by Shawn McClure

As a potential creditor, you have heard this message time and time again.  Do your homework!  Prior to extending credit to a new customer make sure to obtain as much information as possible regarding this new customer’s credit history.  As a creditors’ rights attorney, I urge you to include within this initial investigation the task of finding out a little about the customer’s present operations.  More specifically, find out where this new customer currently banks. 

Customer banking information is extremely valuable in the event that the relationship sours down the road, and you are forced to take legal action to collect on an outstanding account.  Moreover, in the early stages of the creditor/debtor relationship obtaining such information should be effortless.  A new customer who refuses to provide a banking reference should at the very least raise a red flag.     

In my experience, a bank attachment is typically the fastest and most successful form of execution upon a judgment.  It gets the creditor what they want (cash), and it does so in a relatively quick manner (the bank will have twenty days from the date of service to inform a creditor of any funds that may be available).  Of course there are procedural steps that your attorney will need to take in order to receive payment, but those steps can be taken quickly.   

So if in your current practice you are not already asking new customers for banking information, begin doing so.  For existing customers, I would suggest taking the time to note where current payments are coming from.  By expending minimal effort now, you have taken steps that can drastically improve your chances of recovery in the event that the account defaults.

by Jack P. Bock

Click on this link to see Bob Bernstein talk with Kevin Miller on WPXI’s NightTalk about Bankruptcy and Get P.A.I.D.: A Guide to Getting Paid Faster (and What to do if You Don’t!)

http://www.youtube.com/watch?v=vsgGf2RIig4

Please feel free to share this link with people.

By Shawn P. McClure

“They stole from me!” “I am not taking a penny less than the full amount owed!” “I want to nail that son of a b#@^$!”  Often creditors engage an attorney to recover an amount owed from a debtor, and the creditor feels betrayed or wronged by the debtor.  It doesn’t matter whether the account debtor is a long time customer who has ignored demands for payment or a one time credit sale; these feelings of animosity toward that individual or entity are still present.  If not checked, these feelings can boil over and lead to unproductive or unnecessary litigation that only ends up costing the creditor more time and money.     

As with any service industry, one of the first duties of a creditors’ rights or bankruptcy attorney is to monitor, deal with and ultimately manage client expectations and emotions.  I would suggest that the first thing that needs to be done is to get your client in an “economical mindset.”  A creditor needs to realize that when a debtor files bankruptcy or the creditor is forced to place an account with a law firm for collection, then the account is already a loss.  For a creditor’s rights attorney the goal then becomes finding the best way to mitigate that loss and obtain the most favorable resolution for their client.

Therefore, every decision during the “recovery” process should be analyzed while taking full account of the economical consequences of that decision.  No where is that more prevalent then when deciding whether or not to initiate litigation.  Immediately filing a lawsuit without a preliminary asset search or investigation into the financial stability of your debtor can turn out to be the most counterproductive thing a creditor can do when trying to be made whole.  Likewise continuing to pursue litigation when it is obvious that there is no financial recovery to be had can only hurt a creditor’s bottom line.

Sounds simple enough.  Why do creditors continue to fall into these same pitfalls?  Emotion.  Creditors become too focused on “punishing” the debtor, and lose focus of the end goal.  Money. 

Luckily, the problems outlined above are easy to remedy.  Creditors, heed your attorney’s advice and try to avoid focusing on the emotions involved in the dispute at hand.  Attorneys, take control of the situation and make it clear to your client that pursuing certain avenues, while emotionally satisfying, will simply lead to the loss of more time and money. 

I understand that sometimes a message needs to be sent, but for those creditors who seek truth and justice in a failed creditor/debtor relationship, I would suggest visiting a house of worship.  It will be less expensive and they may have better luck.

The logic behind Pennsylvania’s arcane wage attachment laws escapes me. I cannot figure out why the Commonwealth wants to protect debtors at the expense of legitimate creditors.  What are the drawbacks to adopting more liberal wage attachment laws? Who does it hurt? The vast majority of people pay their bills, in full, when they come due and would to be affected by wage attachment. Only small minorities of people do not pay their bills and I can see no reason why the legislature would want to protect those people. Unfortunately (and inexplicably), Pennsylvania has some of the most restrictive wage attachment laws in the country.

The vast majority of states allow commercial creditors to garnish a percentage of a debtor’s wages. For example, in Alabama and California, a creditor may attach up to twenty-five percent of a debtor’s “disposable” income (i.e. income remaining after paying certain “necessities,” such as food, shelter, taxes, etc.).

Only four states prohibit or severely restrict wage attachment. South Carolina is the only state that completely prohibits wage attachment. New Hampshire prohibits “continuous attachment,” which means that creditors must file a new lawsuit each time they want to garnish a paycheck (which is rarely cost effective). Texas allows wage attachment only to pay child support.

Similarly, in Pennsylvania, wage attachment is only available to pay taxes and child support. This is particularly problematic for creditors in Pennsylvania because Pennsylvania law prohibits execution against jointly owned (marital) assets unless a creditor has obtained judgment against both husband and wife.

Two justifications have been proposed in support of Pennsylvania’s restrictive wage attachment laws. First, the legislature is concerned that wage attachment will have the effect of forcing some debtors into poverty, thereby forcing the state to bear the cost of supporting those debtors. Second, supporters believe that wage attachment is counter productive because debtors, upon receiving less of their income and having less incentive to work, quit their jobs and apply for welfare.

In the coming weeks and months, I intend to contact our local state senators and congressmen about wage attachment in Pennsylvania. There may just be support to expand the attachment laws for the benefit of all Pennsylvanians. Stay tuned . . . 

We’ve added a couple new attorneys to our blog.  Scott Schuster, an associate with the firm’s Bankruptcy & Restructuring practice area, and Shawn McClure, an associate with the firm’s Creditors’ Rights practice area.  Look for their posts in the future.

One of our top experts on Judgment Enforcement and collections, Nick Krawec, will be participating in a seminar on September 12 in Pittsburgh.  If you have an interest in this topic, Nick is one of the best!

Bob Bernstein

To Register: 

Seminar ID: 360408 Your priority code is: 306960. Please mention this code when registering. Register online at:

Lorman or By phone: Call our Customer Service Department at (866) 352-9539By e-mail:

customerservice@lorman.com

Our new blog allows us to have more interaction with our clients and colleagues, as well as with those interested in our topics. Because of the fields of law in which we practice (Creditors’ Rights, Bankruptcy & Restructuring, and Business Law) most of our posts and discussion will be around those topics. However, because we are people with lives beyond the practice, we’ll also allow ourselves to engage others on topics about life, family and the world. Naturally, our moderator (me at first) will have the right to limit, redirect or refuse postings and comments, but we will try to be as open-minded as possible along the way.

We are interested in your thoughts, ideas and comments. So, let the games begin…