I'm glad. Too many people think they can do as they please and not be held accountable. We all pay for people like this in one way or another.
This is a discussion on Garnishment of wages? within the Off Topic & Humor Discussion forums, part of the The Back Porch category; For some reason this article disturbs me. I thought only the federal government could garnish wages. Where will this lead? Maybe I need a tin ...
For some reason this article disturbs me. I thought only the federal government could garnish wages. Where will this lead? Maybe I need a tin foil hat
Pay Garnishments Rise as Debtors Fall Behind
by John Collins Rudolf
Thursday, April 1, 2010
PHOENIX -- When the bank sued Leann Weaver for not paying her credit card balance, her reaction was typical for someone in that situation. Personal and financial setbacks weighed her down, and she knew she owed the $2,470. So she never went to court to defend herself.
She was startled by what happened next. When she swiped her debit card at the grocery store, it was declined. It turned out Capital One Bank had taken $224.25 from her paycheck, a quarter of her wages for two weeks of work at a retail chain, and her bank account was overdrawn.
"They're kicking somebody who's already in the dirt," she said.
One of the worst economic downturns of modern history has produced a big increase in the number of delinquent borrowers, and creditors are suing them by the millions. Concern is mounting in government and among consumer advocates that the debtors are not always getting a fair shake in these cases.
Most consumers never offer a defense, and creditors win their lawsuits without having to offer proof of the debts, much less justify to a judge the huge interest charges and penalties they often tack on.
After winning, creditors can secure a court order to seize part of the debtor's paycheck or the funds in a bank account, a procedure called garnishment. No national statistics are kept, but the pay seizures are rising fast in some areas -- up 121 percent in the Phoenix area since 2005, and 55 percent in the Atlanta area since 2004. In Cleveland, garnishments jumped 30 percent between 2008 and 2009 alone.
Debt collectors say they are being forced into the action by combative debtors who dodge attempts to settle. "I think there's a lack of accountability among debtors, and a lack of interest in reaching out to their creditors to resolve things amicably," said Fred N. Blitt, president of the National Association of Retail Collection Attorneys.
Bankruptcy can clear away most debts. Yet sweeping changes to federal law in 2005 -- pushed by the banking lobby -- complicated that process and more than doubled the average cost of filing, to more than $2,000. Many low-income debtors must save for months before they can afford to go broke.
In some states, courts allow creditors to charge high interest rates for years after a lawsuit is decided in their favor. In others, creditors can win lawsuits by default and seize wages and bank accounts without a case ever appearing before a judge.
Lack of participation is the most fundamental problem. Some consumers do not even know they are being sued; the people who are supposed to serve them with formal notice have sometimes been caught skipping that step and doctoring the paperwork.
In far more cases, consumers are served but still do not offer a defense. Few can afford lawyers; others are intimidated or confused. In their absence, judges can offer little relief.
In the rare event that a consumer battles back, creditors frequently lack the documentation to prove their claim, and cases are dropped. That is because many past-due debts are owned not by the banks that issued them, but by debt collectors who bought, for cents on the dollar, a list of names and amounts due.
"If the consumers were armed with more education about how to defend against these debts, they'd be successful," said Jeffrey Lipman, a civil magistrate in Des Moines.
The case of Sidney Jones shows how punishing the system can be. In January 2001, Mr. Jones, 45, a maintenance worker from California Crossroads, Va., took out a $4,097 personal loan from Beneficial Virginia, a subprime lender now owned by HSBC, the big bank.
He fell behind, and Beneficial sued. Mr. Jones did not appear in court. "I just thought they were going to take what I owed," he said.
By default, Beneficial won a judgment of $4,750, plus $900 in lawyers' fees, with the debt accruing interest at 27.55 percent until paid in full. The bank started garnishing his wages in March 2003.
Over the next six years, the bank deducted more than $10,000 from Mr. Jones's paychecks, but he made little headway on his debt. According to a court order secured by Beneficial's lawyers last spring, he still owed the company $3,965, a sum nearly equal to the original loan amount.
Mr. Jones, who did not graduate from high school, was baffled. "Where did all this money go that I paid them?" he said.
Dale Pittman, a consumer law lawyer in Petersburg, Va. , took Mr. Jones's case without charge, and found that all but $134 of his payments had gone toward interest, fees and court costs. "It's a perfectly legal result under Virginia law," Mr. Pittman said.
HSBC said it ceased collection shortly after Mr. Pittman took the case, but declined further comment. "We are confident we are treating our customers fairly and with integrity," Kate Durham, a spokeswoman for HSBC North America, said in an e-mail message.
The rare debtors who press their claims, and catch a sympathetic judge, have a shot at a result more to their liking.
Ruth M. Owens, a disabled Cleveland woman, was sued by Discover Bank in 2004 for an unpaid credit card. Ms. Owens offered a defense, sending a handwritten note to the court.
"After paying my monthly utilities, there is no money left except a little food money and sometimes it isn't enough," she wrote.
Robert Triozzi, a judge at the time, heard the case. He found that over a period of several years, Ms. Owens had paid nearly $3,500 on an original balance of $1,900. But Discover was suing her for $5,564, mostly for late fees, compound interest, penalties and other charges. He called Discover's actions "unconscionable" and threw the case out.
Discover defended its actions. "This account was placed with an attorney only after all other efforts to reach the card member were exhausted," Matthew Towson, a bank spokesman, said in an e-mail message.
Going to court is no guarantee of victory, of course. Consumers who do go are sometimes intercepted by collection lawyers, who press them to sign papers settling without a trial. These settlements may be against the interests of debtors, but they sign anyway.
"We're signing off on a lot of settlement agreements where we shake our heads and ask, 'Why is this person settling to this?' " Judge Lipman said.
For the working poor, losing a lawsuit can mean disaster. A 1968 federal law exempts 75 percent of a worker's wages, or 30 times the minimum wage per week, from being taken in garnishment -- whichever is less. But increases in the minimum wage have failed to keep up with inflation. As federal law stands now, just $217.50 a week is exempt from seizure. (A few states set higher cutoffs.)
The working poor "have difficulties maintaining payments on life's necessities with their full paycheck," said Angela Riccetti, a lawyer with Atlanta Legal Aid who represents indigent clients whose wages are being garnished. "You lose 25 percent of it and everything folds."
For Leann Weaver, the woman at the grocery store, Capital One's lawsuit made a bad situation worse. After being evicted from her apartment, she moved in with her grandparents. Without them, she might have ended up on the street or in a shelter, she said.
Capital One declined to comment on Ms. Weaver's case. "We encourage anyone facing difficulties meeting their financial obligations to contact us right away," Tatiana Stead, a bank spokeswoman, said in an e-mail message.
Ms. Weaver said she repeatedly asked Capital One for more time to pay her $2,470 debt, but last year the bank filed suit. She failed to show up in court, and a judgment was entered against her, swollen by $1,800 in interest and lawyers' fees. Then the garnishment began, almost $500 a month, or a quarter of her pay.
"I can't even look at my paychecks any more," she said.
I'm glad. Too many people think they can do as they please and not be held accountable. We all pay for people like this in one way or another.
The federal government is NOT the only entity that can garnish wages. Nearly any debtor can, and certainly about any financial entity can. But, in order to garnish wages.. they have to :For some reason this article disturbs me. I thought only the federal government could garnish wages. Where will this lead? Maybe I need a tin foil hat
1> Sue you in a court of law
2> Win the case and get a judgment against you
3> Execute on the judgment
Which may or may not include wage garnishment. Individual state laws may vary. But this general the way it goes.
Keep in mind.. a collector that calls you and tells you that they are going to start wage garnishment on Friday... is simply lying. They cannot garnish wages unless they have a judgment against you. If they have a judgment against you, they would not be calling, they would be executing on the judgement.
Here's my story.
Job loss due to injury. Fell behind but called EVERY creditor. It took years but everyone that worked with us got paid off, including the outrageous interest and fees. The only ones that got caught in our bankruptcy were those who pushed us to it. We were willing to pay but we were not able under their terms.
Wanting $1200.00 per month payments for the next 10 months (original bill was less than $400.00). We only had a few creditors like that, but there was no way we could afford several thousand dollars per month for more than a year and still maintain our household.
Our only recourse was to declare bankruptcy.
This was in 2003, things have changed since then. I'm sure that the creditors that forced us into bankruptcy would say we 'dodged' them, lied to them and took advantage of them.
They would outright lie to us and try to use my wife and I against each other. Since we actually talked about our budget etc. that approach did not work. Had more than one call us liars, swear my wife said call on a specific date and my husband will pay you the 1200.00 per month you're asking.
I hate the whole business.
If You Want To POPULATE Heaven
You Have To PLUNDER Hell!!
4th Man Ministries
Congress is still dithering about setting up a financial services consumer protection agency. It likely won't happen, and if it does it will be watered down to ineffectiveness.
Big and small businesses alike have found that they can re-price their products by adding fees with dubious names until the cows come home, and then charge fees on top of fees on top of interest. It is nothing but theft and dishonesty-- and it happens even with otherwise legitimate businesses and enterprises.
Here's a trivial example, but it will ring true as the sort of deceptive stuff that is now so dang routine.
We purchased tickets to a certain even, advertised at 5 dollars a ticket. By the time the actual charge got to the credit card company it was 17 dollars and change, or more than 7 dollars above the advertised ticket price. There was one creative fee of 2.50 per ticket with no explanation and a possibly legitimate fee for mailing the tickets--though it was more than 5 times the postage.
Big and small business rip-offs like this one occur all the time, especially in the banking industry, but I see it on my gas bill, on my cable bill, my cell phone bill especially.
In addition to creation of a consumer financial services protection agency, we need to ditch and forbid all pre-dispute arbitration agreements. These things give the business community too much of a huge disadvantage against the consumer (all of us).
A Federal Tax debt cannot be wiped clean by filing bankruptcy
"Outside of the killings, Washington has one of the lowest crime rates in the country,"
--Mayor Marion Barry, Washington , DC .
What she basically seemed to be saying was pay these federal debts with your credit card. That way if you can't make the payments you can still declare bankruptcy because the card issuers don't have the protection Uncle gave itself.
I'm not sure I think that is ethical, but it is legal.
Parents, when planning your kid's school expenses, please don't let them take it all in the form of loans. They may be paying till after they are dead. At least the loan reforms buried within the health care reform bill did do something good on this score. Payments on student loan debt won't exceed 10% of income in the future.
AZCDL Life Member
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Bad luck happens. Its easy to get into dept with health issues.
But for everything besides the house, my philosophy is never a borrower nor a lender be.
Um, maybe don't charge things? My wife and I have tried to use CC and banks as little as possible over the years and I am glad of it.
It is all there in your credit disclosure that you sign when you take a loan or credit card. You agree to the nutcase, crazy terms.
And, especially easy if you have marketable skill, or run your own buisness, BARTER for things. My heating/AC system was paid for with repairs to the installer's cabin cruiser. No money. No tax. No interest.
I thought that the value of stuff exchanged in barter was taxable?
IRS finding out about the transaction is another matter, but if they do I think it is imputed to be income.
Read this, it is from the IRS:
“The Constitution is not an instrument for the government to restrain the people, it is an instrument for the people to restrain the government.”
Patrick HenryOriginally Posted by UnklFungus
I had a Newspaper send me a bill for an ad I had placed, but I had paid it. I called, they said they would get it corrected, and each time I followed up by mailing them a copy of the cashed check, a letter, etc. . This procedure continued every month for 6 months, then a Collection Agy contacted me. Ok, now I was mad ... because they had also reported it to all of the credit agencies....
I gave them a phone number to contact, then called my attorney and told him what was going on..... when they called him, he advised all of them they were being sued for the continued harrassment, phone calls from the collection agency and damage to my credit.... and that evidence had been continuously provided to them that they had been paid. We then notified them on what we would take to "settle" it ....
That was a costly endeavor for them ....