Oregon: Garnishment Procedure

[treehugger1]

I thought I would post this and perhaps others can follow up with their own state statutes to help those who are not in the best position to file for BK and will need to survive some wage garnishments. If you know you may eventually need to file for bankruptcy, but you need more time, in my opinion there is not much harm in messing up your credit report prior to getting there.

I spent considerable time the past two weeks reviewing the Oregon Revised Statutes related to bankruptcy, exemptions, judgments, and garnishment of wages. I can see why many creditors and debt collectors, who are not local, would choose not to go the route of wage garnishment. A writ of garnishment in Oregon expires in 90 days after the employer receives it. If one has several garnishments backed up, then it is very likely 90 days will expire before their turn comes. They then have to refile a writ. For big creditors (CC's and high-risk unsecured lenders), this would require an awful lot of tracking, and I can see why they just don't bother.

I hope this helps those in Oregon, and it would be good to see others follow through with their own state statutes. The following site is an excellent summary of the Oregon law.

http://www.bullivant.com/showarticle.asp?Show=1198

[GoingDown]

Hey there!

I used to live in Oregon, and I still have a lot of relatives living up there in Eugene, Corvallis, and my favorite town of them all-- Florence, Oregon. But if I ever move back there, I would probably move to Eugene because they have more jobs available and there are lots of things to do like going to their "Saturday Markets" in downtown Eugene and listening to the hippie-wannabees playing their drums. They have the best bicycle path along the river that I have ever seen-- it goes on for miles and miles and you can just use it to get around various parts of town without having to worry about getting out into dangerous traffic at all.

Back on topic... Arizona allows up to 25% of wages to be garnished and unfortunately it's a fairly simple and easy process and so it gets done way too often by collection attorneys. It seems to be their method of choice around here, although they also seem to love to go after checking accounts, too.

[treehugger1]

I lived in Eugene for ten years. Great town. I have heard that they will also go after checking accounts here. I closed all my checking accounts that were related to creditors months ago (back in July). I realize they can try to go after my checking account, and even have a judge put me through a debtor exam, but there isn't a soul who can make me put money into my checking accounts. And since the only money I have coming in is wages, and since 75% of wages are exempt, that does not leave them much. 100% of all pensions, and tax-deferred 403b, 401k, and 457 are also exempt. I realize that if I get judgments, I'll have a mess to clean up, but at least for now, I can get my paycheck paper, and make sure that my rent, utilities, food, and secured payments are made. I'm moving to money orders for all of these. I've shut down all direct ACH payments on everything and closed the accounts that were related to CC ACH payments about nine months ago. MO's are the only way to go ($.48 each at Walmart). I can cash my check at my credit union as I have a only a savings account and secure auto loan with them, and they easily cash my paycheck since it is a government check. I know I am seriously screwing up my credit, but what can I do? I don't dare go into a 13 at this time. My best estimate at this time is that by October or November, I'll be making only 60% of my current takehome salary. If I filed BK 13 now, there is no way they will accept what will really happen to my wages until it actually happens 6 - 7 months from now. What a terrible situation.

IMHO, there are far worse things than living through a few months of 25% garnishment. I just never thought I be in such a "duck and cover" situation. I hate it!

[GoingDown]

It sounds like you have already taken the necessary steps to make yourself as judgment proof as possible, so other than the wage garnishment, there won't be much they can do to you. If you can still make ends meet with that garnishment, and you're okay with that, then you don't have to file bk now. And since only 25% can be garnished, the other creditors would generally have to wait in line before they could garnish your wages.

I've been using nothing but money orders for years. I never have to worry about a check bouncing or a creditor seizing my checking account, because I don't even have a checking account.

The judgment debtor exam is rarely ever used, because it costs them time and money, so I wouldn't worry about it much. Most of them just look for information on your credit reports. It can tell them if you have a car payment, a mortgage payment, a new employer, a new bank, etc.

[treehugger1]

You know its not as if I am ignoring all unsecured debtors at this time. I am ignoring those who are unwilling to at least work with me. And, since I am just beginning to see a bit of creditor pushback, I suspect I have many months to wait for my wages to stabilize. In the meantime, I'll work on making sure the secured are paid, cover my student loan payments when they begin in May (I became a master of deferring, forebearing, etc., over the past 11 years. They finally put the squeeze to me.)

I do need to save up $1800 - $2000 to retain a BK13 attorney. I can slowly put this aside over the next several months. Do you think it is good advice that if I don't see the garnishment, I should pay local creditors who can easily get a judgment? I know all about the 90 day prior-to-filing creditor preferences, so I won't trap myself in that situation. I'm just wondering if there is any downside to paying one particular unsecured vs another, if I have extra money.

Goingdown, I used to run the bike paths on the river when I was training for marathons. What a beautiful setting.

[lrprn]

I'm just wondering if there is any downside to paying one particular unsecured vs another, if I have extra money.

Check out what Cathy Moran, a prominent California bk lawyer, says about preferential payments at http://www.moranlaw.net/preferences.htm and http://www.moranlaw.net/planning7.ht...ance%20actions (Anticipating Avoidance Actions section). Should help you sort out who to pay and how much if you end up having to file. HTH!

[treehugger1]

Great sites. Thanks. I wonder how many folks have been in my shoes, and I woner if I do have to file, I'll look back and think, "I just should have filed months ago." Somehow I don't think I am unique in trying to stall or forego as long as possible. But, it is definitely helpful to know what might hurt you in the future, and that which will probably be okay. Thank you.

[GoingDown]

As for student loan payments, you might think about getting a "Direct Consolidation Loan with Income Contingent Repayment" from the U.S. Department of Education. In some cases it can reduce your monthly payments down to a manageable level, because it is based on your monthly income and rather than trying to pay off the loan in 10 years, they allow you to pay it off in 25 years (any principal and unpaid interest charges left at the end of the 25 year repayment period are "forgiven", but then you will have to pay taxes on that amount). In fact, if your monthly income goes down, your montly payment will also go down to a level you can afford to pay. If your income improves, you can always switch back to the 10 year plan to pay off the loan faster and save on some of that interest.

As far as your question about whether or not to pay creditors to prevent a judgment from being entered against you it depends. Since you intend to eventually file for bankruptcy, I don't think I would pay them any more payments at all. Let the bankruptcy court decide who gets paid after you file. Use that money to pay your bk attorney instead. As far as timing goes, the more time you can put in between your last credit card charges or payday loans, etc., and the time you file bk, the better it will be for you. Time is on your side with bk. However if you have assets like real estate then judgment liens could become a serious problem for you, and in that case it might be better to file bk as soon as a creditor files a lawsuit against you to stop them from getting a judgment against you. But you can just sit back and wait until they actually file a lawsuit before you file bk, and meanwhile you are building up money to pay your bk attorney. Get your paperwork ready and find the right bk attorney for you so that you will be ready to file bk as soon as a creditor files a lawsuit against you, if you have assets to protect.

And yeah, the pathway along the river in Eugene was great for bicyclists, joggers, and walkers. I wish every city had something like that for people who want to get out there and exercise, but don't want to have to deal with dangerous traffic.

[treehugger1]

Thanks. I have already consolidated all my student loans and have finally run out of time for forbearances, deferments, etc. I recently discovered that if one lets their student loans go to a collection status, they can expect a 10% (maximum) garnishment of wages. This counts toward the maximum 25% and, in fact, gets preference in garnishment. I have to chuckle a little bit at what a surprise a big creditor ($3000 owed) or more could potentially be up against garnishing the wages of a no asset debtor. They woul dbe constantly having to renew 90 day writs. I almost wonder if I should just default on my student loans and encourage them to go for garnishment. This almost seems fraudulent, but when you can't pay your bills, you can't pay them. Heck, I didn't write the laws. I cannot be fired from my public employment position for multiple garnishments, and I have 12 years of "exceptional" annual performance evaluations. I doubt my employer would even consider "finding a way" to let me go due to garnishments. Its hard to fire someone for the very laws you are held accountable for. I even called our payroll controller and asked them questions about garnishment. He said they just input the writs for garnishment into the payroll software, and everything works out. He said the division I work for will never even know I have a garnishment.