“Jonathan is an excellent attorney and a valued member of our team.  Throughout his tenure at Wites & Kapetan, he has continually achieved great results for our clients. We are pleased and fortunate to have him as a partner of the law firm,” said Alex N. Kapetan of the successful personal injury and class-action firm.

Marc Wites continued, by explaining that: “Jonathan has great poise and presence with both clients and judges.  He has participated in many trials, and countless hearings, and is always a great reflection on the law firm”

Prior to joining the firm, Mr. Burns practiced law with Thornton, Davis & Fein, a well-respected firm in Miami, where he defended major tire corporations in complex wrongful death cases,  and also represented major banks in negligent security cases.

“I am thrilled to be named a partner in such a great firm,” said Burns.  “I look forward to making a significant contribution in the years to come.”

Mr. Burns is a graduate of the St. Thomas University School of Law, and received his undergraduate degree from the University of Florida.  Mr. Burns is married with a one year-old daughter and is one of the top racquetball players in the state of Florida.

Wites & Kapetan obtained for Ms. Schulman an arbitration award of $523,300 after a 4-day hearing before the Financial Industry Regulatory Authority (FINRA). The Arbitration Panel found Brookstreet and its President, Stanley Brooks, jointly and severally liable for Ms. Schulman’s losses.

On March 2, 2012, the SEC announced that it did the same, and explained as follows:

The Securities and Exchange Commission today announced that a federal judge has ordered the former CEO of Brookstreet Securities Corp. to pay a maximum $10 million penalty in a securities fraud case related to the financial crisis.

The SEC litigated the case beginning in December 2009, when the agency charged Stanley C. Brooks and Brookstreet with fraud for systematically selling risky mortgage-backed securities to customers with conservative investment goals. Brookstreet and Brooks developed a program through which the firm’s registered representatives sold particularly risky and illiquid types of Collateralized Mortgage Obligations (CMOs) to more than 1,000 seniors, retirees, and others for whom the securities were unsuitable. Brookstreet and Brooks continued to promote and sell the risky CMOs even after Brooks received numerous warnings that these were dangerous investments that could become worthless overnight. The fraud caused severe investor losses and eventually caused the firm to collapse.

The Honorable David O. Carter in federal court in Los Angeles granted summary judgment in favor of the SEC on February 23, finding Brookstreet and Brooks liable for violating Section 10(b) of the Securities Exchange Act of 1934 as well as Rule 10b-5. The court entered a final judgment in the case yesterday and ordered the financial penalty sought by the SEC.

“Brooks’ aggressive promotion and sale of risky mortgage products to seniors and other risk-averse investors deserves the maximum penalty possible, and that is what he got,” said Robert Khuzami, Director of the SEC’s Division of Enforcement. “Those who direct such exploitative practices from the boardroom will be held personally accountable and face severe consequences for their egregious actions.”

Rosalind Tyson, Director of the SEC’s Los Angeles Regional Office, added, “The CMOs that Brookstreet sold its customers were among the most risky of all mortgage-backed securities. This judgment highlights the responsibility of brokerage firm principals to ensure the suitability of the securities they sell to customers.”

In addition to the $10,010,000 penalty, Brooks was ordered to pay $110,713.31 in disgorgement and prejudgment interest. The court’s judgment also enjoins both Brookstreet and Brooks from violating Section 10(b) of the Exchange Act as well as Rule 10b-5.

The SEC is awaiting a court decision in a separate Brookstreet-related enforcement action filed in federal court in Florida. In that case, the SEC charged 10 former Brookstreet registered representatives with making misrepresentations to investors in the purchases and sales of risky CMOs. Two representatives settled the charges, and the SEC tried the case against the remaining eight representatives in October 2011.

The SEC has brought enforcement actions stemming from the financial crisis against 95 entities and individuals, including 49 CEOs, CFOs, and other senior officers.

Unbeknownst to Morry, his normal routine – shared that night by all of the guests in that and every other hotel in the county – would soon land him in the hospital for a very extended stay. What Morry did not know was that the water in the Best Western contained abnormally high levels of legionella bacteria.

According to the Center for Disease Control & Prevention, human’s contract legionnaire’s disease from exposure to such bacteria in water vapor and mist, such as that found in showers, as well as in water used for drinking. The CDC reports that “Each year, between 8,000 and 18,000 people are hospitalized with Legionnaires’ disease in the U.S. However, many infections are not diagnosed or reported, so this number may be higher.”

Legionnaire’s disease can have many symptoms, such as coughing, chills, fever, and joint aches. The Mayo Clinic describes Legionnaire’s disease as a “severe form of pneumonia. The symptoms usually appear 2 to 14 days after exposure. In severe cases, which total approximately 4,000 per year according to the United States Department of Labor, death can result.

Morry began exhibiting symptoms several days later, and was admitted to the hospital on December 7. He spent 2 months there, including significant time in the ICU. Although he has a long road of recovery ahead, he feels very lucky to be alive.

The New York Department of Health recently confirmed that tests of the Best Western’s water revealed higher than normal levels of legionella bacteria. Peter Constantakes of the Department reported that six cases of Legionnaire’s disease have been linked to the hotel.

Mr. and Mrs. Natal have retained Wites & Kapetan, a national law firm with offices in New York and Florida, to investigate the case. Mr. Wites explained that Morry’s 2-month hospital stay caused Morry to endure significant pain and suffering, as did his wife Millie, he worried daily that Morry might not survive. Wites & Kapetan and the Natals plan to pursue claims against all parties that are responsible for Morry’s and Millie’s emotional and physical damages.

When lenders obtain judgments against their customers that fail to pay credit card debt, explains attorney Alex Kapetan of Wites & Kapetan, they will often sell these judgments to debt buying companies in large volume at a discounted rate. In selling these judgments, which are sometimes referred to as “accounts,” it is far less complicated for the seller to draft a sale agreement that says the buyer is purchasing the accounts “as is”, rather than doing the due diligence in reviewing hundreds of thousands of accounts, if not millions of accounts for accuracy. Alex Kapetan believes that this may result in attempts by debt buyers “to collect on an amount that may not be accurate or on a judgment that does not exist.”

Chase Bank was recently in the news regarding this very issue, according to an article in American Banker on January 10, 2012. Chase is subject to a Whistleblower Lawsuit involving Linda Almonte, a former team leader in Chase’s San Antonio credit card services division. She had accused the bank of firing her for objecting to the sale of $200 million in legal judgments obtained by bank attorneys because half of the accounts lacked adequate documentation that those accounts had judgments on them and that one-sixth of the accounts listed incorrect amounts owed. Almonte’s suit was filed in a U.S. District Court in the Western District of Texas. After Chase failed to get the case dismissed, they reached a settlement agreement with Almonte, the terms of which were not disclosed.

In the wake of this case, there has been a complete halt of the filings of Chase collection lawsuits in five states and a recent sharp decline in Illinois has been reported. American Banker conducted the search of the electronically searchable court records in major cities in California, Florida, Illinois, Maryland, New York and Washington to obtain these results.

An example of this decline in Chase collection suits can be shown right here in South Florida. As reported by American Banker, “In Dade County, Florida, which includes Miami, Chase filed 640 collections claims in January 2011, most seeking between $3,000 and $12,000. On Jan. 4 alone it filed suits seeking over $200,000, which represents a rate of $50 million annually. But in April of last year, Chase ceased filing claims altogether in Dade County. That month, The Wall Street Journal first reported that Chase had dropped “more than a thousand” consumer debt cases around the country. Some contract attorneys cited documentation irregularities for the move, the paper reported.” However, it is unclear if Chase has stopped seeking collection of its claims on a nationwide basis or if it will find other means to pursue the collection of these accounts.

Wites & Kapetan has found that the threat of litigation is a well known collection tactic used to influence a consumer to try to resolve their debts, the absence of which could explain Chase’s recent decline in recoveries. Alex Kapetan of Wites & Kapetan represents consumers in credit card collection cases.  Both, Mr. Kapetan & Steven Canter report that Chase has dismissed cases against his firm’s clients, and that other cases brought by Chase are at a stand still.  He likened the situation to that of robo-signing in the mortgage foreclosure industry, explaining that “just as a bank must prove with admissible evidence that it actually owns the mortgage upon which it seeks to foreclose, a credit card company must prove that it owns the account and the debt in order to seek to collect from the consumer.

Given the current condition of the real estate market, many home owners find themselves with a lot of debt, and some very tough choices.  For those who are struggling to keep up with mortgage payments, both refinancing and loan modification can provide relief, but often such relief may be difficult to secure.  In particular, when the value of one’s home has decreased to less than the amount that is owed on the home, it can be difficult to refinance or obtain a modification.  Fortunately, there are some government programs that can help.

The Home Affordable Refinance Program (“HARP”), an official program of the Departments of the Treasury and Housing and Urban Development, may provide a solution for some homeowners who are not behind on their mortgage and owe more than the current market value of their property.  While the following list does not include all requirements, you may qualify for this program if you meet these criteria:

• The mortgage must be owned or guaranteed by Freddie Mac or Fannie Mae.
• The mortgage must have been sold to Fannie Mae or Freddie Mac on or before May 31, 2009.
• The mortgage cannot have been refinanced under HARP previously unless it is a Fannie Mae loan that was refinanced under HARP from March-May, 2009.
• The current loan-to-value (LTV) ratio must be greater than 80%.
• The borrower must be current on the mortgage at the time of the refinance, with no late payment in the past six months and no more than one late payment in the past 12 months.

See Home Affordable Refinance Program (HARP) (January 3, 2012) at  (on file with Wites & Kapetan, P.A.).

HARP will end December 31, 2013.  See Id. For a formal determination as to whether you qualify for HARP, you should ask your mortgage servicer.  You can also contact Fannie Mae or Freddie Mac for help in determining if you may be eligible.

By the way, HARP is just one of a number of government programs designed to help homeowners in financial distress.  So if, for example, you do not qualify for HARP because you are not current on your mortgage, you might be eligible for the Home Affordable Modification Program (“HAMP”).  You may be eligible for HAMP if you meet all of the following criteria:

• You occupy the house as your primary residence.
• You obtained your mortgage on or before January 1, 2009.
• You have a mortgage payment that is more than 31 percent of your monthly gross (pre-tax) income.
• You owe up to $729,750 on your home.
• You have a financial hardship and are either delinquent or in danger of falling behind.
• You have sufficient, documented income to support the modified payment.
• You must not have been convicted within the last 10 years of felony larceny, theft, fraud or forgery, money laundering or tax evasion, in connection with a mortgage or real estate transaction.

See Home Affordable Modification Program (HAMP) (January 3, 2012) at (on file with Wites & Kapetan, P.A.).

If you are not eligible for HARP or HAMP, don’t give up hope.  There are several other programs which may be an option depending upon your specific needs and circumstances.  A more detailed list of these programs and their requirements can be obtained from the Department of the Treasury and the Department of Housing and Urban Development.  For more information, visit www.MakingHomeAffordable.gov.  And of course, it is always a good idea to consult with an attorney who has experience in dealing with such issues.

Authored by: David Sternberg an associate with Wites & Kapetan, P.A.

Credit card debt can easily and insidiously become overwhelming, especially in today’s difficult economy.  Lately, many well-intentioned consumers have seen their debts spiral out of control due to layoffs and depressed real estate values, as well as factors not related to the economy such as unanticipated expenses resulting from the loss of a loved one, the need for medical care, or a disability.

The question of how to resolve such debts is a difficult one.  Should you attempt to negotiate with your creditors, and when necessary litigate with them, in an effort to obtain a settlement that you can afford, or should you file bankruptcy?

For many people, bankruptcy is a last resort. For example, some people wish to avoid the stigma associated with bankruptcy. Others simply feel better settling their debts by paying a more meaningful portion of the amount owed than a creditor would receive in bankruptcy; in bankruptcy, credit card companies and other unsecured creditors often receive a few pennies on the dollar, and sometimes nothing at all. For some, bankruptcy is not an option as it would negatively impact their job or business in an unacceptable manner, or they may have assets which they do not want to sell or lose in a bankruptcy proceeding.

Of course, debt settlement, like bankruptcy or any arrangement that falls short of paying one’s debts as originally agreed, will negatively impact one’s credit.  However, settling your debts, rather than filing bankruptcy, may have less impact on your credit, for a shorter period of time, than bankruptcy, and thus may provide a quicker path rebuilding credit.

The Fair Credit Reporting Act, [15 U.S.C. §§ 1681 et seq.], a federal law, allows a bankruptcy to be reflected on a consumer’s credit report for a longer period of time than most delinquent credit card accounts.  While a bankruptcy may be reported for up to ten years, 15 U.S.C. § 1681(a)(1) (2011), most credit card accounts placed for collection or charged off may be reported for no more than seven years, with certain limited exceptions. See 15 U.S.C. §1681(a)(4) and (b). The seven year period begins to run upon the expiration of the 180-day period beginning on the date the account goes delinquent immediately preceding the collection activity, charge off, or similar action.  15 U.S.C. §1681(c)(1).

When a delinquent account is settled, the consumer’s credit report is typically updated with a notation indicating that the account is settled and that the consumer no longer owes a balance.  If such an update is not made, the consumer may dispute the inaccurate information and the credit reporting bureau must delete the information if it is found to be inaccurate or its accuracy cannot be verified.  15 U.S.C. § 1681i (a)(5)(A)(i) (2011).  Thus, even prior to the time the delinquencies are removed from the credit report, lenders will generally be able to see that the consumer took charge financially by settling the delinquent account(s).  And, according to Experian (one of the three major credit reporting bureaus), the fact that a previously delinquent account has been settled and has a zero balance may help the consumer’s credit score to recover a bit more quickly than if the account remained unpaid.  Ask Experian: Benefits of Paying a Collection Account (November 9, 2011)  (on file with Wites & Kapetan, P.A.).

Further, when a delinquent account is settled the consumer is eliminating outstanding debt.  Since one factor which may negatively impact credit is excessive debt, the elimination of debt is generally an improvement.  Lenders who are considering extending credit will be able to see from the consumer’s credit report that the consumer’s total debt has been reduced.

(Consumers should periodically check their credit reports with the three major credit reporting bureaus, which are Experian, Equifax, and TransUnion.  If anything is being improperly reported, the affected consumer should contact the credit reporting bureau to initiate a dispute.  The credit reporting bureau must comply by removing inaccuracies or face civil liability to the consumer which may include any actual damages sustained, attorney’s fees and court costs, and, when the noncompliance is willful, punitive damages.)

While debt settlement has its advantages, in some cases bankruptcy may be a better option for certain debtors.  For example, when a debtor is faced with multiple lawsuits over credit cards debts and does not have reasonable prospects of being able to negotiate a settlement to pay the debts, bankruptcy may be a solution.  This is because filing bankruptcy results in what is know as an “automatic stay.”  With certain exceptions, the automatic stay stops all collection efforts and halts all lawsuits and proceedings to enforce judgments against the debtor.  This includes, but is not limited to, lawsuits and proceedings relating to personal, unsecured credit card debts.  11 USCS § 362 (2011).

Another advantage of bankruptcy is that the time frame for being discharged of one’s debts may be relatively short.  For example, in an uncomplicated Chapter 7 liquidation, a debtor’s debts could be discharged within a matter of a few months.  However, this will not always be the case and, in contrast, a Chapter 13 adjustment of debts will require monthly payments to be made over time to creditors, and as such, could take several years to complete.  Also, bankruptcy likely will cost far less to complete then negotiating settlements of your debts, which of course must be paid.

In sum, whether debt settlement or bankruptcy is a better choice for resolving overwhelming debt depends upon the circumstances.  Debt settlement and bankruptcy each present their own unique advantages for consumers faced with the prospect of inability to pay their debts.  In deciding which choice is better, consumers should take the time to do some research, and it is always a good idea to consult with an attorney who has experience in dealing with such issues.

Authored by: Attorney David Steinberg

Most home mortgages obligate you to maintain a homeowner’s policy that names your bank as an “additional insured.”  This requirement protects the asset that secures your loan: your property.  In other words, the bank is willing to lend money, in part, because if you default it can take possession of the property.  The bank wants to make sure the property is insured in case it is damaged by fire, windstorm and other risks.

You may not know that the same clause in the mortgage also provides that, if your homeowner’s policy lapses for any reason – even accidental oversight – the bank can take out a policy in its own name only, and charge you for the premium.  These policies are called “force-placed” policies.  They do not cover your interest in the property or your possessions, and do not protect you against other claims for which you could be sued such as those by people injured on your property.

A “Force-Placed” Policy Will be More Costly Than Homeowner’s Insurance

Because these policies cover a more limited risk – the bank’s interest in the property – one would assume that they would be less expensive than the lapsed homeowner’s policy.  In the vast majority of cases, however, that would not only be incorrect, but the limited “force-placed” policy could be anywhere from three to ten times more expensive that the homeowner’s policy which just lapsed.  Furthermore, the homeowner often does not learn of the existence of this policy until the bank sends an invoice or escrow adjustment months later.  By that time, several months of a staggeringly expensive policy will have been billed to their escrow account or added to the loan.

Explanations for These Unreasonable Costs

When questioned about the justification for these outrageous premiums, banks and insurance companies claim that, despite the limited risks covered by force-placed policies, they are more expensive because the homeowner “must” be irresponsible or in financial difficulties.

The real reasons for these exorbitant charges vary somewhat depending on the bank and the applicable insurance company but, in many cases, arise because of their close affiliations or exclusive arrangements.  Although one would assume that the bank would try to get the least expensive policy available, the opposite is true for several reasons which can include:

1. First, the bank knows that it will pass the cost on to the homeowner, so it has little motivation to “shop” for the best-available rate;
2. The bank may have an “insurance agency” subsidiary who receives a payment from the insurance company based the issuing of the policy.  In other words, a company related to the bank receives a payment, usually named a “commission,” based on the cost of the insurance.  As a result, not only does the bank have no incentive to seek out the most economical policy but it has an incentive to generate a large commission for its related company;
3. In addition, some banks have exclusive or near-exclusive relationships with insurance companies.  They place virtually all of the force-placed policies with that insurance company who, in turn, pays the “commission” to the bank’s insurance subsidiary, although the insurance subsidiary does little or nothing to “earn” the commission because of the assumption that the policy will be placed with the insurer in question; and
4. In some cases, the relationship between the bank and the insurance company is so “cozy,” that the bank “outsources” the administrative job of monitoring whether its borrowers have homeowners’ insurance to the insurance company.  The insurance company has access to the bank’s mortgage records and, rather than wait for the bank to contact them for a policy, the insurance determines when lapses occur and issues the policies to the bank at the same time, or before, it informs the bank of the lapse.

Is What the Banks and Insurance Companies Do O.K.?

Wites & Kapetan, P.A. does not think so.  A mortgage is a contract, and every contract includes an “implied covenant of good faith and fair dealing” which means that parties to a contract must perform their actual obligations treating the other side fairly.  This is especially true when one party has the discretion to take actions that will affect the other party’s rights.  In other words, although the banks are allowed to take out these force-placed policies, and charge the borrowers the cost, they must do so in good faith, and not in order to generate a profit for a related company or to outsource administrative functions (which should be paid for from bank’s earning from the mortgage payments).

Wites & Kapetan believes that banks have an obligation to seek out force-placed policies on the open market, which will be closer to the rate of the homeowner’s policy that lapsed.  In fact, in many cases, the bank could step in and pay the premium for the homeowner’s policy which would result in greater coverage for everyone involved at a much more beneficial cost.

In addition, in many cases, the amount charged to the homeowner for a force-placed policy is not the bank’s “real” cost of the policy because (a) its related company gets a “commission” based on the policy’s cost without doing much, if any, work, and (b) in cases where it “outsources” the monitoring function, it often receives these services for free, or for far less than it would cost them to handle the operations “in house.” Yet, Federal laws prevent banks from accepting any fee, kickback, or thing of value based to any agreement or understanding, oral or otherwise, for the referral of any business “incident to or a part of a real estate settlement service involving a federally related mortgage loan.”

If you have experienced your lender getting a force-placed policy, you should take a close look at the premium your bank assessed against you.  Depending on your bank’s relationship with the insurer, and the facts of your situation, you may have the basis for a claim against your bank and the insurance company.

Authored by: Michele M. Desoer

The Unfortunate Reality.

Many Americans are facing the sad reality of not being able to pay their bills. The country’s depressed economy has left many without jobs, or with far less income than during the boom times.  Calls from debt collectors often impede the balance of silence and calm in your home, and can add undue pressure to financial and emotional stress. To make matters worse, some debt collectors attempt to collect debts using harassing tactics that may violate Federal and/or state law.

What is the FDCPA?

The Fair Debt Collection Practices Act (FDCPA) is a federal law that regulates how debt collectors may attempt to collect a debt from consumers. Unlike some state laws, the FDCPA applies only to third-party debt collectors, and does not apply to first party creditors. For example, the FDCPA does not govern the conduct of the department store (a first-party creditor) at which you have an outstanding account, but does govern the conduct of the collection agency (a third-party debt collector) the department store hired to collect the debt from you.

Examples of FDCPA Violations.

Examples of potential violations of the FDCPA include, but are not limited to, the following:

• The debt collector cursing or threatening to use violence in order to get you to pay the debt.

• Calling you before 8:00 A.M. or after 9:00 P.M.

• Calling you at your job after the debt collector knows they should not be calling you there.

• Contacting you even though the debt collector knows that you are represented by an attorney.

• Contacting your friends, neighbors, and relatives (other your spouse) without your permission or without an order from a court allowing such contact.

• Leaving voice messages that discloses information about your debt on an answering machine where it can be reasonably expected to be heard by others.

• The debt collector in an attempt to collect a debt,  makes false and misleading statements or engages in some act the natural consequence of which is to harass you.

• The debt collector fails or refuses to identify himself/herself or their employer’s identity and/or fails to inform you that they are a debt collector.

You Have Rights and Remedies.

If you have been subject to any or all of the conduct listed above, you need not stand silent and take it. You should begin by immediately requesting, in writing, that the debt collector stop contacting you. Fax or mail (through certified mail with a return receipt) the debt collector a written request to stop contacting you, and keep a copy of the letter, fax confirmation and/or return receipt card. The FDCPA requires the debt collector – after the receipt of your written request -  to cease all communication with you concerning the collection of the debt.  The debt collector’s failure to honor your request may result in a violation of the FDCPA for which you can sue the debt collector for money damages.

You should also keep a written log of the calls from debt collectors to monitor the frequency of the calls, and to record in writing any offensive and/or threating statements made by the collector. Also, if debt collectors leave voice messages, you should save them.

If debt collectors are found to have violated the FDCPA, you could be entitled to money damages if you prevail in a lawsuit against the debt collector.  Many states also have their laws that govern debt collection activities, and such laws often allow the debtor to sue the collector and/or creditor and collect money damages.

Most importantly, the facts and circumstances that led to your inability to pay a debt are not in any way relevant to your rights under the FDCPA and similar state laws.  These laws are intended to protect you, and you should know your rights.

Authors: Alex Kapetan and Jay Arjoonsingh, of Wites and Kapetan, P.A.

It’s 8 p.m. and you arrive at home after a 12-hour day at work.  You’re exhausted, but feel thankful that you found a job that is putting food on the table.  On your way in, you grab the mail and start flipping through the stack, when you see an envelope from the local court between the phone bill and a coupon from Bed Bath & Beyond.  Your heart begins to beat faster, as thoughts of an unpaid debt rush into your head.  Opening the envelope, you realize that ignoring all those legal notices brought you to this moment; the bank is garnishing your pay check.

The best way to avoid garnishment is to be pro-active and settle your debt before you are facing garnishment.  If this is not possible, you have other options and rights under Federal and state law.

The good news is that both the U.S. Congress and state legislatures have enacted laws protecting some of your wages from garnishment.  In reality, the banks can only have part of your cake.

Federal wage garnishment law limits the amount that the Bank can take (i.e., garnish) from your wages to 25% of your disposable earnings or the amount that your take home pay exceeds 30 times the federal minimum wage per week, whichever is less.  So , if your take home pay exceeds 30 times the minimum wage, for example, with a take home pay of $500 per week, the maximum amount that that the creditor can garnish from your wages under Federal law is $125 per week ($500 times 25% equals $125 per week).  $125 is the maximum amount that can be garnished because it is less than the amount by which such take home pay exceeds 30 times the minimum weekly wage.

(Calculation explained: 30 times the current Federal  minimum wage ($7.25) equals $217.50.  With take home income of $500 per week, your disposable earnings exceed 30 times the Federal Minimum Wage ($217.50) by $282.50, which is 56.5% of take home pay of $500 per week.)

If you are a Floridian, the news is even better.  Under Florida law, the disposable earnings of what a person entitled to the “head of family” exemption are protected in various ways.

You are considered the “head of family,” under Florida law, if you provide more than 1/2 the support for a child or other dependent. A head of family is exempt from garnishment if the head’s disposable earnings are equal to or less than $750 a week.  In other words, if you meet this exemption, your wages cannot be garnished.  You can keep all of your wages.

For the lucky heads of family with a disposable income greater than $750 a week, your wages cannot be garnished unless you waive the head of family exemption in writing with the creditor.

If you are a head of family and your take home pay is $750 per week, you get to keep all of your wages, provided that you properly claim your exemption.

Most states use the Federal Guidelines as their standard.  For example, Illinois offers no special exemptions beyond those provided to all states by Federal law.  On the other hand, Illinois law does limit the amount of your earnings that can be garnished to 15% of your gross weekly wages or the amount by which your disposable earnings for a week exceed the total of 45 times the federal minimum hourly wage, whichever is greater.  However, Illinois narrowly defines “disposable earnings” to the amount remaining after withholdings (such as Federal, State, and Local taxes; Social Security (FICA); required disability contributions and retirement contributions; and mandatory health insurance or union dues) are deducted from gross income.

Texas gives you a big break by not letting the creditors in the cake shop. Texans get to hang on to all of their wages because in Texas wages are not subject to garnishment by creditors.  Of course, creditors can garnish your income if it is not a wage for personal services rendered. Income that is not considered a wage for personal service rendered in Texas includes capital gains on investments and business income to an owner or shareholder.

In California, 25% of your earnings are fair game for these cake-loving creditors. Also, in California the creditors can garnish bank accounts that are held jointly by people that did not incur the debt.  In fact, a bank account held jointly by a married couple can be garnished without court order if proper notice is given.  In other words, you need to keep a close eye on the spending habits of those that you share bank accounts with.

This is only a brief overview of garnishment.  To ensure that your wages are protected, you should consult an experienced consumer protection attorney.

Authors: Alex Kapetan and April L. Castoro, of Wites and Kapetan, P.A.

A CONSUMER’S RIGHT, A CREDITOR’S OBLIGATION; Are you leaving money on the table?

Many consumers are aware that they have the right to dispute a charge or an incorrect credit card bill, but few consumers take advantage of these rights or know how to do so.  Often when a creditor files a lawsuit to collect on an unpaid credit card, they will use discovery requests to confirm whether the consumer ever made a dispute to any of the charges on the account.  Creditors will often assert the absence of a dispute as proof of a consumer’s agreement with the charges. While that is not necessarily the correct legal standard, it does shed light on an underutilized, but important tool for consumers to use to preserve their rights, the Fair Credit Billing Act (FCBA).

It is important to know that credit card companies are required by the FCBA to investigate a properly made dispute and cannot hold you – the consumer – responsible for the charged amount in dispute, late charges or finance charges associated with it during their investigation.

The FCBA covers disputes arising from billing errors, some of which include: 1) unauthorized charges, 2) charges that list the wrong date or amount, 3) charges for goods or services you didn’t accept or weren’t delivered as agreed, 4) mathematical errors, 5) failure to post payments and credits, 6) failure to send bills to your current address (provided a change of address was provided in writing no less than 20 days before the end of the billing period), and 7) charges for which you ask for an explanation or written proof of purchase along with a claimed error or request for clarification.

A dispute over the quality of a good or service is not a billing error, so the following procedure would not apply, however other legal rights may be more applicable.

In order to take advantage of this law, a phone call to a customer service representative, while helpful, is not enough, as it does not satisfy the statute.  No verbal assurance by the creditor will require their compliance with the dispute procedures.  In order to make a proper dispute under the statute your dispute must:

1. Be in writing
2. Include your name, address, account number and description of dispute
3. Be addressed to the “billing disputes”, “billing errors”, or “billing inquiries” address for the creditor.
4. Should be (but not required) by certified mail, return receipt requested. (for your records)
5. Include copies (not originals) of documents that support your position.

Creditors may not threaten to report you as delinquent or report your account negatively based upon your withholding payment on the disputed charge.  The creditor may report to the credit bureaus that your account is in dispute.

Importantly, a consumer’s exercise of its right to dispute a bill cannot be the basis of another potential lender’s denial of credit.  To deny credit based on such a dispute may be a violation of the Equal Credit Opportunity Act.

Once a dispute is properly made, a creditor who fails to follow the statutory procedure may not collect the amount in dispute, or any related finance charges up to $50, even if the bill ends up being correct.  The creditor must acknowledge your dispute in writing within 30 days of receipt, and it must resolve the dispute within two billing cycles (not more than 90 days after receipt of your letter).

If the bill is incorrect, then the creditor must explain to you in writing, the corrections that will be made and credit your account the charge in dispute and all related fees and finance charges. If the bill is correct you must be told promptly and in writing what is owed and why. It may be determined that you owe a portion of the amount in dispute and if so you must also be informed in writing.

You may attempt to dispute it further and request copies of all relevant documents, however this written dispute must be submitted with 10 days of your receipt of the results. If a bill is determined to be correct collection efforts by the creditor may commence.

The bottom line is that consumers should not remain silent in the face of a disputed bill.  Don’t be afraid to stand up for your rights, and instead follow the procedures of the FCBA, and make the creditor do the same.

By Steven M. Canter, Wites & Kapetan, P.A.

This article is provided for informational purposes only and should not be construed as legal advice. If you need legal advice, contact a lawyer as soon as possible.