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Are you being sued by a Debt Buyer?

If you are reading this article then you probably live in Virginia and you probably just received a Warrant in Debt. The Warrant in Debt was either just mailed to you or you found it on your door. Upon taking a closer look at the Warrant you notice that the Plaintiff, the company that is taking you to court, is named Portfolio Recovery, LVNV Funding, Midland or perhaps CACH, LLC. Right now your head may be spinning a bit as you try to figure out who in the world these guys are and why are they suing you. Allow me to shed some light.

Who is Portfolio Recovery, LVNV Funding, Midland, etc? They are simply companies that buy consumer debts from the original creditors like Bank of America, a.k.a FIA Card Services (the branch of Bank of America that handles their credit card accounts), Capital One, Discover and other credit card companies. They buy these accounts for a fraction of what is owed on the original account after the accounts have been charged off and then they sue the person that allegedly owes the money. It is purely a volume business. They buy tens of thousands of accounts each year, file lawsuits on just about all of them, and while they certainly do not collect on all the accounts they purchased, they still make a ton of money because they purchase so many accounts.

So, why is Midland, Portfolio Recovery, LVNV, etc. suing you? Well, because they want to make money of course and they are counting on you to make their job very easy. These “debt buyers” –as they are commonly referred- prey on the fact that at some point, in the vast majority of cases, you did in fact owe some money to one of the big banks/credit card companies from whom they bought these accounts. They know that most people want to do the right thing and pay what they owe if they have the means to do so. Right of the bat they have a psychological edge on you. Again, most people want to pay back what they owe if they have the financial means to do so. Second, statistically speaking, they know that about 80% of people who get a Warrant in Debt will not bother showing up in court. They also know that among the minority of people that do show up in court will not be retain the services of an attorney. That means an easy judgment –as in victory- for them followed by an easy wage garnishment once they figure out where your work. Bottom line, they are counting on your incorrect assumption that they are entitled to your money. They are counting on the fact that you will not pick up the phone, hire an attorney, and fight back!

Is there any way to defend yourself from a lawsuit by Midland, Portfolio, LVNV or some of these other “debt buyers”? Yes! You can hire an attorney like myself who handles these kind of lawsuits to defend you in court. Notice that I did not say anything about filing for bankruptcy! While I am primarily a bankruptcy lawyer, I firmly believe in the notion of using bankruptcy as a last resort. As far as what type of results can you expect if you hire me do defend you in court? Well, why I certainly cannot make any guarantees, and while every case is different, if the past is an indicator, then it will not surprise me if I can dispose of your lawsuit without you having to fork over a penny to the company that sued you. To be clear, I am talking about the situation where the plaintiff is in fact a “debt buyer” as opposed to the original creditor.

How much will it cost me to hire you to defend me in court? While each case is different, all I can say is that the cost will be a whole lot less than what you are being sued for. A flat fee arrangement will be worked out from the get go.


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Foreclosure Defense or Foreclosure Delay?|Foreclosure Defense in Virginia

Wondering what the state of “foreclosure defense” in Virginia is these days? Wondering what your chances of success are of stopping a foreclosure here in Virginia without filing for bankruptcy? Can you possibly keep the house without paying the mortgage in Virginia? Well, a recent ruling by the federal court here in Alexandria, Virginia certainly seems to shed some light.

Here is what the United States District Court For The Eastern District of Virginia, Alexandria Division, had to say in a opinion handed down on April 10, 2012 in the final paragraph of the court’s ruling: “….Plaintiffs’ counsel’s experience in other foreclosure-avoidance actions should have made clear that the claims and theories advanced here and in those cases lack merit. In this district alone, all of the many foreclosure-avoidance actions plaintiffs counsel has initiated have been voluntarily dismissed, remanded, or ultimately unsuccessful on the merits. In the Fourth Circuit, plaintiff’s counsel has fared no better; to the contrary, the Fourth Circuit has never concluded that any of his foreclosure-avoidance theories was meritorious. It is therefore unsurprising that plaintiffs’ counsel has been specifically and repeatedly admonished for his practice of advancing meritless claim in foreclosure-avoidance actions, and yet, as this case shows, he continues to assert substantially similar claims based on many of the same arguments.”

The Court then concluded the opinion by essentially stating that in a show of mercy they would spare the attorney and not sanction him! As in not order him to pay thousands of dollars for bringing a case before the court that lacked any merit or validity. Let me say that again, the Federal Court in Alexandria, Virginia not only stated that all legal arguments made by the homeowners against the bank in an effort to stop the bank from foreclosing were not valid, but the arguments presented were so lacking in merit, where so contrary to Virginia law, that the lawyer representing the homeowner ought to be punished for wasting the bank’s and the court’s time!

So, while “produce the note” or “show me the note” may get you somewhere in Florida, here in the Commonwealth of Virginia, you better think again.  Same goes for that whole notion of attacking MERS and their right to foreclose or claiming that the substitute trustee on the Deed of Trust may not foreclose. As the Court stated: “Virginia does not recognize a cause of action for wrongful foreclosure.”

Bottom line: before you hand over one-half of your mortgage payment each month to a law firm specializing in “foreclosure defense” (which is typically how these law firm collect their legal fees) understand that what you are buying is months of delay while the matter is litigated in court.  At the end of the day, there is no such thing as a free lunch and there is certainly no such thing as a free house. This is not Massachusetts, Florida or New York where these arguments may fly. This is the Commonwealth of Virginia and there is a reason that it has a reputation for being conservative and creditor friendly.

Besides, if delay of the inevitable is all you are looking for, if merely buying time before the foreclosure ensues is your objective, then a chapter 13 bankruptcy can do that for you at a fraction of the cost.


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3 Ways to Stop a Garnishment in Virginia WITHOUT filing bankruptcy (Part II)

Were you just informed by your employer that you are facing a garnishment of your wages? Has your bank just put you on notice that your bank account is frozen due to a garnishment summon that they have just received? Have you reviewed the garnishment summons and concluded that you have never heard of the creditor that is requesting the garnishment? Or, if you have heard of this creditor, you certainly do not recall being sued by them? Don’t despair. You may have an option available to you other than bankruptcy!

Before anyone can garnish your wages or bank account they have to sue you first (unless that person is the IRS. They can skip this step). And if you live in Virginia then that lawsuit will most commonly arrive by way of a Warrant in Debt.  Please see my other article specifically on the topic of Warrant in Debts in Virginia titled What is a Warrant in Debt?

The key thing to remember is that the party suing you has to ensure that you are properly served with the lawsuit. And properly served either means that a process server walks up to you and says “are you John Doe?” and then hands you the Warrant in Debt (Yup, just like on Law & Order). Or, a more common way to properly serve someone with a lawsuit in Virginia is to simply post the Warrant in Debt on the front door of the home where that person resides. That last part of the previous sentence is important. The person taking you to court has to make sure that you are served with the lawsuit at your current place of residence, and not where you used to live!

So what seems to occur quite often or at least often enough? The person being sued no longer lives at the address where they were served with the Warrant in Debt. Since they do not know about the lawsuit the creditor simply shows up in court and gets a default judgment.  Once the creditor has obtained a judgment, they can begin garnishing you. And the person does not realize what has happened until such time as they are being garnished.

So, what have I done for several clients in this instance? I file a Motion to Reopen Case and to Set Aside Default Judgment with the court where the garnishment is pending and show up for the Hearing on my motion. I then have my client testify that the reason that they never responded to the original lawsuit –that would be the Warrant in Debt- that lead to the judgment is because they have not lived at the address where they were served for months or years. I present evidence to back up my story. As long as the judge is convinced of the facts he will then enter an Order making the previous default judgment void. And since there is no longer any judgment, then the garnishment has to be set aside as well. Meaning, the judgment is made to disappear and the garnishment is quashed.

What’s the downside? Well, under these circumstances the judge will in essence give the creditor a second bite at the apple. Meaning, instead of the lawsuit simply going away, the judge will “make you” answer the lawsuit. But now, instead of the creditor simply getting a judgment against you behind your back and without you knowing what is going on, this time you will have your day in court. You will be able to defend yourself against the lawsuit.


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3 Ways to Stop a Garnishment in Virginia WITHOUT Filing for Bankruptcy!

Did you just receive a garnishment summons? Wondering how you might be able to deal with a bank or wage garnishment without having to resort to filing for bankruptcy? Sur

Did you just receive a garnishment summons in Virginia? Wondering how you might be able to deal with a bank or wage garnishment without having to resort to filing for bankruptcy? Surprised that a bankruptcy lawyer is offering you advice about dealing with Virginia garnishment laws without filing for bankruptcy? Don’t be. I like my clients to be as informed as possible and to have all options on the table. Besides, “there is more than one way to skin a cat” (kind of a disgusting saying don’t you think?).

So, here it is. Here is one way that you can deal with a garnishment summons in Virginia without bankruptcy. Notice I said “deal” with a garnishment, as opposed to necessarily “stop” a garnishment.

File a Homestead Deed- After the garnishment is already underway you will be served with the garnishment summons. Note that there will be no advance warning. You will either notice some bounced checks if it is a bank garnishment or you will get a call from HR if it is a wage garnishment. On the garnishment summons, in the upper right hand corner, will appear a hearing date and time, normally referred to as the “return date.” On a wage garnishment that date may be as far out as six months from the time the garnishment is issued by the court.

At that point you can prepare this relatively simple document called a homestead deed, take it to the land records of the county where the garnishment is pending, file it there and then, on the “return date” on your garnishment advise the judge that you have filed a homestead deed. Do that correctly, and you should be able to get back all the money that has been garnished so far and take out of your paycheck or that was sitting in you bank account.

So, what is the problem with using a homestead deed in Virginia to deal with a garnishment? Why have you not heard more about it? Well, for starters, unlike a bankruptcy, it does not actually stop a garnishment. To the contrary, the garnishment will be in place for months typically before you get before the judge and get your money back. Meanwhile you have to live with your bank account being frozen and checks bouncing or your wages being deducted. Can you go for six months while your paycheck is slashed by 25%?!

Second problem with the homestead deed is that it offers a “band aid approach” to treating a wound, or as a colleague of mine is fond of saying…it is just lazy lawyering. Why? Because in the great state of Virginia, the homestead deed, your “get out of jail card” can protect only up to $5,000 of cash or garnished funds during the entire course of your life time. Meaning, if $3,000 has been garnished from your wages during the past 6 months and you file a homestead deed and present it at the “return date” you may have won a battle, but you will lose the war. Why? Because all the creditor has to do is issue another wage garnishment the very next day and start the garnishment all over again. Eventually, that $5,000 protection that you get will be exhausted. Again, that’s 5K of protection for life. Those over the age of 65 or disabled veterans in fact get $10,000 over the course of their lifetime.

Finally, the last major disadvantage to using up your entire homestead deed is that eventually you will probably have no choice but to file for bankruptcy and some of your assets my now be exposed. Most folks need at least some of that $5,000 under the homestead deed when they file their bankruptcy case.

Having said all that, if you have waited until the day before your “return date” to address your garnishment, and if there is no time to file a bankruptcy, or you simply do not want to file for bankruptcy, a homestead deed may be just what the doctor ordered!

In my next blog article I will address the second method for dealing with Virginia garnishment laws without filing for bankruptcy.

prised that a bankruptcy lawyer is offering you advice about dealing with garnishments without filing for bankruptcy? Don’t be. I like my clients to be as informed as possible and to have all options on the table. Besides, “there is more than one way to skin a cat” (kind of a disgusting saying don’t you think?).

So, here it is. Here is one way that you can deal with a garnishment summons without bankruptcy. Notice I said “deal” with a garnishment, as opposed to necessarily “stop” a garnishment.

File a Homestead Deed- After the garnishment is already underway you will be served with the garnishment summons. Note that there will be no advance warning. You will either notice some bounced checks if it is a bank garnishment or you will get a call from HR if it is a wage garnishment. On the garnishment summons, in the upper right hand corner, will appear a hearing date and time, normally referred to as the “return date.” On a wage garnishment that date may be as far out as six months from the time the garnishment is issued by the court.

At that point you can prepare this relatively simple document called a homestead deed, take it to the land records of the county where the garnishment is pending, file it there and then, on the “return date” on your garnishment advise the judge that you have filed a homestead deed. Do that correctly, and you should be able to get back all the money that has been garnished so far and take out of your paycheck or that was sitting in you bank account.

So, what is the problem with using a homestead deed in Virginia to deal with a garnishment? Why have you not heard more about it? Well, for starters, unlike a bankruptcy, it does not actually stop a garnishment. To the contrary, the garnishment will be in place for months typically before you get before the judge and get your money back. Meanwhile you have to live with your bank account being frozen and checks bouncing or your wages being deducted. Can you go for six months while your paycheck is slashed by 25%?!

Second problem with the homestead deed is that it offers a “band aid approach” to treating a wound, or as a colleague of mine is fond of saying…it is just lazy lawyering. Why? Because in the great state of Virginia, the homestead deed, your “get out of jail card” can protect only up to $5,000 of cash or garnished funds during the entire course of your life time. Meaning, if $3,000 has been garnished from your wages during the past 6 months and you file a homestead deed and present it at the “return date” you may have won a battle, but you will lose the war. Why? Because all the creditor has to do is issue another wage garnishment the very next day and start the garnishment all over again. Eventually, that $5,000 protection that you get will be exhausted. Again, that’s 5K of protection for life. Those over the age of 65 or disabled veterans in fact get $10,000 over the course of their lifetime.

Finally, the last major disadvantage to using up your entire homestead deed is that eventually you will probably have no choice but to file for bankruptcy and some of your assets my now be exposed. Most folks need at least some of that $5,000 under the homestead deed when they file their bankruptcy case.

Having said all that, if you have waited until the day before your “return date” to address your garnishment, and if there is no time to file a bankruptcy, or you simply do not want to file for bankruptcy, a homestead deed may be just what the doctor ordered!

In my next blog article I will address the second method for dealing with a garnishment without filing for bankruptcy.


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How does chapter 13 Bankruptcy work in Virginia?

I really should have titled this blog “How does chapter 13 bankruptcy work in Alexandria, Virginia.” Why? Because in each and every jurisdiction things are done just a bit differently than in other parts of the country, or even other parts of the state for that matter. Drawing inspiration from David Letterman and his famous “top 10 list” the following are the top 10 issues to keep in mind if you are thinking about filing a chapter 13 bankruptcy case in Alexandria, Virginia:

  1. There is only one chapter 13 bankruptcy trustee in Alexandria, Virginia and his name is Thomas (goes by Tom) Gorman. If you are shopping around for a chapter 13 bankruptcy attorney in Northern, Virginia, your attorney should certainly know who he is. And yes, he is a pretty nice guy, and has a great sense of humor to boot.
  2. The meeting of the creditors will take place in Old Town Alexandria and it will always be on a Tuesday. For most people, this will be your only “court appearance.” It is at this hearing that you will be meeting with the trustee, Thomas Gorman. Unlike other places, if no objections are filed to your proposed plan, then there will be no need for you to appear at the Confirmation Hearing.
  3. Alexandria is unique in that the judges have decided that in chapter 13 cases, the post filing course, the debtor education course, needs to be taken in person (instead of online) on the day of the meeting of the creditors. The class will begin at 9:45am and is designed to answer whatever general questions you may have about the chapter 13 process.
  4. Unlike Washington, DC for instance, once you file your chapter 13 case you will be responsible for making the first several monthly payments to the chapter 13 trustee before the court will issue a Wage Order commanding your employer to begin deducting these payments from your pay check. The court will issue this Wage Order once your plan has been confirmed. In DC that Wage Order will be issued within a matter of days of the filing of your case.
  5. Unless you are filing a “100% plan,” the chapter 13 trustee will expect you to produce your tax returns each to him each and every year while you are in bankruptcy and will expected you to turn over to him any tax refunds you get that are in excess of $250.00! Of course, your experienced chapter 13 bankruptcy attorney can tell you how to fairly easily avoid having to “donate” any of this money over to the trustee.
  6. In Alexandria things are set up so that you will continue to make your normal mortgage and car payments once you file your case, while the trustee will use the money you pay him each month to catch you up on your mortgage/car arrearage, if any. In other parts of the country, the trustee will make all payments on your behalf. Basically, the courts there do not trust you to directly make your own mortgage/car payments while in bankruptcy.
  7. Some parts of the country are extremely tough about missing your chapter 13 payments. As in, miss one payment to the trustee and your case gets promptly dismissed. When they say no excuses, they mean it! In Alexandria, I will tell you from experience that the trustee tends to be understandable and reasonable.  You will usually get a second or even a third bite at the apple before your case gets dismissed for lack of payments to him.
  8. The two judges that we have in Alexandria are not here to “rubber-stamp” the objections of the chapter 13 trustee. Meaning, if the trustee objects, and you insist on having the matter heard before the judge, then as long as the facts and/or law are on your side, there is no reason to doubt that the judge will rule in your favor.
  9. If you are thinking about trying to dispose of a judgment lien on your home, or a lien strip, an appraisal will certainly be required by the judges.
  10. I cannot think of # 10 at this time.