You should seek private settlement with creditors, but once wage deductions have begun, they will not stop garnishment voluntarily. There are two ways to stop a garnishment: pay the debt or file bankruptcy.

Stop garnishment: Pay the debt

If you have the means to pay off the debt, then you can contact the attorney on the garnishment summons and make an offer. Be sure to get an accounting of the debt, including any credits from garnished wages. The creditor, at this point, holds a position of power. So it’s going to be difficult to settle for less than the full amount. Moreover, you will likely need a lump-sum payment, as opposed to monthly payments over time because the creditor already has monthly payments coming in.

Stop garnishment: File bankruptcy

When you file bankruptcy, the garnishment must immediately cease. Your attorney will notify your HR department to alert them to your filing information in order to stop the garnishment as soon as possible. The creditor may attempt to enforce its judgment in your bankruptcy case. But the garnishment must terminate upon the filing of the bankruptcy.

You can stop garnishment of wages with either Chapter 13 (through a repayment plan) or with Chapter 7 (straight discharge). Filing bankruptcy allows you to terminate the wage garnishment both immediately and permanently.

Stop garnishment of wages

Garnishment can endanger your relationship with your employer because wage garnishments are handled through the human resources department. Most employers are understanding when employees experience financial problems, however some employers are not. And wage garnishment adds another layer of administration, the costs of which are often passed on to employees in the form of “garnishment fees.”

If you are being garnished or a garnishment is imminent, call Lee Legal to determine your options.

Debt collectors don’t give up. They’re very motivated to hound you until the debt is collected. Why? Because collecting your debt is their source of income. Actually, they make money only if you pay the debt. Collection agencies get paid based on the amount they collect from you. Ignoring debt has many downsides.

Ignoring debt collectors won’t make them go away

Under new proposed rules, debt collectors could soon be able to send texts, emails and private-messages to collect on their debts — on an unlimited basis. Creditors will also continue to report nonpayment to the credit bureaus.

Verifying the debt is legitimate

You have the right to request validation of the debt under the Fair Debt Collection Practices Act. You should definitely find out if what they’re saying you owe as a debt is actually legitimate and whether the amount is correct. If you learn that it’s not legitimate, contact the collection agency right away to dispute the debt.

Missed opportunities to settle the debt

Interest, collection costs, and legal fees will be added and, of course, will increase with time. Seize the opportunity to make a payment arrangement with the debt collector. You may even be able to settle the debt for less than the original amount. But you must communicate with the collector to accomplish this.

Don’t get sued

A debt collector may file a lawsuit against you to collect on the debt. In most cases, this is just a matter of time. If you ignore the lawsuit, the creditor will obtain a default judgment against you. Wage garnishment is likely to follow. Any money in your bank account can also be garnished.

Debt doesn’t just disappear

Ignoring debt is like having a false safety net. It’s a progressively slippery slope. Obtain your credit report so you can make a comprehensive debt assessment. Prioritize your debt and make a realistic payment plan. You must contact the collectors and negotiate.

If you’re not able to reach an agreement or repayment isn’t feasible, then it may be time to contact a bankruptcy attorney. A legal professional can inform you of all of your options and help you obtain a new financial start.

You are being sued

If a debt collector fails to reach you or receive payment, they then may file a lawsuit. If that lawsuit is successful, the debt will increase with the addition of court costs and attorney fees. A bankruptcy court issues an automatic stay against creditors, which immediately stops all lawsuits. Until your bankruptcy case is discharged or dismissed, creditors cannot take any additional collection actions against you, including lawsuits.

Your wages are being garnished

After a debt collector wins a lawsuit, they can attempt to collect what is owed. The laws according to your residential jurisdiction govern whether they will be able to freeze your bank account or garnish your wages. A court order for wage garnishment requires employers to withhold a certain amount of money from each paycheck until the debt is paid in full. If you file bankruptcy, the automatic stay would halt the garnishment. The automatic stay, however, will not stop domestic support obligations like child support or alimony.

You can’t pay your bills

Losing your job or sudden medical bills are examples of unexpected occurrences that have the potential to leave one in serious financial distress. Circumstances like these can lead to using credit cards to pay for routine living expenses and monthly bills, which can snowball very quickly. If your debt is increasing each month, or you just can’t make a dent in the debt, then it may be time to file for bankruptcy.

You risk losing your home to foreclosure

If foreclosure is a possibility, filing bankruptcy can allow you to get caught up or your mortgage and keep your home. Reinstatement, modification, short-sale, and deed-in-lieu of foreclosure, and open market sale are other options available to you. Often, however, filing for bankruptcy protection is the only legal means by which to stop a foreclosure auction.

When it’s time to file for bankruptcy

In some cases, it is possible to make your way out of debt with revised budgeting, hard work, sacrifice, and patience. Weigh the pros and cons and seek legal assistance.

If you are unsure, take the time to assess your situation. Do this by taking inventory of all your assets, including retirement funds, stocks, bonds, real estate, vehicles, savings, and any other non-bank account funds. Then total your bills and credit cards statements. You can then proceed accordingly knowing how much you truly owe and how much you can realistically pay. The following questions can help you assess if you need to act now:

• Are bill collectors constantly calling you?
• Do you make minimum credit card payments only?
• Are you considering debt consolidation?
• Is fear preventing you from sorting out your finances?
• Are you unsure of how much you actually owe?

Don’t be one of the many that wish they had filed bankruptcy sooner. A bankruptcy attorney can inform you of your options and assist you in obtaining a new financial start.

The garnishment process

Before a creditor can garnish your wages, that creditor must obtain a court order, meaning the creditor must first sue you. Garnishment is the last resort for creditor collection on a debt. In most cases, the creditor has attempted alternative collection efforts prior to litigation. Once a creditor obtains a money judgment against you, garnishment is not far off.

There are three exceptions to the rule that a creditor must first sue you to obtain a garnishment order: child support, taxes, and student loans. State child support enforcement agencies, the IRS and the Department of Education can all garnish wages without a court order.

How much of my paycheck can a creditor garnish?

The Consumer Credit Protection Act limits garnishment to 25 percent of your disposable income and prohibits employers from terminating an employee because of a garnishment. Each state also has its own garnishment laws.

In Washington, D.C., a creditor can garnish up to 25 percent of disposable wages. The garnishment laws of the District of Columbia are contained in D.C. Code § 16-571 through 16-584. The Wage Garnishment Fairness Amendment Act of 2017 (pending) would further limit garnishment in D.C.
by factoring in gross wages and disposable wages. The bill would also effectively exempt altogether minimum wage employees from garnishment.

In Virginia, a creditor may garnish either (a) 25 percent of your disposable earnings or (b) 40 percent of the federal minimum wage, whichever is lower. Garnishments in Virginia must be renewed (the “return date”) every six months. The garnishment laws of Virginia are contained in Va. Code Ann. § 8.01-511.

In Maryland, a creditor may garnish either (a) 25 percent of your disposable earnings or (b) the amount of disposable income exceeds 30 times the federal minimum hourly wage, currently $7.25. Judgments in Maryland are enforceable for 12 years, and they can be renewed. Interest also accrues on judgments in Maryland at the legal rate of up to 10 percent.
The garnishment laws of Maryland are contained in Md. Code 15-601 et seq.

How do I stop garnishment in DC, Virginia or Maryland?

Generally speaking, creditors will not consider settlement of a debt once a garnishment order is in place. The creditor has already gone through the trouble to obtain judgment and garnish your wages. Once deductions commence, the creditor will not stop garnishment voluntarily.

If you cannot simply pay off the debt in full, the quickest and surest way of stopping wage garnishment at that point is to file bankruptcy. The automatic stay immediately terminates the garnishment and you will obtain a discharge of the debt.

Debt Collection. If you have a debt in collection, you have rights. You’re likely going to want to hire a lawyer to enforce those rights. If you have many debts in collection, consider bankruptcy. If you have just a few debts, however, consider hiring an attorney to settle the debt.

Foreclosure. If you are in preforeclosure, act quickly to preserve your options. If you have a foreclosure auction scheduled, you only have two options: reinstate the loan or file bankruptcy. Timing is incredibly important in foreclosure cases. Contact an attorney immediately if you default on your mortgage.

Repossession. If you are facing repossession, you have options before the vehicle is repossessed. Afterwards, not so much. If you have a debt resulting from a former repossession, you can eliminate that debt in a Chapter 7 bankruptcy. If you want to stop a repo before it happens, a Chapter 13 bankruptcy may do the trick.

Garnishment. Garnishment can often severely impact your monthly finances, and garnishment reflects very negatively on your credit score and credit report. Often, the only way to terminate a garnishment wage order is by filing bankruptcy.

Taxes. If you withhold too little from your paycheck, you will get more money with which to pay your bills. But artificially increasing your deductions creates a tax liability for you at the end of the year. We can help you identify which deductions are appropriate for you. And we can help you determine which taxes may or may not be forgiven.

Lawsuits. You could spend thousands of dollars defending a lawsuit that you’re sure you will win. And then you might lose. In many cases, it makes sense instead to moot the suit in bankruptcy. On the other hand, it could make sense to fight the suit and attempt to settle. Talk to an attorney. Don’t try to handle a lawsuit on your own.

Student Loans. You may be in deferment or forbearance right now. But when your monthly student loan payment comes due, will you be able to pay it? Student loans are not dischargeable in a Chapter 7 bankruptcy. But paying your student loans in a Chapter 13 bankruptcy allows you some breathing room to pay your other debts.

Lee Legal Can Diagnose Your Financial Condition

Financial problems don’t solve themselves. Many financial problems aren’t even obvious problems at first. Don’t try to self-diagnose your condition. Seek out an objective analysis and generate a plan unique to your circumstances and goals. Call Lee Legal to schedule your financial diagnosis.

Worrying about losing your car or home can keep you up at night. And debt collectors can make you afraid to answer your phone. Luckily, the law provides some vital debt relief programs for people struggling with debts they can’t pay: bankruptcy. Lee Legal encourages borrowers in the Washington, DC region to reclaim their lives with a Chapter 7 bankruptcy.

Get a second chance at life with bankruptcy

In a Chapter 7 bankruptcy, you can completely discharge your unsecured debts if you are unable to repay them. You can completely eliminate medical bills, credit card debt, court judgments, and penalties from overdrawn bank accounts. Chapter 7 eliminates many other types of debts, too. The court will immediately order your creditors to cease all collection efforts, which puts a stop to those bill collector phone calls, garnishment proceedings, and even foreclosure and repossession efforts.

Filing for bankruptcy in the DC area is a complex process, but Lee Legal has the experience to guide you all the way through the process. We make sure all of your eligible debts are discharged without putting any of your property at risk. We will also help you navigate the means test, which determines whether you’re a candidate for a Chapter 7. And we will advise you of your other options if Chapter 7 bankruptcy isn’t right for you.

Call us today for your second chance

Visit Lee Legal Washington, DC online now to learn more about their debt relief options, or just call (202) 448-5136 for a consultation with a bankruptcy lawyer today. Get a second chance at life with bankruptcy. You’ll be glad you did.

When Should You File for Bankruptcy?

Bankruptcy is not appropriate for every situation. But if bankruptcy is right for you, we will help you decide on the right time to file. Experienced bankruptcy attorney Brian Lee suggests that you initiate the process when:

You are facing garnishment. A wage garnishment is usually imposed when a creditor has no other way to recover on a debt. Garnishment allows a creditor to automatically withdraw a portion or all of your paycheck. In most cases, garnishment means that you will continue to work but will not have the ability to pay monthly bills. By filing bankruptcy, you will put an end to wage garnishment, and whatever you earn or buy after filing bankruptcy will be yours to keep.

Foreclosure is imminent. A foreclosure defense lawyer can help you keep your home and rearrange the payment plan with a Chapter 13 bankruptcy. The key though, is to file before a foreclosure notice is filed.

Your vehicle is at risk of repossession. You can prevent repossession if you fall behind on payments. A Chapter 7 or Chapter 13 bankruptcy can stop repossession and give your attorney the chance to negotiate with the creditor so you can keep your car. You should file the bankruptcy in advance of repossession. That will save you repo fees and costs. You must file before the creditor auctions off the car or it will be too late.

You get sued. If a creditor has sued you, do not simply accept the default judgment. The automatic stay, which takes effect once a bankruptcy is filed, prevents creditors from calling or carrying out any other actions against you due to debts owed. Bankruptcy will cease all creditor enforcement action, including lawsuits.

Bankruptcy is not for every situation

Other extenuating circumstances that call for a speedy bankruptcy filing include divorce, unemployment, medical expenses and delinquent taxes. These scenarios often leave debtors worried about their financial futures. Many times it will make sense to file well before any of these scenarios happen. Be proactive. Don’t wait for something bad to happen before you take the first step.

When should you file for bankruptcy? Lee Legal of Washington, DC will explain the pros and cons and cater a unique solution to your specific situation, whatever your circumstances may be. To find out more about the types of bankruptcy or to schedule a consultation, call us at (202) 448-5136 today.

To fight a credit card lawsuit is basically to stop the creditor in its tracks. In most cases, the win-win scenario is that you will be able to settle the lawsuit. In the worst-case scenario, you could lose and have a judgment entered against you. This would have happened anyway if you chose not fight the lawsuit. Taking action and responding will not only buy you some time. In most cases, the debt collector would prefer to settle the suit than to actually pursue the claim.

Fight a Credit Card Lawsuit

Debt collectors typically use “boilerplate” complaints. Essentially, they may print off many copies of virtually the same complaint, simply changing the defendants and the amounts owed. You can demur and force them to actually complete a lot more paperwork and documentation at the pre-trial stage. The collector may give up at this point, realizing that the case is going to be a lot more hassle than it is worth. The lawsuit might be dismissed or the debt collector may be willing to settle with you for much less than you actually owe.

If the case does progress, the next big hurdle for the collector is the discovery process. You have the right to request documentation and paperwork during discovery in order to build your case. If the debt collector does not provide all of the requested information, you can seek sanctions for failure to make a good faith effort to comply. Essentially, this means that the court may fine the debt collector if the collector doesn’t take the lawsuit seriously. You could also recover your costs for fighting the suit from a debt collector who fails to make a good faith effort to comply with reasonable discovery requests.

The discovery process can be paperwork-intensive. Many debt collectors are reluctant to deal with discovery. If you fight a credit card lawsuit, the collector may choose to simply dismiss the lawsuit or attempt to negotiate a settlement.

Debt Settlement

Even if you go through the discovery process and the case goes to trial, the debt collector is still incurring fees in proving its case. Settlement for less than what is owed is possible at this phase as well. By fighting the lawsuit, you dramatically increase your chances of paying much less to resolve your problem. Allowing a creditor to obtain a default judgment against you is rarely the best choice.

Instead, you should consult with an experienced debt settlement attorney and fight the credit card lawsuit. Even if you acknowledge that you owe some amount to the creditor, fighting the lawsuit increases your ability to settle the debt for much less than what the creditor claims is owed.

For help in understanding your options when dealing with a credit card lawsuit and debt settlement in Washington DC, Maryland or Virginia, contact a debt relief attorney at Lee Legal today.

Once a garnishment has started, your only choices are to make a deal with the creditor or to declare bankruptcy. If you think your creditor or collection agency may be taking steps to have your wages garnished, act quickly. The best way to stop garnishment is to settle the debt beforehand or discharge it in bankruptcy. If the creditor is able to get your payroll to deduct from your wages, you will not be able to stop garnishment until the debt is paid in full.

Stop Garnishment of Wages

Garnishment can be personally embarrassing. After all, your employer is now aware that you are experiencing financial problems. While the Consumer Credit Protection Act makes it illegal for an employer to fire you for a single garnishment, if you have more than one garnishment, all bets are off.

There are garnishment limits unique to every jurisdiction. In addition, the federal Consumer Credit Protection Act limits garnishment to 25% of your disposable income. Every state also has its own garnishment exemptions.

If your paycheck garnishment is severely impacting your ability to support yourself and your dependents, you may ask the court to reduce the percentage of your garnishment. You must fully document your household income and monthly expenses in order to convince the court that your garnishment should be reduced.

Stop Bank Account Garnishment

Creditors may also garnish bank accounts and other forms of property. This is called “nonwage garnishment.” The creditor will attempt to attach (or seize) the entire amount of the bank account, up to the amount of the debt owed. If there was a lien legally placed against your account, the only way to get the money back is to file bankruptcy quickly after the account has been frozen. You must act quickly, before the bank transfers the money to the creditor.

It is legally irrelevant whether the account is held jointly or whether the money in the account was actually deposited by you. You may simply stop keeping your money in a bank account, however, that is obviously very inconvenient. You will also need to change any direct deposits and automatic bill payments. The only sure-fire way to stop a bank account garnishment is to file bankruptcy.

Stop IRS Garnishment

Most federal agencies, including the Internal Revenue Service, can garnish up to 15% of your after-tax income. The IRS garnishment will continue until the liability is paid in full or until the statute of limitations prevents the IRS from collecting the tax.

The very best way to stop an IRS garnishment is to enter into an installment plan in which you make a monthly payment in addition to your income withholding.

The IRS can garnish both Social Security retirement and disability benefits. IRS Code Section 6334(c) allows garnishment for collection of federal tax liabilities. Typically, the IRS will garnish up to 15% of these benefits.

Stop Garnishment on Student Loans

The Department of Education can garnish 15% of your after-tax income. The federal government, unlike other types of creditors, has an additional weapon: administrative wage garnishment. This means that the government can garnish wages, attach bank accounts, and seize property without first getting a court order or judgment against you. You must be notified in writing, however, at least 30 days before the garnishment begins.

Unlike private creditors, the Department of Education is somewhat easier to deal with, and you may be able to prove that the garnishment is causing you or your family an undue hardship. Private student loan creditors will not afford you such an opportunity.

Stop Garnishment Without Bankruptcy

Creditors will not consider a repayment plan once a garnishment has already started. The creditor has already gone through the time and expense of obtaining judgment against you. Once wage deductions have begun, they will not stop garnishment voluntarily.

Instead of trusting you to make payments, the creditor receives regular and timely payments from your payroll department or bank.

The only way to stop garnishment at this point is to file a Chapter 7 or Chapter 13 bankruptcy.

Stop Garnishment in DC, VA, MD

Ignoring money problems doesn’t make them go away. Smart consumers understand that a proactive approach can avoid garnishments before they even start. Call an experienced debt settlement and bankruptcy attorney to explore your options.

Don’t rearrange the deck furniture on the Titanic. Instead, realize it may be time to jump ship.

You may have stopped answering your phone because you know could be another bill collector. You may have stopped opening your mail because you know it’s just another bill. Perhaps you’re parking your car around the block or on a different street, hoping the repo man won’t find it. You may even be reluctant to open your front door, afraid that it may be a process server with a lawsuit or garnishment in hand.

When to consider filing bankruptcy

Most people know when it’s time to consider bankruptcy, but they put it off anyway. Here are several indicators of when to consider filing bankruptcy and get your finances back on track:

• Have you stopped paying bills? Even if you can’t pay a debt, you can’t simply ignore it forever. You’re damaging your credit and incurring interest and late fees. Bankruptcy eliminates debt.
• Facing home foreclosure or car repossession? These events, not a bankruptcy, are what will truly devastate your credit. Moreover, your creditor will file a lawsuit later on to recover the deficiency from the resale of home or vehicle. Bankruptcy stops both foreclosure and repossession.
• Hit with a lawsuit, garnishment, or levy? If it takes a court order to force you to repay a creditor, then it is very likely you are unable to pay that creditor. Garnishments usually take many years to fully satisfy a debt. Bankruptcy puts a stop to lawsuits, garnishments, and levies.
• Making only minimum payments? If you have more debt than you can pay off in the foreseeable future, it’s time to either restructure or eliminate your debt. You’ll never pay off your balances by making minimum payments.

Call Lee Legal to discuss your options

Ask yourself whether you want more of the same or whether you’re ready to take control of your future. Ignoring debt doesn’t make it go away. You have to deal with it.

If you are considering filing bankruptcy in Virginia, Maryland or Washington, D.C., call Lee Legal at (202) 448-5136 for a free consultation.

Wage garnishments, or payroll garnishments, are a bit different. State laws limit wage garnishment to allow the wage-earner money for living expenses. Your jurisdiction’s garnishment laws set the maximum percentage at which your paycheck can be garnished.

In Virginia, Maryland and the District of Columbia, the maximum percentage is capped at 25 percent of disposable earnings. And in Maryland and D.C., judgment creditors must also send a statement each month to the debtor and employer. The report should show application of payments to interest, principal, attorney’s fees, and costs. No such requirement exists in Virginia.

Bankruptcy Stops Garnishment

Filing bankruptcy immediately stops garnishment of both wages and bank accounts. But it is better to pay close attention during the collection process. If a creditor has obtained a judgment against you, the next step is to attach that judgment to your assets. And a judgment creditor will garnish a paycheck or bank account as quickly as possible. So long as you owe that debt, then your assets will be vulnerable. Filing bankruptcy protects your income and assets from garnishment. In many cases, we will be able to recover some or all of the garnished funds owed to you.

Preforeclosure

If you fail to pay your mortgage for 30 days past the due date, the lender will likely enter you into their preforeclosure database. Most lenders, however, wait until you are at least 60 to 90 days delinquent before they initiate any formal action. The foreclosure process is expensive and cumbersome for mortgage lenders. Most lenders hope during preforeclosure that the borrower will cure the default without further prompting.

How quickly your lender will move to foreclose on your property generally depends upon the amount of equity in your home. Your lender will move very quickly if there is significant equity in the home. If your lender calculates that a foreclosure auction will cover its loan, then foreclosure will commence rapidly. But your the lender can (and will) take much longer if your home is under water. That is, mortgage companies take longer to foreclose if you owe more on the mortgage than the home is worth.

Notice of default

To initiate a foreclosure action, the lender issues a notice of default at least 30 days before they begin with the procedure to sell the defaulter’s home. To be valid, the notice must state that the borrower has breached the deed of trust and that the lender has the right to sell the property as a result. The bank typically mails the notice to the borrower’s address or posts to the door. Alternatively, your lender may personally serve you with the notice of default, although this is less common.

After a second 30 day period has passed, the lender must serve a further notice on the borrower. This “trustee sale notice” or “auction notice” must specify the place, date, and time of the foreclosure auction. The trustee sale notice will state the amount of your unpaid mortgage balance, plus accrued interest, contractual penalties, and cost of the foreclosure. The notice will also give the name and address of the trustee conducting the auction on behalf of the lender.

Foreclosure auction

Once the substitute trustee sets an auction date, the borrower has two options.

First, you can catch up the entire mortgage delinquency and fee balance (the “arrearage”)  within at least 11 days prior to the foreclosure auction. Or second, you can file for Chapter 13 bankruptcy protection. Chapter 13 allows you to repay your mortgage arrearage over a period of three to five years.

Foreclosure auctions are typically held at the courthouse or the offices of the substitute trustee. If there is any equity in the property, prospective purchasers will bid on the property. The winner must make a cash down payment on the spot. In many cases, however, the amount owed on the property is more than the property is worth. In those cases, the first mortgage holder may be willing to accept bids below what is owed on the first mortgage.

Deficiency judgment

If the property sells for more than the total all of the liens (mortgages and otherwise) and costs against the property, the former homeowner will be paid the difference. Obviously, this does not happen very often. After all, if there was equity in the home prior to the foreclosure, the borrower would have simply sold the home prior to the foreclosure.

In the majority of cases, the property will sell for far less than is owed on the first mortgage. At that point, the lender has two options: obtain a deficiency judgment or issue a 1099 for forgiven debt. The lender’s determination of which option to pursue depends upon the borrower’s last-reported income.

If the borrower has other assets (usually real property) or very high income, the lender will obtain a deficiency judgment, which will be a collectible debt against the former borrower. Once obtained, the lender can legally pursue collection efforts against the foreclosed-upon homeowner, including liening and garnishment. If the former homeowner’s income and assets are determined to be too low to pursue collection efforts, the lender can simply write off the debt and report to the IRS a 1099 statement of forgiven debt. The borrower will be liable for the the amount of the “forgiven” debt as taxable income for the year of the foreclosure.

Now that you know how foreclosure works, explore your options

Virginia, Maryland and the District of Columbia have the property market-stabilizing effects of our local federal government. Thus valuations and income levels are to a large degree inoculated to national trends. The above timeline is typical, but other scenarios are possible, especially for commercial property owners or second homes.

If you are facing foreclosure in the DMV, get advice on how to proceed in a manner best suited to your situation. Act quickly once you receive a notice of default. Call (202) 448-5136 to speak with a foreclosure attorney familiar with local foreclosure procedures.

Emergency Bankruptcy and the Automatic Stay

The whole reason to file an emergency bankruptcy is to invoke the protection of bankruptcy’s Automatic Stay. The Automatic Stay immediately stops any collection efforts against the bankruptcy filer, including home foreclosure, vehicle repossession, eviction, wage garnishment, execution sale, tax levy, or utility shut-off. As implied by its name, the Automatic Stay takes effect automatically. Any creditor actions that take place after the automatic stay are void by law. The Automatic Stay protects your property and interests until you can complete and file the rest of the forms.

Lee Legal has assisted in numerous emergency bankruptcy filings. In cases where an emergency bankruptcy is necessary, it is critical that you work quickly and closely with your attorney. Completing the required paperwork and documentation is usually a intensive effort. And an emergency bankruptcy, by its nature, has more pressing deadlines than a regular bankruptcy filing. It is crucial that you return your lawyer’s calls and quickly respond to his or her request for documents.

If you live in Washington, D.C., Maryland or Virginia and want to prevent foreclosure or garnishment, or to stop repossession of a vehicle, you must act quickly. Contact an experienced emergency bankruptcy attorney to discuss your situation.

The Automatic Stay Immediately Stops All Creditor Activity

Contained in the bankruptcy code at 11 U.S.C. § 362, the Automatic Stay acts as a legal injunction, halting all creditor actions immediately at the moment the bankruptcy petition is filed.

Foreclosure. The Automatic Stay stops a foreclosure auction if your home is scheduled for a foreclosure sale. If the he mortgage company conducts the auction anyway, the sale is void ab initio, in other words, as if it never took place.

Lawsuits. If the creditor sued you prior to the bankruptcy, the lawsuit will be stopped (or “stayed”) pending the outcome of the bankruptcy. If you file bankruptcy prior to a lawsuit, the creditor may not sue you without first seeking permission from the bankruptcy court.

Repossession. If you still have possession of your vehicle, the Automatic Stay will prevent the creditor from repossessing it. Your bankruptcy legally enjoins the creditor from seizing the vehicle.

Collection calls or correspondence. While you are under bankruptcy protection, your creditors may not contact you or attempt collection on any debt. Once the Automatic Stay is in place, creditors cannot call your home, cell phone or place of work. Creditors may not send you mail in an attempt to collect on a debt.

Garnishment. Creditors cannot collect on judgments or pursue new collection actions. If the creditor has garnishmed your wages, the garnishment must stop immediately. While you are under bankruptcy protection, creditors may not lien against your property or levy your bank accounts.

Eviction. In most situations, the Automatic Stay stops eviction. Bankruptcy stops eviction in almost every case, but not if your landlord has already obtained a writ of possession.

The Automatic Stay Lets You Breathe Easy Again

When you’re facing legal action and time is running short, it’s not always easy to make the best decisions. Because the Automatic Stay immediately stops all creditor activity, you can catch your breath and think things through.

In short, the Automatic Stay buys you some peace of mind by immediately ceasing all collection efforts and creditor harassment. If a creditor, creditor’s attorney, or collection agent violates the Automatic Stay, then they run the risk of sanction by the Bankruptcy Court. Penalties for violating the Automatic Stay include monetary damages and attorney’s fees.

An experienced bankruptcy lawyer can explain to you how the Automatic Stay will work in your case. Get your creditors off your back. Give Lee Legal a call at (202) 448-5136.

Bankruptcy Solves Problems

Bankruptcy often results after a life-altering event: unemployment, illness, family hardship, divorce. These times in our lives are extremely stressful. Bankruptcy could help you to extricate yourself from otherwise intractable circumstances.

Whether you’re facing foreclosure, paying an unaffordable garnishment, getting sued by creditors, or just seeking to improve your credit profile, bankruptcy solves many different types of problems. This is the top reason that people file bankruptcy. The automatic stay and the bankruptcy discharge are powerful legal tools that solve problems.

Bankruptcy Reduces Stress

Calls and correspondence from debt collectors can develop into a major problem. Creditors will call you at home and at work. And with the recent rise of skip-tracing, they will also call your family, friends, neighbors, and colleagues. Creditors generally relentlessly pursue payment despite specific financial hardship or circumstance.

Filing bankruptcy puts an immediate stop to creditor calls and correspondence, no excuses, no muss, no fuss. If a creditor contacts you while you are in bankruptcy, then that creditor has violated an order of the court. We will sue that creditor for damages and attorneys fees.

Taking a proactive approach to solving your financial problems will be a big relief. From the moment you file bankruptcy, your creditors must cease all attempts to collect on debts. All repossession, garnishment, and foreclosure efforts must cease immediately. All lawsuits are halted, or stayed. The very act of filing bankruptcy can relieve you from an enormous amount of stress.

Bankruptcy Gives you a Fresh Start

Some debts, like student loans and child support, cannot be eliminated by a Chapter 7. Some people make too much money to qualify for a Chapter 7 bankruptcy and must instead file a Chapter 13 and submit a repayment plan. Whatever form of bankruptcy you file, the fundamental goal is to restructure your finances and to free you from debt. Filing bankruptcy can be a difficult decision, but the benefits often outweigh any potential downside.

If you are considering filing bankruptcy in Washington, D.C. or Maryland or Virginia, call Lee Legal at (202) 448-5136 to schedule a free consultation.

How Debt Settlement Companies Work

First, the debt settlement company gets paid. They typically charge several hundred dollars as an initial “administrative fee” to set up your account. In addition, they will charge you a monthly service fee. The company requires a monthly payment, however instead of sending this money to your creditors, the company keeps your money in trust until there is enough to pay a creditor either the entire balance of your debt, or some agreed-upon reduced amount.

Unfortunately, this process can take several years to complete, depending on the number and amount of debts you owe. In the meantime, your creditors can sue you, garnish your wages, and continue to harass you. In addition, during the entire “debt settlement” process, interest and fees will continue to accrue. It is not very surprising that so few of these programs succeed.

The Washington Post recently reported that debt settlement scams are on the rise. Advocacy groups say the industry’s advance-fee model and lack of regulation have allowed unscrupulous firms to take advantage of desperate customers. Bankruptcy is very frequently a much better option.

A Debt Settlement Lawyer Who Works for You

People do not choose to put themselves into unfortunate financial situations, but debt settlement companies often make bad situations worse. These companies collect huge fees. They increase your debt. They damage your credit score. And in the end, they typically fail.

Debt settlement through an attorney is much different. And bankruptcy offers immediate protection from collection efforts, ends garnishments and lawsuits. Both debt settlement and bankruptcy allow you to get your finances back on track almost immediately.

If you are considering debt settlement or bankruptcy, schedule a free consultation with a reputable debt settlement attorney. Debt settlement companies are rip-offs, but your attorney works for you — not a corporate bottom line. Licensed in Washington, D.C. and Virginia, attorney Brian Lee can help you assess your financial options.

In fact, certain recurring circumstances lead people to file bankruptcy. Here are the top ten reasons for bankruptcy.

1. Debt

The primary goal of bankruptcy is to eliminate debt. In bankruptcy terminology this is known as a “discharge” of debts. By the time your bankruptcy case is closed, all or most of your debt should be eliminated.

2. Foreclosure

If your mortgage company has sent you a notice of foreclosure sale, you must act quickly. But bankruptcy stops foreclosure. If you want to keep your property, we will work together to find a repayment plan that works for you. If you are ready to let the property go, bankruptcy will discharge a possible deficiency judgment.

3. Job Loss

Even in a good economy, unemployment remains a common reason to file bankruptcy. Loss of income is often devastating. Instead of exhausting your savings or taking on more debt, consider bankruptcy as an option before you start a new position.

4. Lawsuit

Bankruptcy may be a good choice if you are facing a lawsuit for high damages. Bankruptcy effectively ends most lawsuits. And you could save a ton of money on legal fees. Consider bankruptcy if you are expecting a judgment and act before the judgment is entered.

5. Garnishment

Bankruptcy stops wage garnishment, and bankruptcy stops bank account attachment. Garnishment can make it impossible to pay your monthly bills. Bankruptcy immediately ceases garnishment. Either address the creditor on a more level playing field through Chapter 13, or discharge the creditor in Chapter 7.

6. Repossession

Car companies are quicker to repossess than mortgage companies are to foreclose. If you have missed payments on a vehicle, bankruptcy stops repossession. You can choose to repay the arrearage over time, or surrender the car in an orderly way. If you are facing repossession, you must act quickly to avoid excessive towing and storage fees, or worse, auction of the vehicle.

7. Debt Collection

Collection agents can be rude and relentless. Now, with the advent of skip-tracing, no one can evade debt collection. Creditors will call you incessantly at work, at home, and on your cell phone. Bankruptcy immediately stops debt collection.

8. Medical Bills

An unforeseen illness or accident can feel ruinous. Monthly payments often fall to the wayside when a family member faces the choice of either paying a creditor or health care. Bankruptcy may actually improve your credit if you owe large medical bills.

9. Student Loans

In most cases, student loans cannot be eliminated by bankrupcty. Student loan companies will try to establish with you the highest monthly payment possible. Bankruptcy can not only help you consolidate your student loan debt, but allow you to make a reasonable monthly student loan payment based on your disposable income.

10. Creditor Challenges

Sometimes creditors attempt collection on accounts that have already been paid. Creditors also often seek payment amounts higher than what you actually owe. Bankruptcy allows you to challenge miscalculated and fraudulent claims. And bankruptcy forces a creditor to prove via admissible evidence what you actually owe. Bankruptcy actually offers an extremely robust forum in which to challenge creditor claims.

If You are Facing One of the Top Ten Reasons for Bankruptcy

Do any of the reasons apply to you? Do you have a completely different reason? If you are considering filing bankruptcy, call an experienced bankruptcy attorney to discuss your options.

If at all possible, you should steer clear of payday loans to avoid headaches, fees, and a negative credit history. If you haven’t seen John Oliver’s take on payday loans, it’s worth a look. As he sees it, payday lenders are a “recycling symbol for human misery.”

What are Payday Loans?

Payday loans are short-term loans structured to be repaid before or on your next payday, usually within two weeks. Payday loans have become extremely popular over the past few years. Even big lender Wells Fargo has added payday loans.

The loans don’t have installment payments so credit checks and other traditional forms of verification are not needed. This makes them extremely popular for those those who need cash but can’t obtain traditional forms of financing. Payday loans, however, come with massive fees. The fees are based on a percentage of the amount borrowed. Many states cap this amount, but some do not. In addition, many states cap the amount that can be borrowed as well, and some even cap the number of times a person can have a payday loan in a given period.

The loans are given to people based on a secured account with a bank. Money is quickly deposited into a person’s bank account, but the lender now has access to the funds and can repay the loan based on information that was given about this account. Not all lenders do this, but most will secure the loan with a bank account and either have the person give them a blank check, or wiring information to be able to debit the account.

Payday loans are intended to be paid back in full when they are due. If not, there are more fees to refinance the loan again, but this time with no additional cash given. Loan fees often double, triple and even quadruple during the life of payday loans. This can go on for quite some time and put people into further debt. Most payday borrowers end up defaulting because the fees associated with paying them back skyrocket.

What Happens If I Default on My Payday Loans?

As with any loan, defaulting on it can be serious business and could complicate matters even further. There is no easy way to get out of it: if you signed on the dotted line, then you are legally obligated to repay the loan on time. Many negative consequences could result from the failure to repay a payday loan on time:

• Bank Fees: Given the fact that the loan is secured with a bank account, the lender will keep trying to collect on the loan from the given bank information even if there is no money in there. They will do this regularly until they get their money. Although this doesn’t seem like a big deal because they can’t get the money if it’s not there, the bank may charge a fee every time they try to collect and the funds are not available. If they are depositing the check, the borrower is going to get hit with a bank fee every time they deposit.
• Garnishment of Wages: Not all states allow this, but Virginia, Maryland and the District of Columbia do allow garnishments. Up to 25% of your post-deduction wages will be automatically deducted from your paycheck and sent to the payday lender. Not fun.
• Phone Calls: Although this may not be a big deal for some, this can be quite annoying. Lenders will hire agencies and other collecting services to continually call and follow-up on money owed and they can be relentless.
• Legal Action: Payday loan lenders routinely sue defaulted borrowers. The borrower will not only owe the payday loan, with interest and fees, but also additional fees for court costs and attorneys fees.

Your Options If You Are Stuck in a Payday Loans Debt Cycle

On June 2, 2016, the Consumer Financial Protection Bureau recommended rule changes aimed at ending payday debt traps. The changes would require lenders to take steps to make sure consumers have the ability to repay their loans. The CFPB would also cut off repeated debit attempts that just rack up consumer fees. Those rule changes have not yet taken effect and will not help you now if you’re struggling to repay your payday loans.

The truth is that payday lenders are loan sharks who know that most of their customers take out loans they cannot afford. About four out of five payday loan customers wind up re-borrowing their loans within a month. And 25 percent of customers re-borrow more than eight times, all the while incurring new fees.

Payday loans used to generate a lot of political debate, but that seems to have fizzled. And the payday lenders won. They’re still able to charge exorbitant rates, and more and more people fall victim to their marketing every day. The key argument is that payday loans prey on low-income folks and basically put them into an inescapable cycle of debt. A Chapter 7 bankruptcy may be good option for you if you have defaulted on your payday loans and are unable to pay them.