Articles Posted in Garnishment and Repossession

Garnishment and Repossession are usually the final result of debt collection efforts.  Bankruptcy can stop both actions and we answer how in this category on our blog. Your bank account can be seized, your tax refund offset, your pay check hit for up to 25% – just to name a ways of debt collection. For most garnishments, a lawsuit must happen first. The creditor, or their attorney, or a debt collector files a lawsuit against you for the debt you owe. You are suppose to be served papers so that you have the option to go to court to defend yourself, but for one reason or another, many people don’t actually get the papers they should receive. If this has happened to you, let your attorney know. If the entity suing you wins the case, they receive a Judgment against you. This will allow them to then serve a Writ of Garnishment against you at your place of employment. This instructs your payroll department on how much money to withhold from your check and send to them in order to repay this debt.  Although garnishment and repossession are different, they can both occur in regards to the same debt. Repossession is when the collateral for your loan (such as a car loan, furniture note, etc) is taken back by the creditor of your loan because you have not paid according to the loan agreement. The creditor can then resell the property and if there is money still owed on the debt, sue you for the difference and that can end up being a garnishment of your pay check.

replevin-steps-300x167How can I stop an Order of Replevin? If someone has received an Order of Replevin, (a legal procedure used to recover property) it probably is for property used as collateral on a loan or being purchased through a loan agreement by that person.  The lien holder desires to repossess the property (car, furniture, mobile home, shed, trailer, equipment, etc) and has filed a lawsuit and received an Order of Replevin against the debtor because the debtor refuses to surrender the property voluntarily.

The best way to stop an Order of Replevin is to not let it get to the stage of the Order being issued. You need to address things once the lawsuit has been filed against you by the person/company seeking the Replevin – stopping an order from being issued in the first place. This lawsuit is filed and called a “Writ of Replevin”. When you receive notice of this lawsuit, respond! If you fail to do anything, an Order of Replevin will be issued to the person/company seeking it. You should have received a Replevin Summons (Notice to Appear in Court) and been given 20 days to respond to the lawsuit to fight it. If you fail to respond, the person/company will file for a default judgment.  After the default (or final hearing), the judge will grant the final judgment (Order of Replevin).

Speak with an attorney. You can stop a Writ of Replevin by fighting the lawsuit itself or, if the debt is legitimate and you are behind without the ability to catch up, you can file a Chapter 7 or Chapter 13 Bankruptcy case.  The bankruptcy case will stop the Replevin action in it’s tracks. Depending upon which type of bankruptcy you file, you will either retain and pay under new terms for the property or you will surrender the property at a later date, established through the bankruptcy court process.

Definition of ReplevinRepossession vs Replevin – what is the difference? Click here for definition of Repossession. A Replevin is basically the repossession of collateral (ie: vehicle, furniture, etc) that could not be done without breaching the peace (ie: car locked in garage, furniture locked in house, etc) so the creditor seeks help from the court and this is called a Replevin Order or Writ of Replevin. With a replevin lawsuit, the court provides the creditor an order from the court requiring you to give back the collateral to the creditor. If you do not follow the court order, you will be subject to penalties.

Unlike repossession, a replevin entitles you to some due process before the creditor can take the collateral (property) from you.  This means you must receive written notice of the creditor’s intent to get a replevin order, you have an opportunity for a hearing, you will receive written notice of the time, date, and location of the hearing, and you have the right to dispute and/or respond to the complaint.  The time to respond and/or request a hearing varies by state, but it is typically short.

A replevin can apply to different situations, including a circumstance of where two parties both have rights to the possession of property, but one party might have more rights to that property than the other party. It can also apply to situations where property that has been lawfully withheld but should have been released later to a person, but was not released.

MSDefinition of Statute of Limitations Statutes of Limitations on Civil Matters – MS Code § 15-1 

Of course this 2013 MS Code Title 15 – Limitations of Actions and Prevention of Frauds § 15-1 covers more than just civil statutes, but for the purpose of this discussion, we will focus only on civil statutes, and even more specifically, collection of debt and judgments.   So first of all, what do we mean by civil statute of limitation? The definition is a statute prescribing a period of limitation for the bringing of certain kinds of legal action. In other words, this law sets the maximum amount of time that a party has to initiate legal proceedings against another party they have a dispute with and the time starts from the date of an alleged offense – whether criminal or civil.

Maybe you’ve had a car accident and it’s been a while or you have an old credit card debt, hospital bill, or other issue that you thought was long gone, but you’ve been served papers regarding a new or updated lawsuit. Hasn’t enough time passed? How are they still suing you over this issue?   Collection of Debt on Account is covered under Mississippi Code 15-1-29 and states a 3 year limit.   A Judgement (a lawsuit that was filed against you and was ruled in favor of the company/person that filed against you) is covered under Mississippi Code 15-1-43 and states a 7 year period.  The courts have these limitations in order to create as much fairness and predictability as possible. You have a certain amount of time for legal action to be taken against you and it guarantees that you don’t have unfinished legal matters hanging over your head indefinitely. There are deadlines and all parties must take action accordingly or take no action at all.

Stop RepossessionHow late can I be before repossession will happen?

We get asked this question a lot. I mean A LOT. There is no law that states your property cannot be repossessed unless you are a certain amount of time behind. You can be 1 day behind or 4 months behind. The lender is the one that decides when to take that action and they can take that action the moment you fail to fulfill the loan agreement you have with them.  Different lenders have different policies and procedures.  Know what your lender’s policies and procedures are regarding repossession now.  Don’t wait to know what will happen because it more than likely will catch you by surprise. Hopefully you will never need to know their process and procedure for this – but the saying “knowledge is power” is true.

Most repos occur after two+ months of no payment, but there is NO LAW dictating a set time frame in MS.

Many Americans are asking lately “What if I can’t pay my car loan?” First of all, you’re not alone in the struggle. If you’ve missed car payment or two recently – or worry you might miss one soon – you have options. Typically, missing a car payment will damage your credit score or even lead to your lender repossessing your vehicle. However, most lenders have some type of financial hardship program if you ask for help.  You do have to ask though. And ask ahead of missing a payment, if at all possible.  The worst thing you can do is to ignore the situation and hope it’ll work out on its own in time.  Here’s a look at some options & resources that might help you deal with your car payment.

First, see what assistance your lender has to offer

Find out what kind of programs your bank, credit union or other auto loan lender has available.  Also, get familiar with Mississippi Repossession Laws to know what can and cannot be done. Most of the automakers no longer advertise their payment relief programs. If you are facing missing a payment due to a job loss (from the pandemic or whatever other reason), the best thing to do is to contact your lender. Explain your situation, and hopefully they may be able to offer some short term assistance like a payment deferral, a partial payment option or a lease extension.

Mississippi Repossession Law allows “self-help” repossession. It states that your possessions can be repossessed under the following conditions:

  • You signed an agreement and used the property as collateral for the loan.
  • You failed to honor the terms of the loan agreement (note: the property may be put up for repossession immediately).

checkYou have just learned that one of your creditors is starting to take money out of your paycheck or even your bank account. This is called a garnishment. A garnishment is a legal procedure where a portion of your paycheck is taken for the payment of a debt. Garnishments are usually by a creditor that has a court order. Some government agencies can garnish your paycheck without a court order, for debts such as back taxes and student loans. Federal laws limit the amount that a person’s paycheck may be garnished. A garnishment applies to wages, salaries, commissions and bonuses.

The amount of pay subject to garnishment is based on your “disposable earnings,” which is the amount left after legally required deductions are made. Legally required deductions are federal, state, and local taxes, the employee’s share of social security, Medicare, State unemployment, and required employee retirement.  Federal law sets the maximum amount that may be garnished in any workweek or pay period regardless of the number of garnishment orders received by the employer. Garnishments may not exceed 25% of the employee’s disposable earnings, or the amount by which an employee’s disposable earnings are greater than 30 times the federal minimum wage (currently $7.25 an hour).

  • If the pay period is weekly and disposable earnings are $217.50 ($7.25 x 30) or less, there can be no garnishment.
  • If weekly disposable earnings are more than $217.50 but less than $290.00 ($7.25 x 40), the amount above $217.50 can be garnished ($72.50).
  • If the weekly disposable earnings are $290 or more, no more than 25% can be garnished.

There are exceptions to the garnishment limits. The limitations to wage garnishments do not apply to certain bankruptcy court orders or to debts due for federal or state taxes. If a specific state has a different wage garnishment law from Title III, then the law resulting in the lower amount of earnings being taken must be used.  Debts that are not related to taxes, but are owed to other federal agencies can be garnished up to 15% of disposable earnings to repay defaulted debts owed to the US government. The Higher Education Act authorizes the Department of Education’s guaranty agencies to garnish up to 10% of disposable earnings to repay defaulted federal student loans.

See chart below for different pay periods regarding garnishments:

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Yes! You can get back money that was garnished from your wages (if the debt is dischargeable) if you file bankruptcy.  In Mississippi, you can only recover garnished wages were taken within 90 days of your filing for bankruptcy and the amount taken was more than $600.  You are not entitled to recover everything that’s been garnished if you’ve been garnished more than 90 days before you file bankruptcy; just the 90 day portion they took right before you filed bankruptcy.  ***Keep in mind that filing bankruptcy STOPS a garnishment the moment the case is filed!

Depending on which kind of bankruptcy case you file and the amount, the money may go back to you or it may go to the Trustee.  But either way, it’s beneficial to you.  How would it be beneficial for it to go to the Trustee? Keep reading. I’ll explain!

Example #1: You have been garnished for the past 2 months for a total of $800 and you file a Chapter 7 bankruptcy tomorrow.  The first two criteria are met (within 90 days and over $600) so you stand to regain all $800.

Example #2: You have been getting garnished for 6 months for a total of $1,500 and you file a Chapter 7 bankruptcy tomorrow.  You’re qualifying but only the portion taken within 90 days will be eligible – which lets say totals $700.  The creditor is entitled to keep the other portion ($800).

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FTC logo      If you are getting debt collection calls you are not alone. About one in seven people in Mississippi is being hounded by a debt collector. Buying debt and debt collection is a billion dollar business and becoming a larger, more complex industry. The original creditor sells their debt to a debt collector, and often they sell the same debt multiple times meaning that multiple debt collection companies are attempting to collect the same debt! Debt collectors often attempt to collect from the wrong person, overstate or inflate the amount owed by adding collection fees, and even attempt to collect debts that are not real (may have been paid in the past or was never a debt to begin with).
Along with these abuses, details of the original debt are lost or outdated. Creditors selling debt are basically selling lists that have contact information and amounts owed – and little more than that in way of details.  Collectors then may have a mixture of valid debts, debts that have been since settled, or debts that are past the statute of limitations and can no longer be collected. It’s not clear exactly how many consumers are wrongly harassed for accounts that are not their debt. Debts purchased by the large debt-buying firms have no documents, contracts or other proof of the debt. Your debt will be sold to a debt collector for pennies on the dollar. It’s not just the original credit that sells debt.  Debt collection companies then may sell the lists they have purchased to other debt collectors, who may then sell it to another, then another, and another. It’s not uncommon for people to all of a sudden be receiving debt collection calls and letters about something that happened years ago but now, the debt has shown up on a list that has been sold to another company, and here we go again. Continue Reading ›

stop calls      First realize that you do not have to talk with the debt collectors when they call. They are not calling because they care about your situation or want to discuss your financial problems in order to help you find a solution. They want a payment, or a promise to pay, and unless you are able to give one of these things to them, there is no reason to talk. If you had the money, you would have already paid them, and if you had the money coming in, you would have already made arrangements (a promise) to pay.  They know this so they call, and call, and call, and call – thinking that the more they harass you, belittle you, etc – the more likely you are to figure out a way to pay them – they don’t care about you being able to figure out an overall solution, just that you meet their immediate demand regardless of the cost to you.  Who gets fed? Usually it’s the loudest chirping bird.  Debt collectors don’t care if all you have is the money to pay your house note – they want to be paid and the house note not getting the money is your problem. You don’t have to talk to people like this.
Keep in mind that a debt collector is required to mail you what’s called a “validation” notice within five days of first contacting you. This notice must include and lay out the amount they claim owe, the name of the creditor that they claim you owe, and what to do if you think you don’t owe this money. You then have 30 days to dispute this debt and it’s claims. You also have the right to notify them that you do not want them to call or contact you anymore. It is best that you do this in writing and send it by certified mail so you have proof of your notification to them to stop contacting you, should they continue to call.  Click here to read more about stopping debt collectors from calling.

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