Author Archives: Admin

Do You Need Actual Damages to File a Lawsuit for a Violation under the Fair Debt Collections Practices Act (FDCPA)

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On November 28, 2011, the United States Supreme Court will hear arguments regarding this very issue.  The FDCPA allows for recovery of any actual damages, statutory damages sustained and reasonable attorneys’ fees and costs by an individual resulting from a debt collectors violations and in a case involving an individual, any additional damages as the court may allow, not exceeding $1,000.

The issue being heard by the Supreme Court involves whether an individual has the right or standing to file a lawsuit if actual damages are not pleaded or proved.   The FDCPA is a federal law and to sue someone for a violation of the FDCPA they must have standing.  To prove you have standing you must show that there is a connection between what an alleged wrongdoer did and yourself, and you were harmed as a result.  If there is no standing then the complaint will be dismissed.  The argument being advocated to the United States Supreme Court is that many plaintiffs do not have standing to lawsuits under the FDCPA because they do not and cannot prove there was an actual injury to them for the violation of the FDCPA.

The Fair Debt Collections Practices Act outlines many different types of violations.  For example, if the debt collector calls you 50 times a day over and over again harassing you and causing you unwarranted stress and aggravation, this is a violation of the FDCPA.  What are the actual damages though?  Did you get fired from your job because of it and therefore are seeking lost wages?  Or what if the debt collector called your mother and told her they were going to throw you in jail if you did not pay the debt back to them?  This is a violation also, but again, what are the actual damages?  Most courts allow the recovery of statutory damages without having to prove there were actual damages.

It will be interesting to see how the United States Supreme Court chooses to rule on this issue.  The whole point in passing the FDCPA is to protect consumers from the unfair and deceptive tactics used by collection agencies to obtain payment for debts.  A violation of the law is a violation and therefore that should be damage enough.  If consumers are not allowed to file lawsuits for the mere violation of the FDCPA no matter how insignificant, then why have the law at all?  The FDCPA would become a meaningless set of guidelines to be followed while debt collectors know they can do whatever they want without consequence.  For the Fair Debt Collection Practices Act to protect consumers and operate as it was intended, any technical violation of the law has to be an injury to that person giving them the right to file a lawsuit.

If you are struggling with debt or have been abused by a debt collection agency, please contact us to meet with our experienced bankruptcy lawyers and Bay Area bankruptcy attorneys to schedule a free consultation.

Bankruptcy Fees Have Increased as of November 1, 2011

By Kitty J. Lin, Attorney at Law

As we all know, prices today are rapidly increasing, from the price of food staples such as bread and eggs, to the price of gas.  I am sure it comes as no surprise that the court fees for bankruptcy have increased as well.  Effective November 1, 2011, most of the bankruptcy court fees that affect you have increased.  The increased filing fees can be found here: http://www.canb.uscourts.gov/bankruptcy-court-fee-schedule.

The filing fees that impact consumers most are the Chapter 7 bankruptcy filing fees and the Chapter 13 bankruptcy filing fees.  The Chapter 7 bankruptcy filing fee has increased from $299 to $306.  The Chapter 13 bankruptcy filing fee increased from $274 to $281.  Even though the filing fees for Chapter 7 and Chapter 13 bankruptcy petitions increased by only $7, if you are thinking of filing for bankruptcy, you know that every dollar counts.  The people that may notice these increased filing fees the most are people that have filed a previous bankruptcy recently and need to file another bankruptcy.  Be sure to include an extra $7 if you are filing pro se.  The U.S. Bankruptcy Court only accepts exact change. For people that have retained attorneys, the attorneys will make sure the filing fee is paid.  The filing fees for the other chapters, including Chapter 9, Chapter 11, Chapter 12, and Chapter 15 bankruptcy filing fees have also increased by $7.

Another fee that may affect you is the increased fees for amending your Schedules D, E, F and/or Creditor Matrix.  The fee increased from $26 to $30.  The difference with this fee is that it is entirely avoidable.  If your original schedules are correct and do not need to be amended, then you will not incur this $30 fee, so try to be diligent and make sure the schedules are correct the first time.  Another increased fee is the returned check fee.  The returned check fee increased from $45 to $53.  This fee is also avoidable.  Be sure you have the funds in your bank account before issuing a check to the bankruptcy court and you will not be charged this fee.

If you are requesting a fee waiver in a Chapter 7 bankruptcy case, the qualifications have not changed, so the filing fee increase does not affect the fee waiver.  Fee waivers may be granted to families that have income less than 150% of the poverty guidelines and that cannot pay the filing fee in installments.

If you have any questions or you need to consult with an experienced bankruptcy attorney or bankruptcy lawyer, please call us toll free at 877-9NEW-LIFE or 877-963-9543 for a free consultation.

Who Can Garnish Wages?

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Who can garnish wages is virtually unlimited.  Anyone that has obtained a judgment against you can enforce or collect on the judgment by garnishing your wages unless it is the Internal Revenue Service or Franchise Tax Board.  From a taxing authority you will receive a notice of levy and if you do not respond they will garnish your wages without obtaining a judgment.  Your wages can also be garnished under rare circumstances if you have agreed to a wage assignment, which is different than wage garnishment.

All other parties must sue you by filing a complaint and serving you with the summons and complaint.  Once served has been made the party can then obtain a judgment against you.  If you ignore the complaint the party will be able to request entry of the judgment by default.  If you choose to answer the complaint the party suing you will next be able to obtain a judgment by filing a motion for summary judgment by the court.  If your debt and lawsuit are the result of a breach of contract like not paying a credit card company you will have very few defenses and they will most likely obtain a judgment against you.

Once the judgment is entered the next step is to enforce the judgment.  Just because a party has obtained a judgment against does not necessarily mean they will spend more money to go through the process of enforcing the judgment.  To enforce the judgment they can garnish your wages, levy on your bank accounts and record the judgment with the county in which you live hoping it will attach to any real property you may own.

If your wages are garnished you can file an exemption to reduce the amount that can be garnished each paycheck and even stop the garnishment altogether depending upon your circumstances.  Filing bankruptcy will stop the garnishment of your wages and depending upon the circumstances get rid of the judgment forever too.  Bankruptcy is not the only answer, but for many it is the permanent solution to making sure the enforcement of the judgment does not continue.

Many collection agencies improperly tell people that they are going to garnish their wages without having obtained a judgment in an attempt receive a payment.  This could be a violation of the Fair Debt Collection Practices Act and any contact with the collection agency should be documented for future prosecution if it continues.

Contact us for more information from our experienced bankruptcy lawyers or one of our wage garnishment bankruptcy attorneys to find out if bankruptcy is right for you.

What Happens During Bankruptcy?

By Ryan C. Wood, Attorney at Law

What happens during bankruptcy depends primarily on the chapter of the bankruptcy code you file under.  The most common bankruptcy is the filing of a consumer no asset chapter 7 bankruptcy.  The next most common cases are consumer chapter 13 reorganizations and asset chapter 7 bankruptcy cases.

1.       The Automatic Stay Takes Effect as Soon as the Case is Filed

The first thing that happens during every bankruptcy is as soon as the case is filed the automatic stay is in effect stopping any and all collection actions against you.  This includes wage garnishment, foreclosure, lawsuits and harassing phone calls.  Everything is stopped and must be addressed in the bankruptcy case.  The whole point of filing bankruptcy is to get rid of burdensome debts and treat creditors fairly under the Bankruptcy Code.

2.       Documents are Forwarded to the Trustee Assigned to the Case

After the case is filed certain documents must be forwarded to the trustee assigned to your case.  Some trustees require bank account statements in addition to pay advices and your most recently filed tax return.  If the case is a Chapter 7 case there is a panel of trustees that are assigned cases.  Each jurisdiction has different Chapter 7 trustees to administer the bankruptcy estate.  If your case us under Chapter 13 there is a standing trustee that administers all of the cases filed within in their jurisdiction.

3.       Second Course is Completed and Certificate Filed

The 2005 Bankruptcy Abuse Prevention and Consumer Protection Act created two courses that must be completed.  The first course, Credit Counseling, must be completed before the case can be filed.  The second course, Financial Management, must be completed before you may obtain a discharge of your debts.  You must complete the second course within 60 days of the date the 341 meeting of the creditors is scheduled.  If you do not complete the second course your case will be closed and you will not receive a discharge.

4.       341 Meeting of the Creditors Attended and Concluded

The 341 meeting of the creditors should be the only appearance you need to make in the bankruptcy case.  The meeting is usually scheduled 30-45 days after the case is filed.  If the case is Chapter 7 or Chapter 13 the meeting is administered by the trustee assigned to your case.  The meeting is not in a courtroom but there are formalities observed.  You will provide testimony under oath and it is recorded.  This meeting also provides your creditors an opportunity to ask you questions about the bankruptcy petition filed.  Creditors rarely appear at the meeting unless you have committed some sort of fraud.  If everything is in order then the meeting of the creditors will be concluded.

5.       Debt is Discharged and Closed

In a no asset Chapter 7 case after the conclusion of the meeting of the creditors the only remaining deadline that needs to pass is creditors right to file an adversary proceeding objecting to the discharge of the debt owed to them.  Creditors have 60 days from the date the meeting of the creditors is schedule to file an adversary proceeding objecting to the discharge of your debts.  Once the 60 days passes the Bankruptcy Court may now enter the order discharging your debts and closing the case.

In a Chapter 13 bankruptcy case the Chapter 13 plan will still need to be confirmed or approved by the Bankruptcy Court.  Depending upon the debts you are reorganizing in your Chapter 13 plan this can take a number of months.  Once the Chapter 13 plan is confirmed the plan will need to be completed.  Once the Chapter 13 plan is completed the order discharging the debt you do not pay back in the plan can be discharged and the bankruptcy case closed.

If you are need of bankruptcy you may contact us at San Jose bankruptcy or contact us at Oakland bankruptcy for more information.

The Top 10 Things To Do Before Filing Bankruptcy

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After meeting with hundreds and hundreds of potential clients during our free consultations the same issues arise over and over again.  The following are the top ten most common issues that should be addressed or followed prior to filing either a chapter 7 bankruptcy or chapter 13 bankruptcy case.

10.       Do Not Wait To Speak To An Experienced Bankruptcy Attorney

Even if you are not ready to file bankruptcy speaking with an experienced bankruptcy attorney will give you the information you need to make educated decisions.  To determine if you are speaking with an experienced bankruptcy attorney, ask the attorney how many other areas of law they practice, how long they have practiced bankruptcy law, how many bankruptcy cases have they filed and to name the trustees in the jurisdiction and what document requirements each trustee requires.  If the attorney does not know who the trustees are and what each of them requires they do not regularly file bankruptcy cases.  One the most common problems we face is meeting with potential clients when it is already too late.  If you have been served with a summons and complaint you need to speak with an bankruptcy attorney.  If you owe taxes and the IRS or FTB has indicated they are going to garnish your wages you need to speak with a bankruptcy lawyer.

9.         Review Your Monthly Expenses

All consumer bankruptcy petitions include Schedule J.  Schedule J is the estimate of the average or projected monthly expenses for your household at the time the bankruptcy case is filed.  Prior to scheduling a free consultation with an experienced bankruptcy attorney take a few minutes and review your bank account statements and get a better idea of where your money is going each month.  This will help to determine if you have any disposable income available to creditors.

8.         Make Sure All of Your Tax Returns Are Filed

In 2005 the Bankruptcy Abuse Prevention and Consumer Protection Act (BAPCPA) provided new guidelines for the filing of tax returns and bankruptcy.  If you file for bankruptcy you will need to provide your tax return for the previous year, or the current year if requested.  If you fail to file your return that becomes due after you file for bankruptcy the IRS can request dismissal of your bankruptcy case.  Section 1308 of the Bankruptcy Code requires filers of chapter 13 bankruptcy cases to have filed all of their tax returns for the previous four years before the filing of the bankruptcy petition.  This is one of the standard questions asked by the standing chapter 13 trustee at the meeting of the creditors.

7.       Review and Document Self-Employment or 1099 Income

If you are self-employed or receive 1099 income it is essential that you know what your income is and what your expenses are for each of the six-months prior to filing for bankruptcy.  Just like in Number 6 below, the Means Test uses a six-month average of your income to determine if you have disposable income available to creditors each month.  Determining what your take home pay is when self-employed or receiving 1099 income is always more time consuming, but absolutely necessary prior to filing bankruptcy.

6.         Save Your Pay Stub or Proof of Income Each Month

In 2005 Congress passed the Bankruptcy Abuse Prevention and Consumer Protection Act (BAPCPA) changing the bankruptcy code and creating what is commonly called the Means Test.  The Means Test is based upon local and national standards for expenses.  The Means Test also uses the six-month average of your gross income extrapolated to a twelve months.  You will need all six months of your pay statements or other proof of income.

5.         Do Not Take a Cash Advance on a Credit Card

Taking a cash advance close in time to filing bankruptcy can be a huge problem.  This can be a problem for the same reasons detailed in Number 4 listed below.  It really depends upon the circumstances, but if you take a $5,000 cash advance on a credit card three weeks before filing bankruptcy you will probably hear from the credit card company when you file bankruptcy.  An adversary alleging fraud could be the likely result.

4.         Do Not Continue to Use Your Credit Cards

One of the most common complications in a consumer bankruptcy is the use of credit close in time to filing for bankruptcy.  The problem is the recent use of credit is circumstantial evidence that the user never had the intent to pay the debt back.  If you are unable to pay your bills as they come due how can you incur more debt?  If you are not making payments to your creditors do not continue to use your credit cards.  If you are having trouble paying your credit cards and are missing payments regularly you need to stop incurring more debt.

3.         Do Not Transfer Money or Assets to Friends or Family Members

The simple transfer of a car to a friend or family member before filing bankruptcy to reduce your assets is not allowed.  It must be disclosed and will only complicate your bankruptcy case.  When filing bankruptcy the sole goal is to successfully discharge all of your eligible debts.  Transferring assets in an attempt to hide assets will only complicate your bankruptcy case and possibly have your right to a discharge take away.

2.         Do Not Borrow Funds or Take an Early Withdrawal From an Individual Retirement Account or 401(k) Plan

Bankruptcy provides exemptions to protect assets such as retirement funds.  We meet with client after client that has unfortunately borrowed or withdrawn from their retirement accounts all of their retirement money trying to pay off debts or stay afloat.  You must weigh all the positives and negative before choosing to withdraw or borrow against your retirement accounts.  Bankruptcy provides exemptions that can protect for the average person all of their retirement funds.  You can file bankruptcy and still keep your retirement.

And The Most Important:

1.         Disclose All of Your Income, Expenses and Assets

Anyone that files for bankruptcy protection must disclose all income, expenses and assets in their petition.  The backbone of bankruptcy is the automatic stay, but the body is treating creditors according to the type of debt owed and the priority of payment of debts required under the bankruptcy code.  Without full disclosure treating all parties fairly cannot take place.  It is not the bankruptcy court’s duty or the duty of the trustee assigned to your case to find assets.  It is the bankruptcy filer’s duty to be open and honest about their income, expenses and assets in exchange for the discharge of their debts.  If you have not fully disclosed everything you may not only lose your right to a discharge of your debts, but criminal charges could be filed and fines imposed.

For more information about filing bankruptcy or the steps necessary to file a successful bankruptcy you may contact us at San Francisco bankruptcy or our Redwood City bankruptcy lawyers toll free at 1-877-963-9543.

Covanta Harrisburg, Inc. Seeks Dismissal of Harrisburg Bankruptcy

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The incinerator operator, Covanta Harrisburg, Inc., drew first blood today by filing their objection and brief in support, seeking the dismissal of the bankruptcy petition of the City of Harrisburg.  Covanta is at the center of the cities bankruptcy filing given that the bonds used to fund the incinerator are what the city is having trouble paying back.

Covanta cites section 921(c) and section 109(c) for authority to dismiss the bankruptcy petition.  Under section 921(c) the court may dismiss a petition if the debtor did not file the petition in good faith or the petition does not meet the requirements of Title 11.  Covanta is arguing that the petition was not filed in good faith because of Pennsylvania Act 26 of 2011 and that the petition makes no mention of this state law.  They are also arguing the requirements of section 109(c) are not met.

Covanta argues that Harrisburg is not eligible to be a debtor pursuant to section 109(c) of the bankruptcy code.  You may remember in a previous article in the Bay Area Bankruptcy Blog details about who can be a debtor and who may not.  A municipality must be specifically authorized to be a debtor by state law or by a governmental officer or organization empowered by State law to authorize the municipality to be a debtor.  The Commonwealth of Pennsylvania passed a law providing a city such as Harrisburg cannot file for bankruptcy protection.  Rather the state can step in and appoint a receiver to help the city form a plan to become solvent.  The State of Pennsylvania did just that on October 20, 2011, when Governor Tom Corbett signed Senate Bill 1151.  This bill declares a fiscal emergency and provides a receiver may be appointed to create a plan of recovery.  See Act 26 of 2011, 72 P.S. Section 1601-D.1 (2011).

Covanta also is arguing that the petition is invalid because the person who signed the petition did not have authority.  Just like the Mayor of Harrisburg, Covanta argues that all laws and legal matters must be presented to the City Solicitor for approval.  The four council members that voted for and authorized the filing of bankruptcy by the city have been called “unauthorized council members.”  The Mayor argues that only she as the executive can sign the petition and bind the city to filing bankruptcy, not a council member.

This is probably one of many more objections and briefs to be filed in support of dismissal of this bankruptcy case.  The Commonwealth of Pennsylvania has already passed a law appointing a receiver, the Mayor of Harrisburg representing the City of Harrisburg has opposed the filing, and now the incinerator operator has lined up against this bankruptcy case.  The question still is whether the Tenth Amendment of the U.S. Constitution will force the Bankruptcy Code to defer to the state law of the Commonwealth of Pennsylvania which arguably forbids this bankruptcy filing by Harrisburg.

For more information from an experienced bankruptcy lawyer or from a Redwood City bankruptcy attorney visit us at www.westcoastbk.com or call us toll free at 1-877-963-9543.

Governor of Pennsylvania Signs Senate Bill 1151 Declaring Fiscal Emergency and Appoint a Receiver for the City of Harrisburg

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On October 20, 2011, the Governor of Pennsylvania, Tom Corbett, signed Senate Bill 1151 authorizing the declaration of a fiscal emergency and install a receiver to attempt to develop a recovery plan for the City of Harrisburg.  The news release from the Governor’s office provides the Governor signed the bill to help enforce the state’s law that when a municipal city fails to adopt a fiscal recovery plan the state will intervene.  Wait a second; the City of Harrisburg filed a Chapter 9 bankruptcy case to do just that, implement a plan of reorganization to lead to solvency.  It is the Governor’s and State of Pennsylvania’s position that the filing of the Chapter 9 bankruptcy case was in violation of state law and Harrisburg could not file the bankruptcy petition in the first place.  It seems they are backing up that position by installing a receiver pursuant to Pennsylvania State Law, Act 47 and Act 26.  Act 47 allows a municipality such as Harrisburg to develop a fiscal recovery plan that is acceptable to the secretary of Department of Community and Economic Development.  The plan can be accepted and then the takeover and installation of a receiver is stopped.  The question is whether a plan of reorganization under Chapter 9 of the Bankruptcy Code is a possible way to satisfy this provision of Act 47?  We will find out on November 23, 2011.

The Harrisburg Chapter 9 bankruptcy case is also facing a request for dismissal from the Mayor of Harrisburg, the Honorable Linda D. Thompson.  The Mayor is arguing that the person who signed the bankruptcy petition is an unauthorized council member who lacks the authority to file bankruptcy for the city.  The Mayor is arguing that the only person who is authorized is her as the executive branch of the government of Harrisburg.

The Bankruptcy Court has entered an order setting the date of the hearing on whether this bankruptcy case should be dismissed for November 23, 2011, at 9:30 a.m.  All parties seeking to dismissal of this case must file and serve their briefs by October 28, 2011.  Responses to the briefs requesting dismissal are due by November 7, 2011.  The actual hearing will be held on November 23, 2011, at 9:30 AM in Bankruptcy Courtroom One, Third Floor, Ronald Reagan Federal Building, 228 Walnut Street, Harrisburg, Pennsylvania.  It will be interesting how the court rules and if the court agrees with both the Mayor of Harrisburg and the State of Pennsylvania regarding their state law and the authority granted to the Mayor.

For more information about bankruptcy you may find contact our Foster City bankruptcy lawyer for answers to your questions.  You may also contact our bankruptcy lawyer in Redwood city for more information.

Pennsylvania and Mayor of the City Harrisburg Seek Dismissal of the City of Harrisburgs Chapter 9 Bankruptcy

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In another strange twist, the Mayor of the City of Harrisburg, the Honorable Linda D. Thompson, has hired counsel for the City of Harrisburg to seek dismissal of the Chapter 9 bankruptcy case filed by the City of Harrisburg.  Huh?  You read that right.  On October 16, 2011, a Sunday, Mayor for the City of Harrisburg filed a motion to modify or vacate an order by the Bankruptcy Court to send out notice to creditors of the Chapter 9 bankruptcy filing.  The Mayor seeks to prevent notice of the bankruptcy case from being mailed arguing the bankruptcy case should be dismissed entirely.

The Mayor of the City of Harrisburg claims that the Chapter 9 petition filed on behalf of Harrisburg was signed by an unauthorized council member.  It appears that four city council member voted in favor of filing bankruptcy for the city on October 11, 2011.  The Mayor did not agree with these four council members.  The Mayor is arguing that she has executive power over the city and only she is the governing municipal officer capable of signing a petition for bankruptcy.  The Mayor further argues that providing notice before the issue of whether the case can go forward would force the city to incur significant cost given that the number of parties to provide notice to would be in the thousands.  This is definitely a valid concern if the bankruptcy case will not go forward and is dismissed.  The cost and expense of notifying Harrisburg’s creditors would not only be expensive but cause further complications in the event the bankruptcy court rules in favor of the Mayor or the State of Pennsylvania regarding their requests for dismissal.

As the case moves along many creditors and parties in interest seek special notice of all documents filed in the case.  So far a group called Debt Watch Harrisburg and the International Association of Fire Fighters, Local Union No. 428, have filed requests for special notice with the court.

So, the Common Wealth of Pennsylvania is seeking dismissal of the bankruptcy case arguing the City of Harrisburg violated state law in filing the bankruptcy petition and now the Mayor of the City of Harrisburg on behalf of the city is arguing the petition for bankruptcy is invalid because the party that signed it lacks to the proper authority.  This case is facing an uphill battle from every direction.  A hearing will be held on November 23, 2011, regarding these various issues.  It will be interesting to see if this bankruptcy case will survive.

For more information from an experienced bankruptcy lawyer or bankruptcy attorney visit us at www.westcoastbk.com.

The Latest Chapter 9 Municipal Bankruptcy is the City of Harrisburg

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The latest municipality to file a municipal bankruptcy case under Chapter 9 of the Bankruptcy Code is the City of Harrisburg, Pennsylvania.  The City of Harrisburg filed their petition for relief on October 11, 2011, bankruptcy case number 11-06938 in the Middle District of Pennsylvania.  According to court records the scope of the City of Harrisburg’s bankruptcy case is much larger than another recent municipal bankruptcy, the City of Central Falls.

The City of Harrisburg cites past due payments of a staggering $83 million.  This is primarily due to their failure to pay the guaranteed incinerator bond debt that is due.  Like any cities throughout United States the City of Harrisburg has issued bonds to fund infrastructure improvements.  Many cities must meet certain guidelines for the services they provide the public.  Many cities issue bonds to fund waste treatment plants, waste disposal and other services necessary to meet the public’s needs.  The City of Harrisburg had a $5.35 million deficit in 2010 and has projected a $3.0 million deficit for 2011 without adding in the cost of any of their guaranteed bond obligations.  It is no surprise that small municipalities are feeling having trouble meeting their obligations when many states also have budget deficits not to mention the enormous federal budget deficit.  Like many Americans struggling with mortgage debt and credit card debt municipalities are turning to the powerful tools available under the Bankruptcy Code to obtain relief.

On October 14, 2011, the Commonwealth of Pennsylvania, the State of Pennsylvania, filed a motion seeking the dismissal of the City of Harrisburg’s bankruptcy case arguing that the City of Harrisburg does not qualify to be a debtor under the Bankruptcy Code.  Pennsylvania passed a state law, Act 26 of 2011, 72 P.S. §1601-D.1 (2011), arguably prohibiting a city such as the City of Harrisburg from filing a petition under Chapter 9 of the Bankruptcy Code.  The Pennsylvania state law includes a section providing that if a municipality such as the City of Harrisburg were to file a petition under Chapter 9, all state funding to the filing municipality will be suspended.  Whether the City of Harrisburg will be allowed to continue to seek reorganization of their debts under Chapter 9 of the Bankruptcy Code now remains to be determined.  The Bankruptcy Code is part of Title 11 of the United States Code, federal law.  The question of whether a state may enact laws to circumvent and prevent a municipality from receiving the benefits of bankruptcy is in question.

At issue is the Tenth Amendment of the United States Constitution.  The Tenth Amendment provides that powers not granted to the federal government nor prohibited to the states by the Constitution are reserved, respectively, to the states or the people.  The age old power struggle between the rights of states to govern themselves versus the power of the federal government is not new.  This issue may find its way the United State Supreme Court.

For more information about Chapter 9 bankruptcy you may contact our bankruptcy attorneys or bankruptcy lawyers.

Garnishment Laws

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Garnishment is the result of a lawsuit and the enforcement of the judgment obtained in the lawsuit.  The good news is that filing for bankruptcy protection will stop the wage garnishment and get rid of the lawsuit forever.

Many collection agencies threaten to garnish wages to attempt to scare people into making payments on delinquent accounts.  The fact is that they must first file a lawsuit against you, served you with the lawsuit, obtain a judgment, then writ of garnishment or writ of execution, then serve the earnings withholding order on your employer.  Whew, that is a lot of steps.  The hardest part of this process is usually personally serving you with the lawsuit.  Once they have served you it will only be a matter of time before they can obtain a judgment against you.  Of course you may have a valid defense.  If so, seek the counsel of an experienced attorney to represent you.  In most cases that involve credit cards there are no valid defenses.  It is a straightforward breach of contract for failure to pay.  So if you are behind on a credit card or owe money to someone the question always is, “Are they going to take the time, effort and money to follow the garnishment laws and actually be able to legally garnish your wages?”  Who knows?

What is certain is once all the necessary steps have been completed to garnish your wages it hurts your income severely.  The amount that can be garnished varies from state to state, but what is garnished is deducted from your net income.  Yes, after federal and state taxes are deducted, healthcare costs or other deductions, then thee garnishment is deducted.  Ouch.  Each state has exemptions you can claim to reduce the amount that can be garnished each paycheck.  Depending upon your circumstances, like have ten kids you have to feed, you could reduce the amount garnished quite a bit.  Even though you can be legally garnished that does not mean you will not be allowed to live and eat.

Every check will be garnished until the judgment is satisfied in full up to ten years.  The judgment is only good for ten years and must be renewed if it is not satisfied in full.  The amount of the judgment will be more than what you originally owed too.  Do not forget that there will be attorney fees and costs added into the judgment and you will have to pay that back too.

For more information about garnishment and how bankruptcy can help, contact our Oakland bankruptcy lawyers today.  If you are located on the Peninsula, contact our Redwood City bankruptcy attorneys for more information about garnishment and bankruptcy.