Michigan Collection Law Blog published By Michigan Creditor Lawyers Nitzkin & Associates

I was very surprised to learn from opposing counsel today that my client's wages for her allegedly delinquent student loan can be garnished...all without a judgment. Yep. Thats right. At first, I thought my opposing counsel was from Mars. After all, we have some legal safeguards in this country such as due process under the 5th and 14th Amendments of the Constitution. But, I was wrong! In my 20 years as a collection attorney, this was the first time that I had ever learned of such a thing.

I learned about the Administrative Wage Garnishment for the first time today. I understand that since this law was passed in 2003, it has been a huge success in recouping defaulted student loans. Well why shouldn't it? After all, a collector simply has to locate a debtor's place of employment and whammo.....he can garnish the debtor's wages without a judgment.

In this case, my client was threatened with a garnishment by a collection agency trying to collect her student loan. The agency threatened to garnish her wages even though it had no judgment on her. Ordinarily, this is a slam dunk FDCPA violation. I filed a lawsuit against the agency under the Fair Debt Collection Practices Act ("FDCPA"). Opposing counsel enlightened me that my position was baseless. Fortunately, the collection agency also violated other provisions of the FDCPA so my case will remain in tact. But boy oh boy, you sure are never too old to learn something new.

My friend and colleague, Howard Young, is a partner at a very prestigious firm here in Michigan called Weisman, Young, Schloss & Ruemenapp, P.C. They are business lawyers with a twist. You see, Howard just started a blog that makes me kind of nervous; it deals with Asset Protection Planning. That is just a fancy of way of saying "How to keep your assets away from creditors."

Now Howard is a good friend of mine, but he is on the opposite side of the table from me. I chase people and take their assets. Howard's skill is keeping those assets out my reach and the reach of others. Howard is incredibly bright and creative. His bounds are marked by high ethics. Fighting with Howard over a case is always a difficult thing to do.

I encourage you to check out Asset Protection Planning - - Before and After the Lawsuit.

We have lunch occasionally and the issues that we discuss can get quite heated. I now plan to take our heated discussions public and you can decide who is right and who is wrong on these issues.

Let the games BEGIN!!!!

I just read a similiar blog post at Fix My Credit Report Free where the debtor states:

"What options do I have once a collection has gone to court? The attorney representing the credit card company did not provide me with any information to verify that the debt is mine or how it was calculated. They say I've defaulted and am ordered to pay. Can I use a revised version of the debt validation letter to make them put up or shut up? What about attorney's fees? Can they add them to my judgment?"

The answer: The debtor's rights at this point are quite limited. With the judgment in place, the attorney can garnish the debtor's wages, haul the debtor into court for a creditor's examination to review the debtor's assets and even do a Writ of Execution which is where the debtor gets the court officer to take the debtor's assets. So now question becomes, what can the the debtor do to protect himself after a judgment has been entered. Remember, if the debt is a consumer debt, then the Fair Debt Collection Practices Act will always apply to the debt and govern the actions of the collectors, including the attorneys. Take heart, I have some ideas:

1. Be proactive and take the bull by the proverbial horns. Call the attorney and talk to her. Tell her that you want to pay the debt and are willing to do so. Just ask for an installment payment plan. As a collection attorney, I always admire debtors that recognize that they owe the debt and are willing to pay it. It shows a good attitude. It makes me want to "partner" with them to resolve their debt issue together. On the other hand, when I get a debtor who calls me with the tough guy attitude, I realize that cooperation will be next to impossible and simply go forward with all of the debt collection techniques that I can use. Being proactive and amiable is the number one method you can use to resolve a debt.

2. Motion to Installment payments. In Michigan, a debtor can file a Motion for Installment payments. Before you get too excited about this motion, please note that even if the court grants the debtor's motion to pay the judgment in installment payments, the order only protects wages. It does NOT stop a creditor from getting a Writ of Execution which means that a court officer can still come by your house and seize your car, your wallet, your jewelry, etc. How do you avoid a visit from the court officer? See #1, above.

3. Bankruptcy - This used to always be an option. While you have a Constitutional right to file for bankruptcy, the standards have recently been increased so that many debtors that would have otherwise had this right, may no longer qualify. If you think that this may be an option, in Michigan, I recommend Mark Shapiro and Stuart Gold. These gentlemen are not only my adversaries between 9 am. to 5 pm, but they are my friends outside of these hours. Mssrs. Shapiro and Gold are both not only bankruptcy attorneys, but they are assistant United States Trustees in the bankruptcy court. Since I am writing this blog post at 7:50 a.m. on a Sunday morning, right now, they are my friends. :)

4. Aggressive Asset Planning with an attorney - If you have substantial assets that you need to protect, you should consider hiring an attorney to discuss methods of protecting those assets. Some common methods include off shore bank accounts, trusts and re-titling assets to the names of yourself and your spouse. Sometimes, no amount of asset planning will stop an aggressive and seasoned collection attorney. But sometimes, it does.

My colleague, Jonathan Stein, writes a collection law blog from the debtor's perspective. He writes very interesting and insightful pieces. He recently wrote an article describing how a debt collector went to jail for impersonating an attorney and threatening debtors with arrest if they did not pay their bills. Mr. Stein wrote an article in his blog in which he refers to another site that allows one to verify whether an individual is an attorney. I liked this article a lot and thought it had a lot of good information in it. You can now verify whether you are dealing with an attorney or a prankster.

In the last few months, I have drafted dozens and dozens of Motions for a Receiver over debtors who have failed to satisfy the judgments that I have obtained against them.  This effort has been an inordinate success.  Indeed, just last week, I obtained a receiver over a debtor, that I will call Mr. X.  It turns out that Mr. X has several accounts at a well known brokerage house.  Now that I have a receiver appointed over Mr. X, its a simple matter of having the receiver take the funds out of Mr. X's accounts to satisfy the $200,000 that he owes to my client.

I have also found that having a receiver, in many instances, is enough to convince a debtor to pay a judgment voluntarily. 

I have been asking the various courts to appoint Franklin Gettleson, who is a well respected attorney and a certified public accountant.  The courts, without hesitation, have all been agreeable.  I highly recommend this collection technique.  Its effective and will get your money collected.