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FAQ'S

Monday, February 15th, 2010

by Theodore Sliwinski, Esq.

1. I have just been served with a lawsuit. I am being sued by one of my credit card companies that I owe approximately $10,000. What should I do now?

If you are served with a collection lawsuit, and if you believe you have a defense to the case, then you should file an answer to the case. You are legally required to file an answer with the clerk within 35 days from the date when you received the complaint. If you do not file a written answer within the 35-day time period, then the court could enter a default judgment against you. You are also required to pay a filing fee when you file your answer. It is important to emphasize that before a judgment can be entered against you, New Jersey law requires that the creditor must verify proof of the debt. The creditor must either submit affidavits and copies of any credit card bills to establish that the veracity of the debt. Credit card debt is constantly brought and sold. Therefore, if you have legal counsel then he may be able to object to the creditor’s proofs when they are submitted at any proof hearing. At the very least, these objections may provide a debtor with some meritorious legal arguments to use in any settlement negotiations.

2. If one of my creditors obtains a judgment against me, what can they do against me?

If one of your creditors obtains a judgment against you, then the Sheriff or a Constable may be able to levy or seize your checking and savings accounts or to garnish your wages. In a wage garnishment a creditor simply obtains a court order that permits it to deduct approximately 10% from your wages. The garnishment may not legally exceed 10% of your gross salary. Additionally, any monies may not be withheld if disposable weekly earnings are less than $154.50 per week or $309.00 every two weeks. If a debtor has more than one creditor who has obtained a wage execution order they will be applied in turn. A debtor can only be garnished by one judgment creditor at a time.

In some default cases the court will set the case down for a proof hearing. In these cases, the court may not be able to enter a judgment without some type of testimony from the creditor as to the nature of the debt, and the amount due and owing. At the proof hearing the creditor will submit proofs to the court to establish the debt and how much is still outstanding. However, in the majority of book accounts or credit card cases, the judgment will simply be entered on the papers. The creditor will simply submit detailed legal paperwork to the court that verifies the debt.

3. Does filing for bankruptcy stop a wage garnishment and/or bank levy?

Yes, one of the best advantages of filing for bankruptcy are that it will stop a wage garnishment and a bank levy. When a person files for bankruptcy it automatically stays (stops) any and all collection activity against a debtor. The main purpose of the bankruptcy is that it gives a debtor some breathing room, and it also gives him a fresh start. Moreover, many debtors are absolutely petrified at the prospect of having their paycheck garnishment. Many of my clients advise me that they would get fired if their employer had to garnish their paycheck. Many debtors also will have their bank account frozen or levied by their creditors. This can be an ultimate disaster! Many debtors live pay check to pay check. If their bank account is levied, then their rent payment is lost. A bankruptcy will stop a bank levy. However, in my experience it normally takes four to five weeks before a bank will release a levied bank account back to a debtor. The Constable freezes and levies bank accounts in massive numbers. If your lawyer sends a bankruptcy notice to a Constable to release a levied account, unfortunately they do not take efforts immediately to release his levy. It normally takes four to five weeks to have the monies released from a levied bank account. Therefore, a distressed debtor should not wait until the last minute to file for bankruptcy.