Help Please...questions about how to correctly respond to summons to buy some time.

[my2girls]

Hi All,

Long story short we are going to try and hold on until December to qualify for the 7. We were served yesterday by our CU through an attorney. There are 2 charges since we held 2 accounts with them. The first is for a credit card owe about $6K the other is for a loan owe about $2500. They had several months of statements and attached documentation attached to the summons as well.

Here's my questions.

1. I've been reading when we respond on the very last day of course and ask for verification of debt or claim insufficient knowledge of the debt (which I think they've provided by including the statements) they could turn around and file a MSJ right away. Is that correct?

2. How do I buy the most time out of this process? Should I reply and try to enter into sometype of payment plan for the next 4 months to buy time?

3. We don't want to be garnished...wouldn't look good to our employers can we arrange a plan through the court without our paychecks being garnished?

4. If we get a MSJ right away will we be notified before they garnish or take $ from our bank account?

5. Accounts are in both of our names. Will they garnish both of us or one of us?

Thanks everyone.

[karm43]

Try to make agreement. Hopefully you will be able to afford it, until Dec. Do you own a house?

[drowning123]

The part I can answer is, yes, you'll be notified before garnishment takes place. I know I was, but the garnishment never happened because I filed for bk.

[my2girls]

Yes, we own our home and are current on our mortgage...why do you ask? Something else I should be parnoid about?!?!

[my2girls]

Try to make agreement. Hopefully you will be able to afford it, until Dec. Do you own a house?

Yes, we own our home and are current on our mortgage...why do you ask? Something else I should be parnoid about?!?!

[DesdemonaB]

Hi All,

Long story short we are going to try and hold on until December to qualify for the 7. We were served yesterday by our CU through an attorney. There are 2 charges since we held 2 accounts with them. The first is for a credit card owe about $6K the other is for a loan owe about $2500. They had several months of statements and attached documentation attached to the summons as well.

Here's my questions.

1. I've been reading when we respond on the very last day of course and ask for verification of debt or claim insufficient knowledge of the debt (which I think they've provided by including the statements) they could turn around and file a MSJ right away. Is that correct?

Timing is everything your response has to be to the court with 21 days as well as the law firm. IMHO a verification of debt wouldn’t work; most verification of debt requests work prior to a summons and on much older debt that has been bought and sold over time. (This is again is strictly my option)

2. How do I buy the most time out of this process? Should I reply and try to enter into sometype of payment plan for the next 4 months to buy time?

By all means reply, no reply = judgment.

3. We don't want to be garnished...wouldn't look good to our employers can we arrange a plan through the court without our paychecks being garnished?

You wouldn’t be garnished unless they are awarded a judgment – payment for judgment does not funnel through the courts any payment voluntary or not will be made directly to the plaintiff listed on the summons.

4. If we get a MSJ right away will we be notified before they garnish or take $ from our bank account?

Yes and No – the plaintiff must file wits of garnishments with the court that awarded the judgment. Once those are filed and signed they are mailed to your employer (payroll department), your bank or CU, and in the state of Michigan IRS. The state of Michigan allows for your state income tax refund to be seized for payment of consumer debt. Your employer must inform you and the plaintiff that they received the paperwork and they must inform you of the first pay period in which the garnishment will start. The bank has 21 days from receiving the WoG to remove non-exempt funds from the account(s). They usually garnish very quickly – they will garnish the account and send you the notice after they did it. The banks must hold that money for 21 days before sending it to the plaintiff. You should receive copies of the WoG also from the courts so you will not be completely in the dark. The banks work the fastest so pull all non-exempt funds from your accounts now. Pre-paid debt cards or good old hard cash till you are able to work out a settlement or file.

5. Accounts are in both of our names. Will they garnish both of us or one of us?

If you are both listed on the summons then yes they can. The bank can’t tell whose money is whose so they will take it all. Same with tax refund.

Thanks everyone.

Make sure you reply to the courts within that 21 days not just the plaintiff, keep all communication in writing and don't tip your hand about filing BK. Good luck with everything.

[catleg]

You could enter into a stipulated judgment with them, where you agree to make payments otherwise a judgment is automatically entered. This is usually not a great option but it will prevent wage garnishment as long as you make payments. Then when you file BK the state court action is suspended.

[jgcortese]

Great advice thank you.

[jacko]

People freak out on wage garnishments and end up paying more for agreed upon payments than a garnishment. If you factor in your exemption, the first $290 weekly earnings are exempt. So you may pay less via a garnishment which will stop other collectors from pursuing one or get in line for their turn.

[bcohen]

Yes, we own our home and are current on our mortgage...why do you ask? Something else I should be parnoid about?!?!

Yes. The fact that you have real estate titled in your name is (probably) the only reason they're coming after you so quick! If they get a judgement, then they can place a lien on the property--and the lien cannot be discharged/set aside in bankruptcy! So after you file, you could find yourself in a situation where although your personal liability for the debt is discharged, the credit union and/or its attorney has a lien on your house for the judgement amount which will have to be paid when you want clear title to sell or refinance.

[karm43]

I thought you could get th lein taken off

[catleg]

The lien can be removed if you have zero/negative equity, or your equity is entirely protected by bankruptcy exemptions.

[DesdemonaB]

People freak out on wage garnishments and end up paying more for agreed upon payments than a garnishment. If you factor in your exemption, the first $290 weekly earnings are exempt. So you may pay less via a garnishment which will stop other collectors from pursuing one or get in line for their turn.

I have to disagree, as someone who lives in Michigan as our OP does and was garnished, Michigan follows the federal law which allows up to 25% of your non-exempt wages. The month I was garnished I had over 700 taken from my monthly salary. The first WoG that was submitted to the court was for my bank account, thankfully I had closed the account prior to the WoG so they got nothing.

The second WoG was submitted for my state income tax refund, which BTW it was my responsibly to submit all garnish release paperwork to the state to release the refund. Found that out the hard way and had to wait over 6 weeks to get the refund released.

I couldn't live with over 700 taken out my pay a month, having what little savings I had in my bank account taken and losing my refund; I am sure I could have negotiate less if it wasn't for filing bk the month the garnishment started.

Now if the goal is to pay the debt back, and it's a joint account and the spouse is on the suit then doubling the garnishment can do that - the debt can be paid back in about 4 to 6 months.

This of course is just MHO.

[catleg]

I'll just add that DesdemonaB is right on the mark; plus, lawsuits originating from original creditors are extremely tough to fight because they have all the paperwork. You can delay the judgment but ultimately the court is going to find in their favor. It's a waste of judicial resources to try these cases so the courts do everything in their power to expedite them. You are correct in that your answer will most likely be followed by a MSJ. You will then have to answer all over again why the MSJ should not be granted. If you can cite a legitimate dispute over balances that might do it. But you have to have a built up paper trail already, just asserting I don't owe it won't be enough. In California, debtors have caught a break in that the filing fee for a MSJ has been increased to several hundred dollars, ultimately if collection is successful this is collected from the debtor but as we know many many of these judgments just end up being avoided in bankruptcy. It might be worth a shot to notify the attorney that you plan to file for BK in December; it is unlikely they will be any more aggressive in collecting and it might give them second thoughts as the money could be stripped away from them as a preferential payment. You might get off settling for $599 and some kind of stipulated judgment that you will owe the rest if you don't file BK by such and such a date. It all depends on the creditor and the attorney. Credit unions are tough because the losses are spread across the other members, which could be your co-workers, etc.

[my2girls]

Wow! Thanks for everyone's insight. A lot to consider. I'll keep you posted.