Being Sued?
If you are being sued for a consumer debt such as credit card debt or a student loan, there may be defenses available to you, even if you believe that you owe the debt and cannot repay it.
The collector suing you may be working on behalf of a “debt buyer” who purchased the debt from the original creditor and may not be able to prove in court that it owns the debt. If you are being sued by an entity that is not the same company as the credit card you used, chances are it is a debt buyer. Portfolio Recovery Associates, Encore Capital Group, Asset Acceptance, CACH LLC, LVNV Funding, Midland Credit Management, and RJM Acquisitions are some of the largest debt buyers.
These debt buyers pay as little as three to seven cents on the dollar for buying up your debt and then sue you for the entire amount claimed by your original creditor, plus interest and attorney fees. However, the debt buyers usually do not have documents proving their right to collect the debt at all. Suing you for the entire amount plus interest and attorney fees is a violation of fair debt collection laws.
Do not assume you have no defenses and let a default judgment be entered against you. Contact us right away if you have been served papers to find out what defenses might be available to you.
Setting Aside a Default Judgment
Unfortunately, you may not be aware that a debt buyer has filed a lawsuit and received a judgment against you if you were never properly served. You might only find out when you start receiving calls from someone trying to collect on that judgment. If that is the case, contact us immediately. If you act quickly, default judgments can be set aside if you can show that you had no actual notice of the lawsuit because the summons was never delivered to you.
For more information visit my blog.
Wage Garnishment and Bank Levies
Wage Garnishment or “Earnings Withholding Orders”
In California, if a creditor has received a judgment against you, they can serve an Earnings Withholding Order on your employer. The Earnings Withholding Order, or “EWO,” orders the employer to send 25% of the employee’s disposable income to the creditor.
Some of my clients only find out there is a judgment against them when their employer tells them about the EWO.
You can file a Claim of Exemption and show that your income and expenses justify a lower amount of withholding than the 25%, and sometimes you can pay as little as zero. But you must submit the Claim of Exemption quickly to keep money from going to the creditor and to obtain a refund from the Sheriff of any money that the creditor already received.
Contact us for more information, and especially if you were unaware that there was a lawsuit filed against you. Default judgments can be set aside if the debtor was not properly noticed.
Bank Levy
A judgment creditor in California can serve a levy on your bank account and take what is in the account. Many banks put an automatic freeze on the account upon being served the levy and if this happens, the debtor should immediately submit a Claim of Exemption. Debtors have the right to money needed to support themselves and their families. The money in your account may be exempt from bank levy if it is any of the following:
- 75% of Paid Earnings that were Paid 30 days before the Levy
- Social Security Benefits
- Worker’s Compensation Benefits
- Unemployment Benefits
- Funds that are necessary for basic necessities.
- Veterans Benefits
- Supplemental Security Income
- Disability insurance benefits
During and After Bankruptcy
The Automatic Stay
The moment your bankruptcy petition is electronically filed, all collections actions and attempts to collect against you are stopped by an order of the court called an “automatic stay.” Any judgment or foreclosure that happens after the automatic stay is issued is void by operation of law, even if the creditor or debt collector does not know about the stay or the bankruptcy case until much later.
If a creditor has attempted to collect from you during your bankruptcy, you may need to file an action in Bankruptcy Court to enforce the stay, and you could be entitled to compensation for damages and an award of attorney fees.
The Discharge Injunction
At the end of a bankruptcy case, a final order clearing all eligible debt is issued called an Order of Discharge. It prohibits creditors from collecting or attempting to collect any debt that was included in the bankruptcy.
If a creditor has attempted to collect from you after your bankruptcy is completed, you may need to file an action in Bankruptcy Court to enforce the discharge, and you could be entitled to compensation for damages and an award of attorney fees.
Contact the Law Office of James Michel if you think you have been the victim of an Automatic Stay or Discharge Violation. We can help you even if we were not your attorneys for the Bankruptcy filing.