Fifteen years later, Lilly is still getting garnished!
Lilly came to see me in my Sterling office last Friday. When she was much younger, she got a high interest car loans from Ford Motor Credit.
The car got repossessed, and in 2003, Ford got a judgment against her for $8,051.35. Plus $1,207.70 for Ford’s lawyer and $33.00 filing fees.
Like many people, she wanted to protect what was left of her “good credit,” so she never talked to a lawyer about it.
She works in a medical office and has had different jobs, each lasting a few years. Periodically Ford Credit would catch up with her job and put a garnishment on her pay.
Fast forward to 2018. Lilly has paid $23,955.42 in garnishment against that $8,051.35 judgment. And she still owes $15,814.38! How can that be? $29,768.25 in interest of the judgment. Plus $709.50 filing fees for the garnishments. (Most courts in Virginia charge about $73.00 for a garnishment, it used to be less. So from that calculation Lilly was probably garnished nine times over the 15 years.) You can see it for yourself, here.
Symphony Claims Her New Start
A week after I saw Lilly. Symphony came to see me, also in my Sterling office. Just like Lilly, Symphony had a high interest car loan with Ford Motor Credit, and her car got repossessed in 2016. Ford got a judgment against her in July 2017. They started garnishing her in January 2018.
As soon as that garnishment hit her payroll office, Symphony came running into see me. We got her bankruptcy filed before her first short-check payday, although the day after the check was cut.
Under Virginia law, filing bankruptcy stops a garnishment and sends that money back to your paycheck.
Filing Bankruptcy Stops and Garnishment and Gets that Money Back
Filing a Chapter 7 bankruptcy stops a Virginia garnishment and gets back to you the money taken. Both Lilly and Symphony now have their money back. (Not for Lilly the whole $23,000–just the money they had gotten from her for this garnishment, which started in January 2018.)
Filing Bankruptcy Helps Your Credit
Both Lilly and Symphony are getting a benefit they didn’t expect. Like most people, they believe the bank’s propaganda that filing bankruptcy hurts your credit score. For them, like most people, filing bankruptcy helps.
Fair Isaac, who invented the FICO score, say that if your credit score is in the mid 700’s, filing bankruptcy will drop you about 100 points. With a repossession and judgment, Lilly and Symphony had made their credit about as bad as you can make it. There scores were nowhere near 700. For them, and for most people, filing bankruptcy improves your credit.
A study by the Federal Reserve Bank of Philadelphia showed that the average person who file bankruptcy had an average credit score of 538. And those people saw a 90 point improvement in their credit score in the next six months or so.
The Lesson of All This
If you have a repossession, go talk to a bankruptcy lawyer right away. Don’t wait for that garnishment that’s surely gonna come. Take advantage of the new start you have a right to, under the law.
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