Monthly Archives: March 2017

A debt collector just told me that they are starting garnishment proceedings. When are they going to start garnishing me?

Never, if you file bankruptcy first.

That being said, it’s usually a lie on the part of the debt collector.  Garnishment is the tail end of a series of legal actions, and unless you’ve already been served, had a judgment entered against you, and given them your employer info to send the garnishment paperwork, then they are bluffing.  Basically, if they filed a lawsuit today, it will usually be about 45 days before you see the first garnishment from your wages.  

If they do already have a judgment, they will serve the papers on the payroll office of your employer.  Even then, payroll will normally inform you and give you a fair heads-up kind of warning.

It sounds scary on the phone, but collectors tend to say nasty things.  Many of those nasty things are at best, gross misrepresentations, and at worst, bald-faced lies.

I have given the timeline here:  A creditor just called and said that they are initiating the legal process for garnishment. How long do I have until they garnish me?

You can also find more information here:

A creditor just got a judgment against me. Will they start garnishing me right away?

How does a creditor find out where I’m working so that he can garnish my wages before bankruptcy?

How long will it take my creditors to garnish me after they get a judgment? (video)




What are the steps to purchase and finance a car in my chapter 13 bankruptcy?

You can purchase a car at any time, if you are paying cash.  Financing, on the other hand, is much more difficult.

Today I had a current client ask me about financing a newer car in the middle of her chapter 13 case.  She surrendered an upside-down vehicle in her chapter 13, and she was tired of borrowing vehicles from friends and family.  I responded to her email and gave the following steps:  

What options would I have if I need to buy a car? I surrendered mine when I filed and but now that I am moving to XXXX I’m not sure if I will be able to function out there without one. Can you let me know if this is possible?


Yes, but it’s obnoxious.

If there is any way that you can have someone else finance it in their name, and you make the payments, do so.  Otherwise, here is how you finance a car in a chapter 13:
1.  go to a dealership and tell them how much you can spend on a car and that you are in a 13,
2.  they will show you a type of car you might be able to buy,
3.  sign a purchase contract and have them draft up the finance agreement,
4.  send it to me,
5.  I file a motion with the court, and then we wait 30 days for the court to approve it,
6.  the court awards about $500 in additional fees that you have to pay out (through your chapter 13 payments),
7.  go back to the dealership and show them the signed order, and then,
8.  you can finally drive a car off the lot similar to the one you originally looked at over a month ago.
I stand firm with the adjective above, “obnoxious.”  I also didn’t tell her that the court will
usually only allow a car under about $400 a month, it has to fit your budget, and the court
frowns on luxury (Cadillac) or sports (Mustangs) vehicles.
If you can buy something with cash, always do so.  It’s much cheaper, and your insurance is
cheaper as well.  If you’re not in that kind of situation, then try to finance something as cheap as
you can stomach that will still get you from Point A to Point B.

Can I change the interest rate on my car title loan in bankruptcy?

In a chapter 7, no.

In a chapter 13, yes.

In a chapter 7 case, we can list the title loan, check a box that says that we will reaffirm or keep the loan, and you can keep the vehicle.  But, you keep the exact same payment terms:  same interest rate, balance, monthly payment amount, etc.  So in a chapter 7, no, you cannot change the interest rate.  You can always try to negotiate, but it seems hit and miss with my clients when they try to negotiate a different amount with someone who already holds the title to their vehicle.

In a chapter 13, yes, we can change the interest rate to something called the Till rate, which currently is 5.5%.**  So, in a chapter 13, you can change the interest rate on your title loan, usually about 250%, down to 5.5%.  This doesn’t change the outstanding balance, but it sure cuts down those future interest payments.  


**The Till rate is based on a Supreme Court case called TILL V. SCS CREDIT CORP. (02-1016) 541 U.S. 465 (2004).  I have linked it if you would like some light reading.  I would warn you that the Supreme Court does not generally use cute little pictures made from Microsoft Paint (unlike this blog).

What happens to my property settlement from my divorce when I file bankruptcy?

It depends.  If you have already received the settlement proceeds or items, you’re fine.  If you are still waiting on it to finalize, you’d better wait on the bankruptcy.

When we file bankruptcy, I can protect most of your property under various exemptions.  For example, I can protect $3,000 of equity in your car.  Unfortunately, I generally cannot property property settlements proceeds still coming to you.  So if your ex-husband still owes you another $5,000 from your old joint savings account, and he is sending it to you in 2 weeks, then we’d better not file until after you receive and spend it.  Otherwise, the bk trustee will step into your shoes and intercept that money for himself.  

If you’ve received it and spent it, you’re good.

If you are waiting on the settlement proceeds, do NOT file bankruptcy yet.

And don’t think that you can hide this from the bk trustee.  The moment trustee realizes that you are divorced, he will ask you if you still have any property settlement coming to you.  He’ll also want a copy of the divorce decree.  It’s not worth potential perjury charges and a loss of your bk discharge to keep the settlement secret.



I surrendered my condo in bankruptcy, but now the HOA is suing me for post petition fees?

Yes they can.  

It’s not very common, but at least twice a year I have clients face this issue:  they surrendered their home in a chapter 7 bankruptcy, and then the HOA sues them for HOA fees which came due after the bankruptcy was filed.

Bankruptcy wipes out your personal liability for those fees which arose prior to the bankruptcy file date.  If you’re keeping the home, you’ll still have to pay them back, but if you’re surrendering the home, you do NOT have to pay them back.

The problem is that new HOA fees keep coming due until your name is off the title of the home. (Your names comes off title when they sell or foreclose the property).  Your chapter 7 case does not affect these new post-petition fees.  The Bankruptcy Code Section 523(a)(16) exempts from discharge any:

(16)  fee or assessment that becomes due and payable after the order for relief to a membership association with respect to the debtor’s interest in a unit that has condominium ownership, in a share of a cooperative corporation, or a lot in a homeowners association, for as long as the debtor or the trustee has a legal, equitable, or possessory ownership interest in such unit, such corporation, or such lot, but nothing in this paragraph shall except from discharge the debt of a debtor for a membership association fee or assessment for a period arising before entry of the order for relief in a pending or subsequent bankruptcy case;

In other words, even though you’re giving up the home, the HOA can still come after you for new fees.  All you can do is wait until the bank forecloses or the trustee sales the property.  Once that happens, your name is off title, and the new title holder will have to pay those fees for you.

I’d like to give credit where credit’s due.  I used the following two articles for inspiration here:

HOA dues still due after bankruptcy filing? by Justin Harelik, and

Post-Petition HOA Fees in Bankruptcy, by the Wilson-Goodman Law Group.