Guess what I think?
Bankruptcy law is federal, but there is
plenty wrong with state laws, especially
Michigan’s wage garnishment statute.
Personally, anyone in Congress critical of consumers borrowing too much money makes me yak.
No one in the history of the world has borrowed more money than our U. S. Congress.
The N. Y. Times editorialized on some of the laws that give consumers little or no room with debt problems.
Michigan is like most states in allowing 25% of a consumer’s take home pay to be taken by a creditor wage garnishment.
Back when I started practicing consumer law, a wage garnishment was only good for one paycheck, and the creditor had to file another for every paycheck they wanted to nick.
Now, Michigan wage garnishments are good UNTIL THE JUDGMENT IS PAID OFF!
That could be years.
Many times, the first time the consumer realizes there was a lawsuit against him is when the garnishment hits.
Many were never properly served with papers, so they did not know they were being sued.
Now they need a lawyer to file papers to set aside a judgment, but they are missing 25% of their take home pay.
I never understood why, if you owe me money, I can sue your employer for them to pay me.
And that is what a garnishment is, if the employer does NOT pay, the debt collector gets a judgment for the full amount against the employer.
And, once you deposit that paycheck in the bank, it can ALL be garnished.
Even more of an issue in these days of direct deposit. And, again, many consumers were never properly served until they get papers that their bank account is frozen, so, again, they cannot access money to hire a lawyer.
And, even when consumers have rights, they can be tricky.
Like statutes of limitation.
In Michigan, you have 6 years after the last payment to sue on a contract.
Although the CFPB may end this, as of now, the debt collector can file the suit, and you have to file papers in response with the court claiming the debt is past the statute of limitation.
Or, you lose.
Should these laws be changed?