the problems with this case?

I am permanently disabled due to cognitive decline resulting from a craniotomy to repair one of three aneurysms. I also suffer from back pain, anxiety, depression and panic attacks. In addition to my 2012 brain and gallbladder surgeries, I underwent back surgery in 2011 and two foot surgeries in 2010, and due to complications from my back surgery I have not been able to return to work. . I was very recently approved for disability retirement after 25 years as an employee with the federal government.  I also receive SSI.   I filed a chapter 7 in 2008 and am unsure what my options are in regard to having my student loans forgiven. I am seeking a full discharge.

Let’s start with the most immediate problem – currently, Jane’s eligibility to file bankruptcy.  Under Bankruptcy Code Section 727(a)(8), Jane is not eligible to file Chapter 7 for eight years after previously filing a Chapter 7 1.  Depending on when in 2008 she filed, she would have to wait until at least 2016 before filing a second case. [Read more…]

  1. assuming that the previous Chapter 7 resulted in a discharge

How to Stop a Wage Garnishment in Georgia and Get Your Money Back

judgment creditorAlmost without exception my clients who are subject to wage garnishment in Georgia report that they feel “violated” or “horrified” by discovering that 25% of their take home pay 1 has been seized by a creditor.  I can certainly understand this emotion – especially if you depend on every penny of your paycheck to cover monthly expenses like rent, utilities, car payments and insurance costs.

How Wage Garnishment Happens in Georgia

With limited exceptions, you can only be wage garnished in Georgia if your creditor has first filed a lawsuit and obtained a judgment.  More than a few of my garnishment clients claim that they do not remember being sued – this is an issue for another blog post but anytime you find out that a sheriff’s deputy or process server is looking for you, it is time to take action because this means that you have been sued. [Read more…]

  1. Click here to review the details about wage garnishment in Georgia.

How do I Know if Filing Bankruptcy is the Right Decision for Me?

If you are facing a looming debt crisis, the idea of filing for bankruptcy may have crossed your mind.   For many of our clients, it can be very difficult to take that first step of calling or emailing a bankruptcy lawyer.

In this Google “Hangout” video, Atlanta bankruptcy attorneys Jonathan Ginsberg and Susan Blum discuss a threshold question of their bankruptcy practice – how does an honest, hardworking family know that it is time to call a bankruptcy lawyer.

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You can read more about filing bankruptcy in the Atlanta area, please visit our web site.

Why Some People Face More Bill Collection Harassment than Others

bill collection harassmentWere you aware that credit reporting agencies (Equifax, Experian and Trans Union) have assigned you a score which reflects the likelihood that you will pay a delinquent bill?  This collection score 1 helps bill collectors decide where to focus their collection efforts.

Credit reporting agencies also offer “bankruptcy risk scores” which offer credit grantors a numerical rating score to determine whether a customer or potential customer is more or less likely to file bankruptcy.

Financial data that may be buried in credit applications or public records can now be analyzed instantly by computer and reduced to a simple score 2 [Read more…]

  1. The collection score product is described in more detail here, in a brochure published by the Fair Isaac Company, the organization that also provides credit scoring algorithms for the credit reporting agencies.
  2. My professional colleague, Long Island, New York bankruptcy lawyer Craig Robins writes more about bill collection and bankruptcy in his excellent Long Island Bankruptcyblog.  Thanks to Craig for his excellent post about automated bill collection systems, which you can read here.

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