Once a debtor files for bankruptcy, all wages garnishments must cease. In the recent case of In re Williams, a case from the Bankruptcy Court in Kansas reported on May 15, 2012, the creditor had an obligation to refund post-petition wages even though it did not originally get notice of the bankruptcy filing.
In this case the debtor filed bankruptcy on June 23, 2011, but did not list the creditor who had been garnishing his wages before he filed. On October 5, 2011, he finally notified the creditor of his bankruptcy filing and the next day the wage garnishment stopped. The creditor refused to return the wages garnished for the period between June 23, 2011 and October 5, 2011, claiming that it only needed to stop the garnishment once it leaned of the bankruptcy case. The debtor then filed a turnover motion with the bankruptcy court seeking the return of his wages for this period of time.
The Bankruptcy Court granted the debtor’s motion. The Court said that “absence of notice to the creditor that the bankruptcy has been filed is not a defense to the obligation to obligation to turnover. Notice to creditors is not an element of the imposition of the stay. The stay arises automatically upon the filing of the petition for relief, not upon notice to creditors of the filing. A creditor who has initiated collection efforts without knowledge of a bankruptcy petition has an affirmative duty to restore the status quo without the debtor having to seek relief from the Bankruptcy Court. Lack of proper notice protects a creditor from the imposition of a penalty, but not from the turnover obligation."
Laura J. Margulies is a principal in the firm of Laura Margulies & Associates, LLC. Our web site is located at: www.law-margulies.com. We represent consumers in bankruptcy and litigation matters in Maryland and the District of Columbia.
Sunday, July 29, 2012
Monday, July 16, 2012
District Court of Maryland Dismisses Thousands of Debt Collection Cases
A recent news article caught my attention and I thought I would share it with those following this blog.
ANNAPOLIS, Md. – July 11, 2012) On July 10, Chief Judge Ben C. Clyburn of the District Court of Maryland dismissed 3,564 debt collection cases against Maryland residents. Judge Clyburn’s order comes after a settlement agreement with the debt collection agencies LVNV and Resurgent Capital Services.
As part of the agreement reached with the Maryland State Collection Agency Licensing Board, LVNV and Resurgent will pay $1 million to the state and agreed to the dismissal of cases pending in Maryland District Court. Also, $3.8 million in credit will be applied to the accounts of 6,246 consumers whose cases have been adjudicated or settled. The settlement came after claims that LVNV and Resurgent violated state and federal laws about licensure and submitting false or misleading claims or affidavits in court.
LVNV is part of a new industry – “debt buying,” – that has clogged the dockets of small claims courts in Maryland and throughout the country, particularly during the current recession. Debt buyers specialize in buying debts that have been abandoned by the original creditors, usually credit card companies, for a tiny fraction of the amount owed. Debts may be sold to other debt buyers several times, and the documentation to prove the debt is owed sometimes is little more than the person’s name, last known address and Social Security number.
“In this current recessionary economy, the District Court has been seeing an increasing number of debt collection cases,” Judge Clyburn said. “We have been responding to many issues related to debt-buying and we now have new rules in place that help make the process more transparent, give the judge more information, and level the playing field for consumers.”
The 3,564 cases dismissed yesterday were dismissed before judgment and “without prejudice,” which means a case is eligible to be re-filed in the future.
Laura J. Margulies is a principal in the firm of Laura Margulies & Associates, LLC. Our web site is located at: www.law-margulies.com. We represent consumers in bankruptcy and litigation matters in Maryland and the District of Columbia.
ANNAPOLIS, Md. – July 11, 2012) On July 10, Chief Judge Ben C. Clyburn of the District Court of Maryland dismissed 3,564 debt collection cases against Maryland residents. Judge Clyburn’s order comes after a settlement agreement with the debt collection agencies LVNV and Resurgent Capital Services.
As part of the agreement reached with the Maryland State Collection Agency Licensing Board, LVNV and Resurgent will pay $1 million to the state and agreed to the dismissal of cases pending in Maryland District Court. Also, $3.8 million in credit will be applied to the accounts of 6,246 consumers whose cases have been adjudicated or settled. The settlement came after claims that LVNV and Resurgent violated state and federal laws about licensure and submitting false or misleading claims or affidavits in court.
LVNV is part of a new industry – “debt buying,” – that has clogged the dockets of small claims courts in Maryland and throughout the country, particularly during the current recession. Debt buyers specialize in buying debts that have been abandoned by the original creditors, usually credit card companies, for a tiny fraction of the amount owed. Debts may be sold to other debt buyers several times, and the documentation to prove the debt is owed sometimes is little more than the person’s name, last known address and Social Security number.
“In this current recessionary economy, the District Court has been seeing an increasing number of debt collection cases,” Judge Clyburn said. “We have been responding to many issues related to debt-buying and we now have new rules in place that help make the process more transparent, give the judge more information, and level the playing field for consumers.”
The 3,564 cases dismissed yesterday were dismissed before judgment and “without prejudice,” which means a case is eligible to be re-filed in the future.
Laura J. Margulies is a principal in the firm of Laura Margulies & Associates, LLC. Our web site is located at: www.law-margulies.com. We represent consumers in bankruptcy and litigation matters in Maryland and the District of Columbia.
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