Citation to Discover - The Hearing you Never Want to Miss!

Oftentimes, client's will come into my office with a stack of bills, primarily credit cards and several unpaid default judgments.  However, the court hearing that usually makes them come in an deal with the bills and unpaid judgments is the "Citation to Discover".  The real name for this hearing should be "Garnishment Alert - You've got about one month until 15% of your gross paycheck starts to Disappear".

Bottom line - what is a "Citation to Discover".  Put simply it is a hearing that demands your presence to learn about all of your assets and your place of employment.  Unlike simply seeking a garnishment, a "Citation to Discover" seeks to also learn about the location of your bank accounts and any other assets you may have.

What's the result of not showing up?  A body attachment which is a nice way of saying a warrant is out for your arrest so that you can appear at this hearing and explain why you are in contempt of court.....for not showing up at the scheduled "Citation to Discover" hearing.

So if you show up - what happens:  You tell the creditor the location of your employer/s and your bank account/s.  Depending on the size of the unsatisfied judgment, all of your bank accounts will be emptied and the remaining balance of the unsatisfied judgment will be taken as a garnishment.  A garnishment is 15% of your gross income until the judgment is satisfied.

What if I already have two other garnishments occurring?  No Problem, the court simply allows the first two garnishments to complete.  Then when those judgments are fully paid, your new garnishment starts automatically.  In effect, you always see 15% of your gross pay deducted for garnishments all of the time until all three unsatisfied judgments are paid off.

Conclusion:  You should always show up at a "Citation to Discover" hearing.  You should meet with a bankruptcy attorney about one to two weeks before the hearing to determine whether a bankruptcy is good alternative to being garnished.  You should also consult with an attorney regarding any balances that you have in your bank accounts because shortly after your testimony at a Citation hearing, all balances in your accounts will be taken by the creditor just before the garnishment starts.

Chapter 13 Bankruptcy is a great solution to the "Citation to Discover" Trap.  Let's say you have no savings, are already in a garnishment and now face the prospect of two more garnishments.  In this situation, you already are putting out 15% of your gross income towards the garnishments.   Most Chapter 13 plans only pay out 10% to unsecured creditors - that's all creditors with all of your debts discharged in five years or less.  In a garnishment you pay 15% and not all of your debts are cleaned up.  Chapter 13 is less costly and globally solves all of your debt issues.

For more information about how to deal with "Citation to Discover" Hearings, Garnishments and Chapter 13, please call our office at 877-GO-GO-NLO or email to schedule an appointment:  Email Bankruptcy Consultation

The Bank Won't Foreclose and I am not paying my mortgage

Sometimes, lenders decide not to foreclose on homes that have delinquent home loan mortgages that are in default.  For example, Joe has a mortgage for $200,000 on his home.  His monthly payment is $1000.  $200 is escrowed each month for taxes and insurance.  Joe has not paid his mortgage payment for 6 months.  Joe is $7200 behind in his mortgage.  Ordinarily, the lender would being foreclosure proceedings beginning in the fourth month of non-payment.  Nine Months Later, the lender would have an order for possession and the foreclosure sheriff's sale of the home would be confirmed and complete.

However, sometimes, a lender doesn't want the property back.  The following are the most common reasons:
1)  The property will not be easily resold
2)  The property is occupied and is not being vandalised.
3)  The lender has documentation problems and needs to wait until they have been able to correct documentation problems.

Let's say that you simply want it "all over".  Then you have a problem.  Even though you are behind in the mortgage, you are still the owner and liable for any building code violations or other violations such as leaving a vacant building.  In most cases, you are best off living in the property until the lender asks you to leave.

The benefits of staying in your home:  1)  Time to save up funds to get a rental unit  2)  Time to save up funds to pay off any deficiency judgment or pay for a bankruptcy  3)  Ability to allow your family to remain in the home longer to allow children to finish High School or simply enjoy their home, family and neighbors.

Why do people hate staying in their homes?  They are anxious about the foreclosure knowing that inevitably they will be thrown out of their home.  Another reason - they just want to get away from the bad experience of owning the home and losing it due to default.  Here's the problem - the painful staying in the home is often best financially.  Although avoiding a bankruptcy may not be possible, avoiding the financial destruction of your family is by maximizing the amount of benefit you can get from staying in the home.