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Special Limits on Wage Garnishment

In a previous blog post, http://www.brandonlawoffice.com/2016/06/heres-how-much-of-your-wages-can-be-garnished-to-pay-your-debts, we covered the broad limitations that federal and state laws place on wage garnishment. Wage garnishment is when a creditor sues you to have part of your income diverted directly to them to pay your debts. There are certain general limitations on how much of your income may be garnished and special limits on certain types of garnishment.

Wage garnishment for unpaid, court-ordered child support is generally limited to 60 percent of your disposable income. If you are additionally responsible for supporting a spouse or child not covered by the order, the limit is 50 percent. For support overdue by 12 weeks or more, an additional five percent may be garnished.

For federal student loans in default, the Department of Education may garnish up to 15 percent of your disposable income. But they cannot garnish more than 30 times the federal minimum wage ($217.50) per week.

If you are subject to more than one wage garnishment, the total garnishment permitted by law is 25 percent of your income.

One additional protection offered: Because complying with wage garnishment creates a certain burden on your employer, they may be inclined to fire you rather than comply. Federal law protects you from this if you have one wage garnishment. However, that protection does not apply if you have more than one garnishment order against you.

As you can tell, the law provides an assortment of protections against excessive garnishment, but these can be quite complicated. If you are having trouble paying your debts, you need the help of an attorney. Contact Olivero Law today.

Posted on Wednesday, July 27th, 2016 at 5:15 pm under Bankruptcy.
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Here’s how much of your wages can be garnished to pay your debts

If you do not pay your debts, your creditors may try to take a portion of your income directly from your employer. This is called wage garnishment.

Fortunately, there are limits to how much of your income may be garnished so that you can hopefully keep paying your basic living expenses. The limits are based in part on “disposable income,” which is income remaining after certain deductions, such as income taxes, Social Security and required contributions to retirement plans.

The maximum garnishment for most creditors is the lesser of

  • 25 percent of your disposable income, or
  • the amount by which your weekly income exceeds 30 times the federal minimum wage ($7.25), or $217.50

In Florida, if your disposable income is less than $217.50, no wages may be garnished at all.

Florida also has a “head of family” exemption. The head of a family’s wages may only be garnished if they exceed $750, and only if they agree in writing to have their wages garnished. This is a very powerful exemption against wage garnishment, but importantly, it does not automatically apply — it must be claimed in an affidavit filed with the court.

If you are facing wage garnishment, contact Olivero Law today.

In a later post, we’ll cover special limits on certain types of wage garnishment.

Posted on Wednesday, June 15th, 2016 at 5:05 pm under Bankruptcy, News and Press.
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Bankruptcy can be a good thing

When businesses declare bankruptcy, sometimes they come back better than ever.

That’s what executives at retail giant Sports Authority are hoping they can achieve. Like many businesses focused on brick-and-mortar stores, the chain has struggled in recent years as consumers have shifted toward online shopping. The company has filed for Chapter 11 bankruptcy protection, giving it a period of time to reorganize, during which it will be protected from creditors.

Some people mistakenly think that when a business declares bankruptcy, that means it goes out of business forever. And indeed, about 140 of the chain’s 463 stores will close, including at least two in the greater Tampa Bay area. However, CEO Michael Foss said the move will allow much-needed investments including upgrades to stores and website enhancements, resulting in an improved experience for customers.

In January, Sports Authority missed a $20 million interest payment to creditors.

Many companies have filed bankruptcy and later achieved stability, or even impressive growth. Examples include General Motors, Marvel Entertainment, Six Flags, American Airlines and Kodak.

Posted on Friday, April 15th, 2016 at 11:24 am under Bankruptcy.
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No, you won’t be arrested for nonpayment of debts

The headlines on stories about a recent incident in Texas may have debtors worried about what could happen to them if they fall behind on their debts.

A Houston man named Paul Aker was involved in a sequence of events that began with defaulting on a student loan and ended with his arrest. In a subsequent interview with a local Fox affiliate, the caption displayed on-screen said that Aker was “arrested by US Marshals for student loan debt.” Print headlines weren’t much better. Viewers could be forgiven for thinking that we had gone back in time to the days of debtors’ prisons.

Fortunately for all of us, law enforcement officers are not, in fact, arresting anyone simply for nonpayment of debts. In 2007, a default judgment was entered against Aker when he failed to respond to a complaint of nonpayment. Five years later, Aker was ordered to appear at a deposition to explain why he was still not making loan payments. The court specifically noted that he would be arrested if he did not appear in court.

When Aker still failed to comply with court orders, a warrant for his arrest was issued, and U.S. Marshals began searching for him. It took nearly four years for them to locate him, at which point they arrested him at his Houston home and took him to court to sort out the matter.

Falling behind on your debts is a serious matter, but not so serious as to lead directly to your arrest. That is, of course, unless you repeatedly fail to respond to court orders. If you have debt problems or are ordered to appear in court, seek the help of an attorney right away.

Posted on Wednesday, March 9th, 2016 at 12:17 am under Bankruptcy.

Protect yourself against these common debt collection scams

There will always be someone out there who, given the chance, would not hesitate to steal your hard-earned money from you. This post will help you spot a scammer a mile away and keep what’s yours.

One popular racket among scammers involves calling people on the phone, pretending to be from the Internal Revenue Service, and demanding immediate payment of taxes owed. They threaten jail time and often demand payment by a specific method. According to the IRS, at least 5,000 victims were cheated out of some $26 million since 2013 — an average of over $5,000 each.

You should know that the IRS virtually never calls taxpayers, and absolutely never demands immediate payment over the phone. They never demand a specific form of payment. And jail time for unpaid taxes is not common; it is a punishment usually reserved for people willfully avoiding large tax liabilities.

Criminals running more general scams often fraudulently obtain people’s credit reports. That way they can call about a debt you actually owe. Like those posing as IRS agents, these scammers will demand immediate payment via a specific method and threaten jail time or law enforcement involvement. They may be unusually harassing and rude.

Again, no legitimate debt collection agency is going to demand payment “today,” refuse to accept various forms of payment or threaten jail time. Another tell-tale sign is if the caller refuses to give a physical mailing address. If you call back and a live person immediately answers, or if you speak with the same individual each time you call, these are red flags. Real debt collection agencies have phone menus or receptionists and multiple agents, any of whom might work on your case.

Ignoring scare tactics and knowing how scams work can help protect you against scammers. For real problems with real debt, contact Olivero Law.

Posted on Monday, February 15th, 2016 at 11:23 am under Bankruptcy.
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Keeping your home in Chapter 7 and Chapter 13 bankruptcy

Homeowners considering filing for bankruptcy often wonder whether doing so means they will lose their home, and whether Chapter 7 liquidation or Chapter 13 reorganization is the better option. Most homeowners can keep their homes if they wish, and the situation is even better for Floridians than for most others.

Those filing Chapter 7 bankruptcy must liquidate any non-exempt assets to pay their creditors. This means that if you have equity in your home, your trustee may sell it to pay down your debts. State and federal guidelines exempt certain amounts of home equity from this process. In Florida, however, there is no limit to how much equity is exempt for most homes. Therefore, while most Americans with a good deal of home equity are well advised to file Chapter 13 instead of Chapter 7, that does not necessarily apply to Floridians.

Other situations make Chapter 13 a better prospect than Chapter 7 regardless of where you live. If you are behind on your mortgage payments and file Chapter 13, your mortgage “arrears” will be incorporated into your court-ordered payment plan, giving you three to five years to catch up on missed payments. You are therefore protected from foreclosure during the Chapter 13 process if you stay current on the loan and your bankruptcy payment plan.

If you have a second mortgage or other “junior lien,” the process of “lien stripping” may permit you to get rid of it. When a lien is stripped, the lender is treated as an unsecured creditor and will usually receive little to no money in your payment plan. Lien stripping is permitted in Chapter 13 bankruptcies, but not Chapter 7.

Chapter 13 bankruptcy is probably a better choice if you have missed mortgage payments, if you want to get rid of a junior lien, or if you have significant non-exempt equity. Otherwise, Chapter 7 may be a simpler and faster way to reduce your debt burden and keep your home.

Posted on Saturday, December 12th, 2015 at 11:01 am under Bankruptcy, News and Press.

Despite decline, Tampa leads big cities in foreclosures

A recent report on national foreclosure statistics paints an improving, but still unfortunate, picture for Tampa, Florida, homeowners.

First, the good news. The Tampa-St. Petersburg metropolitan area has seen a 23 percent decline in home foreclosures in the past year — one of the largest decreases among large U.S. cities.

Now, the bad news. Despite this decline, Tampa’s foreclosure rate is still the highest among the 20 largest metro areas. The rate stands at one in every 527 homes in the bay area, according to RealtyTrac. This applies to all homes in some stage of the foreclosure process.

Another wrinkle in the foreclosure data is that bank repossessions accelerated in most states in August. Repossessions, which conclude the foreclosure process, are on the rise as lenders finally make headway in clearing the huge backlog of foreclosures that piled up in the wake of the housing bust. While this increase is actually a sign of finally putting that turmoil behind us, it will serve as little comfort to those who are losing their homes. In August, bank repossessions in Florida increased 23 percent year-over-year.

If you face an unpayable debt, consult a bankruptcy attorney. Filing bankruptcy will not wipe out your home mortgage, but it will halt the foreclosure process and give you time to make a new plan.

Posted on Monday, October 19th, 2015 at 8:38 pm under Bankruptcy, Estate Planning.

Chapter 13 can help those saddled with student loan debt

A recent story in the Pittsburgh Post-Gazette highlights an increasingly common strategy for dealing with unmanageable student loan debt: Chapter 13 bankruptcy.

If you have student loans, you may already be aware that those debts cannot be discharged under Chapter 7 bankruptcy liquidation except in very limited cases. Under Chapter 13 reorganization, however, debtors agree to make monthly payments that are manageable given their particular financial situation. Creditors in these cases can be forced to accept lower payments than they otherwise would not.

The strategy mainly applies when dealing with private student loans. Private loans usually have higher interest rates than federal loans, and private lenders are usually less accommodating to borrowers who want lower monthly payments that fit their budget.

The Post-Gazette interviewed a man whose monthly student loan payments went from nearly $1,000 to just $200 after he filed Chapter 13. There is one catch, however: Chapter 13 payment plans last no longer than five years, after which normal monthly payments will resume on any unpaid student loan debt. A debtor who then still faces unaffordable debt payments may subsequently file again for Chapter 13 protection, but that entails another round of fees and court proceedings.

If you cannot afford your student loan payments, speak with an experienced bankruptcy attorney about your options.

Posted on Monday, September 14th, 2015 at 11:53 am under Bankruptcy.

When debtors agree to surrender property, they must follow through

When filing bankruptcy, “surrender” means “surrender.”

That is the message from Tampa bankruptcy judge Michael G. Williamson in a recent Florida bankruptcy case, in which Lisa Metzler of Gibsonton declared bankruptcy in 2012. She was delinquent on her mortgage and had no way to pay it or her other debts. She agreed to surrender her home to the lender, Wells Fargo, and allow them to proceed with foreclosure.

Metzler’s incentive to surrender the home came from one of the finer points of bankruptcy law. Debtors filing bankruptcy are entitled to certain “exemptions” — property not subject to liquidation to satisfy creditors’ claims. Normally, this includes $1,000 worth of personal property, such as furniture and jewelry. However, in cases where a home is surrendered, that exemption is increased to $5,000.

Apparently, however, Metzler had no intention of actually surrendering her home. After agreeing to do so in federal bankruptcy court, she hired an attorney to fight the foreclosure in state court. In response, Wells Fargo filed a motion asking Judge Williamson to revoke confirmation of Metzler’s bankruptcy plan. Williamson granted the motion and dismissed the case.

Since then, at least two other bankruptcy judges in Florida (which continues to lead the nation in foreclosures) have built on Williamson’s ruling in similar cases. And last month, Williamson reopened the Metzler case in order to issue an opinion and further clarify the matter.

“At a minimum,” Williamson wrote, “’surrender’ means a debtor cannot take an overt act that impedes a secured creditor from foreclosing its interest in secured property.”

In case it was not already clear, now it most certainly is: In bankruptcy filings, as in all legal matters, you must do what you say you will do.

Posted on Thursday, August 13th, 2015 at 11:38 am under Bankruptcy, News and Press.
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Detroit Bankruptcy Represents Largest Municipal Case in U.S. History

Bankruptcy is most often used as a way for individuals and businesses to either discharge debts or reorganize them into a more manageable payment plan. But governments, particularly cities and counties, can declare bankruptcy as well for the same reason: unmanageable levels of debt.

Municipal bankruptcies are fairly rare. They have happened at the rate of about one per year since the Great Depression. But in the wake of the U.S. and global recession of recent years, the filing and/or consideration of municipal bankruptcies have become an ever-present part of the news.

Last year, the controversy in Detroit, Michigan dominated headlines for weeks. The city filed for bankruptcy, but the legality of the filing was in question for almost a year. Detroit filed for Chapter 9 bankruptcy on July 18, 2013. The next day, judge Rosemarie Aquilina ruled the filing violated the Michigan Constitution by interfering with pension payments. She ordered Michigan Governor Rick Snyder to withdraw the filing. Snyder appealed the ruling, and the Bankruptcy Court declared a federal stay of state laws to make the bankruptcy legal. After a trial for objections and several deadlines, the Bankruptcy Court ruled the filing legal in December 2013, and the bankruptcy procedure moved forward.

On June 3, the state legislature of Michigan passed a number of bills designed to prevent Detriot from falling into the same state of emergency again.

It was by far the largest bankruptcy filing of any municipality in U.S. history, both in terms of debt and in terms of the population. Detroit’s debt was estimated at $18-$20 billion, towering over the previous record-holder, Jefferson County, Alabama, which declared bankruptcy in 2011 with some $4 billion in debt. And Detroit’s population is about 700,000, or more than twice that of Stockton, California, which went bankrupt in 2012.

One of the main reasons for Detroit’s financial troubles is a steadily declining population and, therefore, tax base. Its peak population was 1.8 million in 1950. Other causes the city named in its bankruptcy filing were pension and health care costs for retired workers, a dismal rate of property tax collection – with nearly half not having paid for 2011 – budget deficits, government corruption and poor record keeping.

Many consider pensions for current retirees to be untouchable in bankruptcies. The question of whether the modification of debt obligations in bankruptcy proceedings trumps state constitutional protections of pensioners’ rights is being tested for the first time in a Chapter 9 case.

President Obama commented that the federal government is “committed to continuing our strong partnership” with Detroit, but he did not indicate any intention to attempt a bailout of the city, even when the bankruptcy was uncertain. Gov. Snyder has said he does not support the idea of a bailout, saying “accountable government” is the answer.

The ability of bankruptcy to allow individuals, businesses, and governments to move on from untenable financial situations is key to keeping our economy flowing smoothly, but when the livelihood of many thousands of pensioners is on the line, the issue becomes much more complicated.

Posted on Saturday, September 27th, 2014 at 11:08 am under Bankruptcy, News and Press.
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