wage garnishment procedure?

scottinalaska · #1 10-08-2005, 01:41 PM

Revisiting a previous post from a few months ago.
A buddy, Troy, is way upside down on his truck payments - he got a 40K loan for a 30K truck because of trade in, etc.
The couple will soon be taking in the wife's sister who is pregnant and in crisis. Payments, as you can imagine, are horrendous for the young couple and he is considering turning the truck back in and taking a black mark on the old credit report.
Of course, the bank/loan institution(does the institution make a difference?) will sell the truck and likely send Troy the bill for the remainder due.
ASSETS: This couple rents and owns nothing of value but an old Subaru. Small bank account of less than 1K and he works for a small hospital. She stays at home and raises their two preschoolers.
It appears the only financial danger to their family would be a wage garnishment possibility. He knows the payroll lady directly and can have some influence. What steps to educating would he need to do for her? OR is the court judgement inevitable and payroll will have no choice. OR do I need to advise him on writing some VOD letters?
Obviously, I would handle it differently because of what I know(for one, not getting loan so far above the car's worth!), but Troy is looking just to stabilize the family's finances before his sister-in-law's arrival.
Scottinalaska

iamfreeru2 · #2 10-08-2005, 07:37 PM

Scott, what will happen when the truck is turned back in is that the secured loan now becomes unsecured because the property is once again the bank's. Your friend can wait to get the bill and let it go to a debt collector. Once this happens, because more than likely the debt collector has purchased the debt, you friend can dispute under FDCPA and whether the DC has standing to collect. I would suggest getting Richard Cornforth's book "Beating up on debt collectors." The info has worked well for me with alleged unsecured claims.

There is another way that has worked for me as well regarding a commercial truck I leased and turned back in when I could no longer drive it, due to an injury. If you would like to know about that PM me and I will share with you.

Judge Roy Bean · #3 10-09-2005, 08:43 AM

Quote:

Originally Posted by scottinalaska

Revisiting a previous post from a few months ago.
A buddy, Troy, is way upside down on his truck payments - he got a 40K loan for a 30K truck because of trade in, etc....She stays at home and raises their two preschoolers.
It appears the only financial danger to their family would be a wage garnishment possibility....

Alaska allows wage garnishments but the first $602.50 per week is exempt for a sole provider. Federal law (working off memory here) limits it to 25% of the take-home (disposable) income. So if he brings home $1,000 per week the max they can take is $250, but if he only brings home $750 per week the most they can take is $147.50.

They don't always get the max. Circumstances like family situation can mean the judge may determine it isn't appropriate to garnish the maximum.

weishaupt1776 · #4 10-09-2005, 01:43 PM

what about arranging a "loan" and you garnishing his wages to the state max and then giving him "gifts" each week?

scottinalaska · #5 10-09-2005, 04:31 PM

WOW! Now that is creative, Weis! JRB, thanks for the research on that aspect. What a great idea. We'll get this whipped yet!

scott

weishaupt1776 · #6 10-09-2005, 05:48 PM

Thing is, is to have a solid paper trail

Can you document a large withdrawal which you loaned?

Can you access those funds safely in anpther place besides the bank?

You should put a lien on his house too

scottinalaska · #7 10-10-2005, 01:13 AM

He owns no home or land. Typical poor young couple with only one debt other than a credit card. Just bought a truck that doesn't work with kids, traded it in for a Tahoe, great for kids, but awful on budget. I will give him a 1000 dollar minivan while he saves up to PAY CASH next time.

As you can imagine, Weis, my bank account is rather sparse purposely! The wife isn't so sure about me (as in NO WAY) garnishing his paycheck, so I'll give him that option of finding someone to do this BEFORE he turns it in.

thanks for the thoughts,

scott

Judge Roy Bean · #8 10-10-2005, 10:05 AM

Quote:

Originally Posted by scottinalaska

He owns no home or land. Typical poor young couple with only one debt other than a credit card. Just bought a truck that doesn't work with kids, traded it in for a Tahoe, great for kids, but awful on budget. I will give him a 1000 dollar minivan while he saves up to PAY CASH next time.

As you can imagine, Weis, my bank account is rather sparse purposely! The wife isn't so sure about me (as in NO WAY) garnishing his paycheck, so I'll give him that option of finding someone to do this BEFORE he turns it in.

thanks for the thoughts,

scott

Forgot to mention something about garnishment - his employer cannot fire him for having ONE garnishment going on. A 2nd removes the federal protection from being fired.

scottinalaska · #9 10-10-2005, 10:53 AM

JRB,

HOw the heck does wage garnishment give the employer cause to fire someone? If he is still doing his job, it would seem foolish to let him go because of garnishment, but I guess maybe that is just a rule, that's all.

BUT, if ONE garnishment takes the max allowable by law, doesn't that mean the second potential garnisher must wait in line, perhaps for years, until the first garnishment has been fulfilled?
scott