How to File a Garnishment or Lawsuit

Some creditors, seeking to collect on money owed them, will file a lawsuit in civil court against the debtor. If the judge who hears the debt case finds that the debtor does indeed owe the creditor, he will issue a civil judgment against the debtor. Once a civil judgment has been issued, the creditor has a number of legal actions that he can take to claim the money. Among these is wage garnishment, in which money is diverted from the debtor's paycheck and given the creditor. To receive a garnishment, the creditor must follow several steps.

Instructions

1

File a civil lawsuit. Before a garnishment can be initiated, you must first have a court grant you a civil judgment against the debtor. Depending on the complexity of the debt, you may wish to have a lawyer aid you in preparing the lawsuit against the debtor. However, in some cases, particularly if the debt is a small or simple one, you may be able to file the claim yourself. Then wait for the judge to grant the judgment.

2

File a motion for wage garnishment. The exact method you must use to file this motion will depend on the rules of the court in which you file it, which will vary by state and county. Again, unless the procedure is relatively simple, you may need an experienced attorney to help you prepare this motion. In all cases, garnishments must first be ordered by a judge; you cannot attempt to garnish a debtor's wages extrajudicially.

3

Present the order of garnishment to the employer. As with the procedures necessary to receive the order of garnishment, the exact process by which the order of garnishment will be presented to the debtor's employee will vary by jurisdiction. In some cases, the creditor himself will be required to present the order to the employer. However, in other cases, the creditor will present the order to a law enforcement official, such as a sheriff, who will deliver the order. Check with your county clerk for specifics.

4

Respond to challenges to the garnishment's validity. In many jurisdictions, after a garnishment has been issued, the debtor will have the opportunity to challenge its validity before it can be executed. In such a case, you may have to appear in court and defend arguments about the garnishment. Again, having a lawyer in such a situation can be a valuable asset. A judge will then hear the objection and re-rule on the garnishment.

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Motion to Claim Exempt Property

When a creditor obtains a judgment against you, it's more than just another bill. Right on the heels of the judgment's entry comes the execution, where the creditor sends the sheriff to seize your property. The specifics of judgment execution vary from state to state, but there's typically a procedure available for you to designate certain property as exempt from your creditor's claims.

What Property Is Exempt

Exemptions vary from state to state. You can expect a homestead exemption, which may be anywhere from a few thousand dollars to unlimited. You'll be allowed a certain amount of equity in a motor vehicle, along with an allowance for personal property, health care aids and tools of the trade. If you don't have enough property to exceed the exemptions allowed in your state, you're said to be "judgment-proof"; the creditor can't take any of your property because it's all exempt. You can probably find your state's list of exemptions in its code of statutes under the section covering enforcement of judgments. Go to your legislature's Internet homepage and type "exempt property" into the search engine for the statute index.

Claiming Exemptions

Your exemptions aren't automatic. You must file a motion to designate your exempt property with the court. In some jurisdictions, such as North Carolina, the creditor is required to notify you of your right to claim exempt property and provide you with a copy of a form motion before proceeding with execution. Don't try to draft your motion from scratch; many states make fillable forms available for free online. Fill it out in clear print, paying close attention to the instructions, and file it with the court within the time allowable by state law. Make sure to mail a filed copy to the creditor or the creditor's attorney of record, and remember to keep one for yourself.

Creditor's Remedies

Just because you list certain property as exempt and claim a value that places it below the exemption threshold doesn't mean the creditor can't eventually come after it. Your state's judgment and execution code probably contains a procedure for the creditor to object to your motion. You may be required to appear at a proceeding to determine the validity of your claimed exemptions as well as to uncover assets the creditor thinks you might be hiding. Underreporting the value of assets you claim as exempt won't necessarily protect them from execution. Remember also that when you sign a motion to claim exempt property and file it with the court, you're swearing that everything you're saying is true.

Avoiding Execution

Transferring non-exempt assets around and putting property in friends' and relatives' names may seem like a good way to avoid a judgment execution, but it's fraught with danger. For starters, fraudulent transfer provisions in state and federal law will enable the creditor to rope the assets back into your estate. Furthermore, the people you pick to help hide your assets might be incurring judgments themselves, subjecting the assets to seizure. Finally, if you represent to the court that your listed assets are all you own, and you're actually hiding something, you're committing a crime.

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How to Report Possible Identity Theft to the Credit Bureau

Identity theft is a rapidly growing problem in America. With the advent of the Internet, borrowers and banking consumers have become more lenient with their personal passwords and account numbers. Monitoring your credit and accounts periodically is as important as knowing the process for reporting a possible identity theft.

Instructions

1

Pull a copy of your credit report. See the resources for a free bureau offered by the government. Review all accounts, judgments, delinquencies and personal data for inaccuracies. Make sure to verify any suspicious information with your lenders and account holders. Before making a claim, you must be very confident that reports on the bureau are in fact fraudulent; false claims of identity theft are taken very seriously, and the punishments are severe.

2

Notify the Federal Trade Commission first. You can file a report either by phone or online. See the resources bar for this information. The FTC follows up on all complaints filed and you can check the status of your report by dialing the same number. Contact the SSA (Social Security Administration) to report a lost card or stolen number. In certain circumstances, you will be issued a new Social Security number. Contact the Office of the Inspector General if you suspect your Social Security number may be being used for more malicious purposes like terrorism.

3

Report the identity theft to all three credit bureaus -- Equifax, Experian, and Trans Union. (See resources for contact information.) All three bureaus will immediately place fraud alerts on your credit bureaus. Fraud alerts require the bureaus to contact you before any credit changes (credit extension, new accounts) are made to your profile. Also, request that only the last four digits be displayed on your credit bureau reports for security purposes.

4

Mark all fraudulent activity on hard copies of each of the three credit bureau reports you obtained earlier. This includes all fraudulent inquiries, accounts, credit withdrawals, personal information changes and judgments. Once compiled, send this information to the credit bureaus. The bureaus are then required to inform any and all retailers involved in the transactions. Also, they are required to confirm each claim of fraudulent activity and remove it from your profile.

5

Consider freezing your account. All borrowers are entitled to this privilege. When you freeze your accounts, no one is able to access the information contained on the report without your expressed authorization. If you are a true victim of identity fraud, this service is free. Non-victims may be subject to a fee for this service.

6

Prevent the problem. Monitor your credit reports and bank accounts regularly (at least four times per year). Keep a close eye on your online transactions and never provide personal information to a source you do not trust. Also, never enter personal and confidential information on a website that doesn't begin with an "https" -- the universal symbol for an encrypted and protected site.

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Compare Mortgage Rates in Port Saint Lucie, Florida

Comparing mortgage rates in Port Saint Lucie, Florida, could help save you thousands of dollars in finance charges over the life of a loan. Understanding different types of loans will be important as well, as that can help prevent you from falling for rates that seem low at first but may increase dramatically over the life of the loan. You can begin shopping for a loan even before selecting a house.

Instructions

1

Make an appointment with a government-housing counselor in Port St. Lucie, Florida. Find a counselor by checking the website for the U.S. Department of Housing and Urban Development (see Resources). Housing counselors are most known for helping people with problems, but they also offer pre-home buying counseling sessions.

2

Ask the credit counselor about interest rates and terms currently being offered in Port Saint Lucie. As a HUD-approved housing counselor, she should have detailed information on current rates offered by the local lending community. The counselor should also be able to tell you about the different kinds of mortgages being offered by lenders in Port Saint Lucie.

3

Get a copy of your credit report and score. Order the credit report from Annual Credit Report -- a website managed by nationwide credit bureaus Experian, TransUnion and Equifax. They operate the site to offer free credit reports as required under the terms of the Fair Credit Reporting Act. Navigate to the website to view and print your report (see Resources). Order your credit score separately, for a fee. You are entitled to three free reports a year -- one from each of the three credit bureaus.

4

Call around to banks and credit unions in Port Saint Lucie. Ask to speak to a mortgage officer. Tell him you are looking for a mortgage, and then give him your credit score and a little about your credit history. Ask what interest rate might be available for you based on your score and credit background. Also, rely on some of the advice from the housing counselor as you ask about interest rates on different kinds of mortgage programs, such as 30-year fixed mortgages and adjustable-rate mortgages.

5

Apply for "pre-approval" on some mortgages to get a better idea about total costs. Compare and rank the mortgages in Port Saint Lucie based on their interest rates -- as well as fees and overall cost over the life of the loan.

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How to Get Rid of Debt Faster

Controlling expenses is an important aspect of managing personal finances, and debt is usually the most critical expense you must control. There are many forms of debt; not all debt is bad, and some debt is worth incurring. However, bad debt can destroy financial plans. Therefore, learning to make smarter debt decisions is a vital step toward a better financial future. Understanding the relationship between the cost of financing a debt and its long-term value is the first step in understanding how to get rid of debt faster.

Instructions

1

List any forms of debt you incur on a monthly basis, such as credit card payments, gas and store charge accounts, and any other unpaid loan balance (including mortgage, auto and student loans).

2

Write down the total charges owed on each account, as well as the minimum payment due and the interest rate. Add up the total due for the month and divide it by your monthly income to get your debt to income ratio. If your debt to income ratio is higher than 20 percent, this is a sign that your debt is becoming a problem. If it's approaching 30 percent, it's unlikely that you will qualify for any more loans.

3

After making essential payments like mortgage, auto and education loans, prioritize the remainder of your consumer debt. Start with the bill that has the highest interest rate and the lowest total due. Calculate the maximum you can afford to pay while maintaining minimum payments on the other forms of debt.

4

Once you have paid off the first bill, proceed to the bill with the next highest interest rate and lowest total due. If two bills have similar totals due, always prioritize the bill with the higher interest rate.

5

Periodically check your debt to income ratio, based on your new debt total, to stay motivated. Make it a goal to lower your ratio to 15 percent (or lower, depending on your starting point). Continue setting such goals until you reach an acceptable ratio of 10 percent or lower.

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What Is a Loan Modification Net Present Value?

A net present value (NPV) is a test used by lenders when determining an approval for a loan modification. NPV helps lenders determine if a loan modification is a profitable decision or not.

Options

Lenders use NPV to decide if by modifying the loan, which reduces payments to the borrower, is a better decision in the long run than not modifying it and having the risk of the borrower going through a foreclosure on the house. NPV helps lenders decide the likelihood of the borrower foreclosing using both options.

Considerations

When lenders calculate the NPV, they take many factors into consideration. They analyze how likely the borrower is able to catch up on past-due payments without a modification. They investigate the home's current value, the home's value in one year and how many months on average before the homeowner may default. Lenders also analyze how much the home would likely sell for if it forecloses.

Details

When the NPV is calculated, the lender is basically comparing the loan if it is not modified against if it is modified. The lender takes the expected cash flows through both situations and bases the modification decision primarily on this factor.

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Can My Bank Account in Another State Be Garnished?

If you default on your debts and do not have regular income, your creditors can ask the court to order a bank account garnishment. If the creditor gets an order of garnishment, your bank must freeze your funds up to the amount of garnishment, so that you cannot withdraw these funds (although you can put more money into the bank). After 21 days, your creditor can withdraw the funds from your bank account to settle the debt. Most states allow creditors to garnish bank accounts even if the debtor lives out of state.

State Laws

Creditors must follow state laws when garnishing bank accounts. Thus, if your bank is in another state, creditors can only garnish the bank account if that state's laws permit them to do so. Most states will allow creditors to garnish bank accounts if they have a court order to do so; however, state laws differ as to exemptions from garnishment, and what to do if a debtor has funds in a joint account with a non-debtor.

Exemptions

State laws vary as to which funds are exempt from garnishment, but in most states public assistance funds, alimony and child support and Social Security retirement or disability funds are exempt from garnishment. Thus, if you have a bank account that contains only these funds in another state, your creditor probably cannot garnish the account. Some states also allow you to claim a portion of your assets as a wild card exemption; if your bank is in one of these states, creditors must respect that exemption. If you have exempt and non-exempt funds in the same account, state laws vary as to whether the creditor can garnish the bank account.

Garnishment Process

Creditors must go to court and obtain a judgment against you. If you ignore a court summons regarding your debt, the creditor gets this judgment by default. Once the creditor receives a judgment against you, he asks the court to garnish your bank account. The creditor's investigators find out where you bank and contacts the bank. The bank must freeze all funds up to the amount of the judgment for 21 days and then turn them over to the creditor. The creditor usually does not notify you until after he has contacted the bank, so that you will not withdraw all your funds or transfer them to a bank in another state.

Avoiding Garnishment

The best way to avoid garnishment is to communicate with your creditors if you are having trouble paying your bills. Most creditors prefer making payment arrangements with debtors to taking legal action against them; if you make arrangements to pay what you owe, you most likely will never face bank account garnishment. Do not attempt to avoid garnishment by putting funds in a bank in another state. Your creditors usually will be able to seize the funds anyway if you do this.

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