Judgments and Wage Garnishments

What is a Judgment?

Receiving legal papers for a pending judgment or garnishment from a creditor lawsuit can be alarming. Don’t delay in getting assistance, time is not on your side.

A judgment occurs when a creditor seeks a formal decision by a court to create or affirm an obligation, such as a debt. This is obtained so the creditor can take further actions to collect on the debt, such as a wage garnishment, liens against personal or real property, etc.

We can put an immediate end to these proceedings – even same day!  If a garnishment has already occurred, we can potentially get your money back depending on how much was taken and over what time period. Call us at 866-261-8282 to speak to one of our licensed attorney about your debt resolution options.  We offer free consultations at any of our six office Michigan locations, conveniently located in:  Detroit, Southfield, Warren, Dearborn, Ann Arbor and Flint.

What Power does a Judgment Give to My Creditor?

If a creditor seeks a judgment, it typically signals an intention to more aggressively collect on the debt and in most cases to pursue a garnishment (wages, bank account, state tax returns, etc.) to force payment. Here are a few fact about judgments:

• Default judgments occur when a debtor fails to respond to a creditor’s lawsuit or complaint. This becomes a legally binding judgment. Even if a debtor chooses to respond to the suit, in most cases the court finds in favor of the creditor unless there are unusual circumstances (identify theft, fraud, etc.).

• Judgments are active for 10 years under Michigan law.  However, your creditor can renew the judgment if full payment has not been made. These renewals can continue indefinitely until your creditor has collected on the debt in addition to continued:
  • Late penalties;
  • Interest charges;
  • Legal fees.

  This prolongs the negative consequences for your credit and may prohibit you from obtaining new credit in the future.

• Once a judgment is active, there is no statute of limitations for collection on the debt.

• Often time creditors will “sell” their debt to a 3^rd party professional collection agency. This agency also has the legal right to pursue a judgment and eventual wage garnishment.

Will Bankruptcy Stop a Judgment?

The filing of a Chapter 7 or Chapter 13 will stop a judgment from proceeding. In the case of the Chapter 7, the debts are generally dischargeable and will therefore be legally eliminated. In the event of a Chapter 13, optimal repayment terms will set up through the program and a portion of the debt will most often be eliminated at the end of the plan.

We encourage all of our clients to proactively deal with judgments and other outstanding debts. If you have available money, you can attempt to settle the debts with your creditors. Just ensure that the creditor fully releases the debt and not just the portion you paid so you don’t receive further collections down the road. If making a settlement would compromise other areas of your budget (deplete your retirement account and cause a tax liability, cause you to get behind on your mortgage or vehicle, etc.) then we recommend other means to resolve the debt, such as filing a Chapter 7 or Chapter 13 bankruptcy.

Other Benefits of Filing Bankruptcy in Michigan:

Other benefits of filing Chapter 13 are:

• Re-structured and balanced budgetby reducing and partially eliminating unsecured debt obligations such as:
  • Second mortgage or home equity loan;
  • Personal loans;
  • Loan deficiency debt;
  • Credit Cards;
  • Medical Bills, etc.

  All repayments are locked in at 0% interest.

• Court protection from creditor action such as home foreclosure, vehicle repossession, judgment and garnishments, phone calls or collection letters, etc.

• Improved credit. The Chapter 13 program promotes positive credit movement by:

• Reducing debt-to-income ratio by focused efforts to reduce principal debt combined with partial debt elimination at the completion of the program.
• Restoring consistent and timely payment to your creditors.
• Eliminating late reports to the credit bureaus.

These factors influence 65% of your credit score according to FICO.

Other benefits of filing Chapter 7 are:

• Total debt elimination of all unsecured debt obligations such as credit card, medical bills, old utility bills, personal loan, loan deficiency debt, etc.
• Creditor protection from judgments, garnishments, utility shut-offs, etc.
• Clean credit slate by reducing your debt-to-income ratio providing you the opportunity to re-build your credit.

Call one of our experienced bankruptcy attorneys today at 866-261-8282. We will spend the time to carefully review your finances, discuss your long-term goals and develop a game plan to begin resolving your debt issues. We offer free consultations and same day bankruptcy protection to stop a judgment or garnishment.

What is a Lien and How are They Handled?

A lien is an interest in real or personal property that secures a debt.  The lien may be voluntary(such as a mortgage in real property) or involuntary, such as a judgment lien or tax lien.

Liens are non-dischargeable in the event of a Chapter 7. If a lien is in place at the time of a Chapter 13 filing, our lawyers can evaluate how to treat it within the plan. If there is insufficient value in the property to support the lien, the attorney can do a “Lien Strip.” Lien Stripping will basically convert the lien to unsecured debt.

Under the terms of a Chapter 13, our attorneys can often eliminate a portion of the unsecured debts, including the stripped lien. The stripped lien will be paid back at 0% interest. In addition, all payments are deferred to your unsecured creditors until you are caught up on your secured obligations, such as your first mortgage, vehicle, etc.

Stopping a Garnishment In Michigan

Most creditors immediately pursue a garnishment after they secure a judgment. In the event of a garnishment, this can be stopped immediately with the filing of a Chapter 13 or Chapter 7.

There are many types of garnishments:

• Wage garnishment: A creditor can garnish your paycheck up to 25% of your net pay until the debt is satisfied.
• Bank accounts: A creditor can take whatever amount is available to satisfy their debt – even if it is your whole account balance.
• State taxes: A creditor can intercept your state tax refund to satisfy a garnishment. This can continue year after year until the debt is satisfied.

Social security, disability pay or other government assistance that is typically not eligible to be directly garnished but may be taken by a creditor to satisfy a judgment once the money is deposited into a checking account.

Under Chapter 7 or Chapter 13 bankruptcy law, if you have experienced a garnishment within 90 days of filing and the total amount taken is over $600, we can recover the funds and return the money to you.

Get Debt Resolution

Don’t spend another sleepless night stressing about a judgment, garnishment or budget concern. We are here to help and have the experience and proven track record of success to ensure you get the best result and debt resolution.  Call us today at 866-261-8282 for a free consultation with a licensed Michigan attorney.

We offer free in-office or phone consultations to review your personal circumstances, analyze your situation and advise you on the best course of action. We specialize in bankruptcy law, debt resolution, foreclosure prevention and credit repair. We have offices in Detroit, Southfield, Dearborn, Flint, Ann Arbor and Warren, Michigan. Please call us toll free at 866-261-8282 or click here to schedule a consultation right now.