May 25, 2009

Kisa Kisa and Mortgage Jam

Two years ago, my sister (Georgia Resident) had a house with an 80/20 that was forecloesed by the 1st mortgage company.  The second mortgage company did not participate in the foreclosure.  Now she has a $30,000 second mortgage that has gone into collections.  We are afraid they will start garnishing her pay soon.  She had a part-time job that pays 8.00/hour and she is barely making ends meet.  What legal remedies does she have to stop any garnishments as a result of this foreclore?

Kisa

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Hi Kisa,

Georgia Code 18-4-20 seems to follow the federal standards for wage garnishment with regards to maximum amount of disposable earnings subject to garnishment.  The federal standards listed as “Title III of the Consumer Credit Protection Act (CCPA)” and described by the U.S. Department of Labor are as follows:

“Title III also protects employees by limiting the amount of earnings that may be garnished in any workweek or pay period to the lesser of 25 percent of disposable earnings or the amount by which disposable earnings are greater than 30 times the federal minimum hourly wage prescribed by Section 6(a)(1) of the Fair Labor Standards Act of 1938.”

Minimum wage will be $7.25 per hour on July 24, 2009 and 30 * $7.25 = $217.5, so the maximum that could be garnished would be the lesser of 25% of net wages or net wages minus $217.5, whichever is less.  An individual with “a part-time job that pays 8.00/hour” will not have enough disposable income to garnish.  A judgment creditor could, however, locate a bank account and attempt to garnish bank funds. 

A defaulted second mortgage post-foreclosure in collections isn’t necessarily a danger to garnish.  The true owner of the note, which could be a junk debt buyer, may have a right to bring a lawsuit over the promissory note and obtain a judgment through the courts and then have a right to seek a bank levy.  If a lawsuit comes over this debt then I would make sure to file an answer and the junk debt buyer would generally be required to have the original promissory note along with proper endorsements since the loan’s inception.  Additionally, any collection agency contacting the consumer about this debt is subject to the Fair Debt Collection Practices Act (FDCPA) which means they absolutely, positively, (among other requirements) can not misrepresent the amount of the debt.  How is it that LCS Financial, Real Time Resolutions, and all the other creepy second mortgage debt collectors out there know EXACTLY how many payments have been made and how they were applied, how the escrow account was handled, and interest and late charges accrued over the life of this loan?  My experience has been that a nicely worded letter or two is all it takes to get these junk debt buyers to drop collection on these accounts.

Thanks for the questions and hope this helps.

Paul

This author is not an attorney and this information should not be considered legal advice.  Please consult an attorney for legal advice.

(source= legis.state.ga.us/legis/2003_04/gacode/18-4-20.html)

(source=dol.gov/compliance/guide/garnish.htm)

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