Child Support Exemption for Garnishment

In the case of General Electric Capital Auto Lease, Inc. v. Turner, the City of Richmond Circuit Court denied a debtor's exemption to garnishment claim.

In Turner the debtor claimed an exemption based on the amount of monthly child support the debtor owed.  The Court noted that the specific exemption claimed by the debtor on the garnishment form was the exemption created by Virginia Code §55-165.  The judgment creditor argued that this code section only applied to assignments of wages executed and approved by a judge under the procedure specifically set out in Virginia Code §55-161 through 167.  That procedure included notice to and consent of the debtor's creditors, the appointment of a trustee, and so on.  The Court found as fact that none of those things were done in this case.  Therefore, the Court ruled that an exemption under Virginia Code §55-165 did not apply.  The Court also considered all the other exemptions from garnishment listed in Virginia Code §8.01-512.4, and none of those exemptions applied either.  Accordingly, the debtor's claim of exemption was denied.

Trustees in Foreclosure

Trustee under a deed of trust are agents for both the lender and the borrowers.  Accordingly, a trustee must act fairly and impartially.  The lender must not let either the lender or the borrower influence the manner in which a trustee carries out the terms of the deed of trust, especially if this would be detrimental to either party.  If any question arises as to the existence of the default or the amount in default, a trustee should seek the aid and direction of the court.  The powers and duties of a trustee are governed by the deed of trust and Virginia Code Section 55-59.1 et seq.  The code provides when the deed of trust does not.  A trustee has no right to exercise the power of sale or to obtain possession until such time as the borrower defaults under the note or deed of trust, and, then, only for the purpose of selling the property at foreclosure or preserving the property until sale.  When a default occurs, there is no change in title – the property merely becomes eligible to be sold under the powers originally conferred to the trustee by the owner.  Thus, the noteholder has the right to have the property sold and the proceeds of the sale applied to the debt.

Using Mechanic’s Liens to Secure an Interest in Real Estate

In recent editions of Creditor News we have been discussing the benefits of using real estate to improve creditors’ positions.  As I have emphasized, properly securing debts through real estate could make the difference between collecting the funds and incurring a loss.  In this edition, we will begin a review of the benefits of using mechanic’s liens to aid in the collection of your debt.

Virginia Code §43-3 et. seq. provides for special procedures for the collection of unpaid bills related to work performed on, or products supplied for, real estate.  §43-3 A states:

“All persons performing labor or furnishing materials of the value of $150 or more … for the construction, removal, repair or improvement of any building or structure permanently annexed to the freehold … shall have a lien, if perfected as hereinafter provided, upon such building or structure, and so much land therewith as shall be necessary for the convenient use and enjoyment thereof … subject to the provisions of § 43-20. But when the claim is for repairs or improvements to existing structures only, no lien shall attach to the property repaired or improved unless such repairs or improvements were ordered or authorized by the owner, or his agent.”

Virginia Code §43-3 B provides for special rules regarding condominiums.

Virginia Code §§43-4, 43-7 and 43-9 provide for the perfection of the lien by general contractors, subcontractors, and laborers and suppliers.  We will explore this more in next month’s edition. 

We have experienced attorneys and staff who can examine title, file mechanic’s liens, and litigate to enforce the same.

Lien Avoidance Case Review: Judicial Liens

Bankruptcy Code §522(f) provides that debtors may avoid judgment liens if the liens impair an exemption to which the debtor would be entitled under Bankruptcy Code §522(b).  Bankruptcy Code §522(b) allows debtors to exempt property pursuant to state homestead provisions.

Although opinions vary in different jurisdictions, in the Fourth Circuit, Eastern District of Virginia, to avoid judgment liens, debtors must claim the subject property as an exemption on Schedule B-4 of their bankruptcy petition, and then must also file their homestead exemption in a timely manner. The case of In Re Wall, decided by the United States Bankruptcy Court, Eastern District of Virginia, demonstrates that debtors can lose their rights by failing to properly claim the avoidance.