When Garnishment Strikes

On April 18, 2012, In Bankruptcy, Chapter 7, By ericbrown

 For anyone who has ever had the misfortune of trying to survive under the heavy weight of a garnishment, you know just how debilitating it can be. This problem that I see all too often in my line of work as a bankruptcy attorney in Tulsa Oklahoma prompts this post.
Obviously, the best way to steer clear of a garnishment is to avoid it in the first place. If paying the debt is just not an option you can try to negotiate a smaller lump-sum payoff or even smaller monthly payments. If this is not possible and there is no hope of clearing the debt, you may have to consider filing bankruptcy. If, for whatever reason, that is simply not an option or it is an option that you cannot take advantage of just yet and the garnishment inevitably hits there are a few steps you can take in the State of Oklahoma.

Here in Oklahoma, when you get a notice that a garnishment has commenced, you will be given some forms. One of these forms is a Request for Exemption and Hardship Hearing form. This form allows you to let the court know whether the assets in jeopardy are protected by an exemption. This form also allows you to request a hardship hearing. Under the laws of the State of Oklahoma, if granting a garnishment would create a “hardship” for you, the judge has some discretion to reduce or eliminate the garnishment. This only applies if you have dependants, however.

Now, having said this, the judge still has to determine if a “hardship” exists. If the judge in your case is anything like the judge that I recently presented before, it is a good possibility that your situation will not rise to the level of a hardship. But the hearing did give the debtors a unique opportunity to work out a payment plan more on their own terms. The judge flat out said that it was highly unlikely for her to find that anyone was under a severe enough hardship as she had only granted 7 out of the thousands of hearings that she had been involved with.

It is very possible that the creditor has given their attorney a set of guidelines for settlement in anticipation of the hearing. It is very possible that their guidelines set out bottom-line numbers that are significantly less than what the garnishment would be. It is therefore incumbent upon you to go into any negotiation with them prepared with numbers in mind as to what you could comfortably pay in a payment plan without breaking the bank. Then of course you have to fight for it.  Just as an example.  I have seen cases where the creditor gave a bottom line number of less than $100 per month, whereas the garnishment was drawing over $400 per month. 

Perhaps in other County Courts they might do things a little differently. They might even actually hold all the hearings. If this is the case, come prepared to make your case. Tell your story and see if the judge sympathizes with your plight.

 
0 Comments
Leave A Response

What Came First: The Divorce or the Bankruptcy?

On January 4, 2012, In Bankruptcy, By Eric B. Brown Esq.

There are many unfortunate things in life.  Not the least of which are Divorce and Bankruptcy.  As if the misfortune of having either of these happen to you is not enough, sadly, often both come at you at the same time.  Sometimes it is that marital problems arise because of financial problems.  Sometimes it is the other way around.  But the truth of the matter is that they often happen at the same time.  My intent in this post is to help arm you with some tidbits of wisdom to know how to handle them when they do.  My bias will be pretty self evident as you read on but I will spoil it now and tell you that you would most likely be better off filing bankruptcy together before filing divorce.

Before you decide for yourself, however, you need to have a good idea as to the answers to the following questions:

 

  1. Do you have joint debt?
  2. If you do, what type is it? (e.g. secured, unsecured, priority)
  3. What will become of the property in the divorce?
  4. Who might be assigned what debt in the divorce?

 

It may be hard to answer some of those questions right now but you need to get into that frame of mind.  Which way you go with your decision of which to file first may ride on the answers. 

            There are also several facts that you should be aware of.   They range from common misconceptions about the interplay between bankruptcy and divorce as well as issues I have had to address in my practice.  First, assigning one person a debt in the divorce decree, does not absolve the other person from liability on the debt.  Second, if one person is assigned a debt in the divorce decree, at least in Oklahoma, there is a question as to whether it becomes a domestic support obligation to the other party which is not dischargeable in bankruptcy.  Third, problems arise most often when one person is assigned the asset in the divorce and the other person is assigned the debt that the asset is securing (I’m sure you can imagine why).  Fourth, discharging a debt in bankruptcy does not protect you from civil contempt of court for not paying a debt that is assigned to you in a divorce decree.  Finally, filing bankruptcy individually is usually no cheaper than filing jointly. 

            I am not just saying this because I primarily practice in bankruptcy and not family/divorce law but, in my opinion, it is always a safer bet to file your bankruptcy first.  Since I do not charge someone more for doing a joint bankruptcy than I do for filing an individual bankruptcy it only makes sense to do it together while you are still married.  The problem with this is that, if you are in the death throws of your marriage you might not be able to be in the same room with one another long enough to accomplish a bankruptcy.  If that is the case than my opinion probably holds no sway in your decision.  However, if you can manage to cooperate for the common good of your family, I believe, it would behoove you to at least give it some serious consideration.  If you can settle some of the financial issues before signing on the dotted line to end your marriage you will have so much less left to fight about.  Of course you will still have countless other issues to deal with still but you can save yourself some measure heartache by filing your bankruptcy together first.

 
0 Comments
Leave A Response

The Ups and Downs of Reaffirmation

On September 30, 2011, In Bankruptcy, Chapter 7, Debt, Debt Line Law Office, By Eric B. Brown Esq.

reaffirmation-agreement-in-tulsa-oklahoma-bankruptcyMost people when filing bankruptcy have some debt secured by assets that they would like to keep.  For instance, they might have a house with a mortgage or a car with a car payment.   In these circumstances (assuming there is a bankruptcy exemption to cover the assets, which there normally is) the chapter 7 filer can elect to give up and asset and discharge the debt or keep the asset and reaffirm the debt.

Reaffirmation describes the process by which a person going through bankruptcy contracts to maintain the debt obligation on an asset her or she would like to keep.   To reaffirm a debt, there is a specialized form that must be filled out and filed with the bankruptcy court.  Without such form(reaffirmation agreement), the bankruptcy code essentially provides that all dischargeable debt is discharged in the bankruptcy.  However, the code does not state who is responsible for drafting and entering the reaffirmation agreement.  Generally the creditor takes on this responsibility, since they have a great incentive to have it entered.

Many times I have clients who want to affirm debts even though they are not secured by any asset.  They might want to reaffirm a signature loan because it is co-signed by a family member.  This is a matter that takes great consideration.  Or, they might want to credit card so they could “keep” it.  This trick does not work ; therefore, it does not make sense to reaffirm under this circumstance.

Filing bankruptcy now days is nearly impossible without the assistance of an Oklahoma bankruptcy attorney and the reaffirmation process is one of the reasons for that.  The Bankruptcy Act is quite vague when it comes to reaffirmation agreements.   Who provides the agreement?  Who files it?  How are they enforced?  What if one party wants one and the other does not?  What if one party has a policy not to do them?  The code does not have the answers.

When should a debtor file a reaffirmation agreement?  Many times filing a reaffirmation agreement is a catch 22.  By filing one you are essentially making a dischargeable debt in to a non-dischargeable debt. In essence, the debt survives the bankruptcy and, if reaffirmation is not rescinded within 60 days of it being filed, it is as if you had never filed as to that debt.

I, as a Tulsa bankruptcy lawyer, am initially hesitant for a client to reaffirming, because it is puts them outside of the bounds of the protections of the bankruptcy for that debt.  On top of that, there is a possibility that the creditor would allow the debtor to simply continue on without a reaffirmation agreement.  With these creditors, so long as the payments are made, the creditor will continue to accept them. On the other hand, there are also creditors that put a clause in their contract that filing bankruptcy a form of default. If they do that, then they have the right to repossess/foreclose even if you remain current, if there is not a reaffirmation agreement in place.  So each case is different.

If you are considering an Oklahoma chapter 7 bankruptcy, you are going to have to consider reaffirmation agreements and whether to file any.  You have to make the decision and there is a time limit to your ability to file one.  With reaffirmation, there is no simple generalized answer to the questions of, “do we do one or not.”  It is important to consult with your bankruptcy attorney on your specific circumstances, but I have heard of some Oklahoma bankruptcy lawyers who simply will not participate in reaffirmation agreements.  So, if you are considering bankruptcy in Oklahoma, you should contact me at (918) 878-0010, and I can walk you through your reaffirmation options.

 
1 Comments
Leave A Response

JUDGMENT-PROOF IS NOT BULLETPROOF

On August 9, 2011, In Bankruptcy, By Eric B. Brown Esq.

bullet proofI have had several clients in the last few years whose cases I did not take because they were judgment-proof.  This is usually the designation that I reserve for someone that is under these or similar circumstances:

  1. Has only Social security income or other income exempt from garnishment, levy or other process.
  2. No real property
  3. No non-exempt assets

This person is judgment proof in that a creditor, upon filing a suit against this person and getting a judgment cannot enforce the judgment.  The tools that they would usually use to enforce a judgment are useless against such a person.  They cannot garnish his wages because Social Security and Qualified Retirement income is exempt from garnishment/attachment.  They cannot put a judgment lien on his real property if he does not have any.  They can ask the court to hold an asset hearing to see if there are any non-exempt assets to be sold but, again, if there are none, there is nothing they can do.

Having said all that, there are circumstances where people that, at first glance seem judgment-proof should nevertheless file a bankruptcy case.  A bankruptcy attorney and a client that may be judgment-proof but that has significant exempt assets should give consideration to his future heirs.  Not that bankruptcy should be used in an estate plan, it seems appropriate consider the impact to the estate that the debt poses.

I took on a client who has ailing health that will never feel the ill effects of the enforcement of a judgment but that has real property which is subject to a judgment lien which is avoidable in a bankruptcy.  Her whole purpose in wanting to file is not to benefit her as much as it is to preserve her estate for her kids.

I have had several client that called, and once I told them the worst that could be done to them is that a lien is placed on their home they told me that they would just not worry about it then.  I am always quick to add that just because they will not feel the effects of it in their life, does not mean that it goes away at death.  Their estate will be diminished by their debt when they die.

 
0 Comments
Leave A Response

I’ve Been Sued: What do I do?

On February 4, 2011, In Bankruptcy, Chapter 7, Debt, By James M. Wirth Esq.

You-Got-Served-I-ve-Been-Sued-by-a-Creditor-What-do-I-doA common question I get from clients at the Debt Line Law Office, is, “What should I do about that Petition I was just served with from a creditor.”   Below is the general outline of the advice I give.
The Summons will tell you the time that you have to file an Answer or other responsive pleading. If the papers served with the Petition instead tell you to appear in court at a certain date and time, your matter is likely in small claims courts and the information below will be largely inapplicable to you.  Call me at (918)  878-0010 for small claims advice.

If you file nothing, after the amount of time listed in the Summons passes, the creditor can file for a default judgment, which will likely be granted. The creditor will ask that its attorney fees and costs be added to the judgment.  Then that judgment can be used to obtain garnishments, levy bank accounts, and put liens on real property, if the creditor knows where you work, where you bank, or what real estate you own.  If the creditor does not know this information, the creditor can then request an asset hearing.  You should be served with notice of this hearing and if you fail to appear, a bench warrant can be issued to compel your appearance.  At the asset hearing, the creditor will ask questions about money and assets that you have, as well as information needed to obtain garnishments, et cetera. The Judge at the asset hearing will require you to truthfully answer these questions and may set a review date to come back on the same docket. This basically continues with the creditor trying to garnish, levy, and lien all the money it can from you until the judgment is paid or expires. In Oklahoma a judgment can expire if it is not renewed after five (5) years.

If you file an Answer, it should indicate whether you admit or deny the allegations in each paragraph of the Petition.  Under Oklahoma law, filing an Answer waives certain defenses.  So, if you wish to file a Motion to Dismiss on the basis of (1) lack of personal jurisdiction, (2) improper venue, (3) lack of capacity to be sued, or (4) failure to state a claim upon which relief can be granted, you must file your Motion to Dismiss prior to filing an Answer.  Assuming you file an Answer and deny at least one important element to the creditors case, the creditor will not be able to simply get a judgment and it will delay the case.

The creditor’s next move will likely be to file a Motion for Summary Judgment, which will include attachments to evidence the debt owed.  By Oklahoma law you have fifteen (15) days to respond to a Motion for Summary Judgment. If you do not file a response the Judge will likely grant summary judgment without a hearing.  If you do file a response the Judge will either review both the Motion and response and decide whether to grant summary judgment or set the matter for a hearing on the Motion for Summary Judgment. Assuming your creditor attached contracts and documents and things to its Motion for Summary Judgment which tends to show that you owe the money, Summary Judgment will likely be granted unless you present evidence contradicting this.  A signed affidavit can be appropriate evidence for the purpose of a summary judgment hearing.  For example, if you filed a signed affidavit stating that the signature on the contract filed by the creditors is not yours, this would likely prevent summary judgment from being granted because there is a “genuine issue of material fact.”  That is, a fact finder must decide whether that is your signature or not and therefore summary judgment is not appropriate.  Keep in mind, that testifying to a lie or lying in an affidavit is perjury, which is a felony in Oklahoma punishable with up to five (5) years imprisonment.

If summary judgment is granted, the creditor will request that its attorney fees and costs be added to the judgment and as you can imagine those costs may have increased substantially from what they were at the stage when your Answer was filed. vThe Summary Judgment can be enforced by the creditor the same way that it was noted above that a Default Judgment would likely be enforced.

If summary judgment is denied, your case will likely move forward to trial so that the judge or a jury can decide each issue of material fact.   If the amount in controversy is more than $1,500.00, either you or the creditor can demand (and pay for) a jury trial. Otherwise, a bench trial, where the judge makes the determination, will be had.

So now we are back to the common questions: “How should I respond to this lawsuit I was just served with.”  Bottom line, if you have defenses to the debt, your decision will be based on the quality of those defenses and you will need to consult with an attorney who can evaluate your specific circumstances.  If you have no defenses you wish to present, there are two mutually exclusive goals, to choose from. You can go the route of maximize the amount of time it takes for the creditor to obtain the judgment or you can try to minimize the amount of the judgment or you can try to .

If you are planning on filing bankruptcy in five (5) months and are served with a lawsuit from a credit card debt that will be 100% discharged in your chapter 7 bankruptcy, it really does not matter to you whether the judgment being discharged goes from $50,000 to $75,000.   However, it would probably matter greatly if you received a garnishment for 25% of your pay next month because that would make it difficult to raise the attorney fees you need for your bankruptcy attorney.  Under this scenario you probably want to maximize the amount of time it takes for the creditor to receive the judgment.  So, you would file an Answer and contest a Motion for Summary Judgment.  Most of the time this can buy you a least a few months.

If you do not qualify for chapter 7 bankruptcy or do not wish to file, it probably makes sense to minimize the amount of the judgment.  In which case, the more you fight the case, you more you add to the creditors attorneys fees, costs, and interest that typically end up being tacked onto the judgment.  So, consider contacting the creditor to see if they would agree to reduce the debt a bit in exchange for you agreeing to enter a judgment by agreement with a payment plan.  If no progress is made with the creditor, you will probably want to file an Answer that admits everything.  Or, simply file nothing and allow a default judgment to occur.

All this said, each person’s circumstances are different and one article cannot cover every variable.  So, if you are in the position of deciding whether to respond and how to respond to a lawsuit, speak with an Oklahoma Bankruptcy Lawyer at the Debt Line Law Office by calling (918) 878-0010.

 
0 Comments
Leave A Response

Oh No! I Forgot One

On October 21, 2010, In Bankruptcy, Chapter 7, By ericbrown

Bankruptcy documents are cumbersome and complicated.  Then again, so are your finances if you are seriously considering filing bankruptcy.  It is no wonder that, in the flurry of preparing and getting your bankruptcy attorney all the information to file your case there will be an inevitable omission or two or even three.  The fact is that we are all human.  Good thing the law often takes this into consideration.

This blog post is the short answer to the question, “What happens if I inadvertently leave off a creditor in my bankruptcy schedules?”  Basically it works like this for the most part:  The discharge applies to all dischargeable debt for which all creditors were given notice of the claims bar date, thereby giving an opportunity to file a proof of claim to secure their portion of whatever is liquidated in a Chapter 7 bankruptcy case.  But, here is the kicker and it comes from case law from the various districts (so check the court decisions that pertain to your specific case):  in a case where there is nothing to distribute to creditors–often called a zero-assets or no-assets case– there is no deadline set to file a proof of claim and therefore no chance for the creditors to get anything.  Because they are not disadvantaged in any way by having been omitted they are not excepted from the discharge.  Basically it is no harm no foul proposition.

In cases where debtors have attempted to re-open their case in order to add an omitted creditor to get them under the discharge injunction, courts have, from what I can tell, consistently said “no” because it would not benefit the debtor any more because the creditors are discharged already despite being omitted in a no-assets case.  For more information or a free bankruptcy consultation, call the Oklahoma bankruptcy lawyers at the Debt Line Law Office at (918) 878-0010.

 
0 Comments
Leave A Response

Do You Value Your Car?

On October 20, 2010, In Bankruptcy, Chapter 7, Exemptions, By ericbrown

The State of Oklahoma has very good exemptions compared to other states.  Exemptions define the property that a person filing for bankruptcy in Oklahoma can keep and still discharge their debts.  One such exemption is that the debtors in bankruptcy can exempt up to $7,500 of equity in a vehicle.  This means you can keep your car if its fair market value minus the debt owed on it is $7,50o or less.  When you file a bankruptcy you have to disclose all the vehicles that you have and what their value is.  Then you attach the exemption to protect them.  In my experience as a bankruptcy practitioner, I have come across some issues for which I have sought out answers from high places.  I have the following on pretty good authority:

First, at least in the Northern and Eastern Districts of Oklahoma, you can aggregate the vehicle exemption of two joint-debtors.  In layman’s terms this simply means that if a husband and wife file a joint Chapter 7 bankruptcy case and only have one vehicle that is valued over $7,500, you can apply both parties’ exemptions covering a whopping $15,000 worth of a vehicle.

Secondly, the way to put a value on your vehicle is to first use Edmonds as opposed to Kelly Blue Book or even NADA.  You will not use trade-in value but you will value the vehicle somewhere in between private party value and retail value.

Third, because a trustee has to be able to make money on the sale of a vehicle that is worth more than the exemption, it would have to be worth between $10,000 and $12,000 or more to be worth the trustee’s time.

So, as you can see, what the law says and what is true in practice can sometimes be different.  Therefore, if you are in need of debt relief and are considering a chapter 7 bankruptcy in Oklahoma, you need an attorney that knows both the law and the practice.

 
1 Comments
Leave A Response

Pro Bono

On July 30, 2010, In Uncategorized, By Eric B. Brown Esq.

Pro-Bono work is good for everyone involved.  It allows someone of less than modest means to get the help that they need without depleting the resources that they otherwise depend on for food and shelter.  It also allows a professional to practice his craft, hone his skills and have the satisfaction of doing service.  Everybody benefits.

There are hidden benefits for a bankruptcy professional as well, such as the building up of good will.  Not only can a pro-bono client be a good source of future referals but, by doing pro-bono work, you also build rapport with the trustees that review your cases.  For example, the Debt-Line Law Office took on a client referred to us by Legal Aid.  This was a lady that was down on her luck.  It was a simple bankruptcy to prepare and file and, of course, there was no charge for our services.  When I attended the 341 Meeting of the Creditors the Trustee said to the client, “I see here that you did not pay your attorneys for their services.”  To which the client responded that she did not and that it was done pro-bono.  The Trustee then turned to me and said, “Wow, that’s great”, and he proceeded to try to solicit me to do pro-bono cases that he had come across.

The point is not that we got a pat on the back by the Trustee but rather it is that we fulfilled part of our professional responsibility and, in the process, esteamed ourselves a little to a person who weilds some power over our clients.  Again, pro-bono work is good for everyone involved.

 
0 Comments
Leave A Response

If It Starts To Hurt, Convert

On May 27, 2010, In Uncategorized, By Eric B. Brown Esq.

I had a client come in today wondering what the chances are for her to convert her Chapter 13 to a Chapter 7 bankruptcy.  She started into her 5 year Chapter 13 plan about a year ago and she is going to retire soon and won’t have the same income as she did before. 

Section 1307(a) of the Bankruptcy Code gives Chapter 13 debtors what seems like an absolute right to convert to a Chapter 7 (if you qualify for a chapter 7).  Rule 1017(f)(3) of the Federal Rules of Bankruptcy Proceedure tells you how it is done.  It is done by filing a notice of conversion and can be done without a court order if done pursuant to Section 1307(a).

So I told my client, if it starts to hurt, we’ll convert.

 
0 Comments
Leave A Response

What is furniture anyway?

On May 19, 2010, In Uncategorized, By Eric B. Brown Esq.

I just spent the last 3 hours pouring through Oklahoma case law researching the issue of what can be considered “furniture” and thus exempt under the Oklahoma exemption covering “All household and kitchen furniture”.  Because there is no specific language for a TV, piano, washer and dryer, vacuum cleaner, I have always just lumped those types of items under the household furniture exemption and have never had a problem.  Lately, however, I have come across debtors with these types of items that are of significantly higher value so I was forced to face the issue square on and I have found my answer and the answer is……………………………….ready?:

 IT ALL DEPENDS!

 The sad truth is that all the district bankruptcy courts are a little different.  The Western District Bankruptcy Court seems to have the broadest interpretation of what “All household and kitchen furniture” can include, going so far as saying that TVs, VCRs and even lawnmowers can be covered by the exemption, depending on the situation.  The Courts seem to ride on the idea that if something is found to be reasonably necessary for the maintenance of the debtor’s home; that the word “furniture” can easily be substituted for “furnishings” or “goods” thereby broadening the exemption. 

 On the other hand, the Northern and Eastern District seem to take a more stiff approach; with the Eastern District Court even going so far as to bust out the Webster’s Dictionary to define furniture and rigidly applying that definition to say that a lawnmower is not furniture (even though, in the same case, they have no problem construing jewelry as wearing apparel).

 The Northern District Court, in one case made specific mention of the Western District case where the Court, citing the Oklahoma Supreme Court was OK with a piano being furniture.  In that case the Western District went one step further and said, not only is a piano furniture but the piano can be likened to a stereo and thus a stereo could theoretically be exempt under Oklahoma Law.

 In other words, nobody knows and the legislator could have been a little clearer in the wording.

 
6 Comments
Leave A Response
« Previous Entries
Go To Top »