Case Study: Challenging Out-of-State Wage Garnishment by a Debt Collector

This case[1] represents a recurring pattern in debt collection lawsuits: our client was sued in a county in which he never lived, has since moved to another state, and is suffering a wage garnishment premised on that improperly brought lawsuit.

Two FDCPA violations are in play: 1) suing the consumer in the wrong county; and 2) bringing an income execution in the wrong county (especially in a different state without following proper procedure).

Usually, a New York Marshal serves the debtor's employer who happens also to have a New York business address. The employer, unaware of the jurisdictionally defective income execution, honors it across state borders. This leaves our client debtors in the situation that the FDCPA seeks to prevent: defending themselves in inconvenient, foreign courthouses.

In our K.S. v. Rubin & Rothman case, this is what precisely happened. Our client was sued at his brother's address in Queens where he never lived. He defaulted and discovered that Midland Funding, LLC were taking his wages in Ohio.

Upon discovery of the garnishment, we quickly intervened and moved to vacate the default judgment. Rubin & Rothman agreed to vacate the money judgment and discontinue the action. We further brought suit against Rubin & Rothman in federal court to recover our clients' attorneys' fees and statutory damages for dealing with the improperly brought lawsuit.

We discussed this scenario (with particular emphasis on debt-collector liability) in our recent article on AVVO.com entitled:

What if my income is being garnished due to a New York judgment but I don't live there? Can I vacate the judgment? Are the debt collectors liable for this?

Broader Legal Implications

Such cases underscore the importance of understanding and adhering to jurisdictional requirements in debt collection. They also highlight the need for consumers to be aware of their rights under the FDCPA. Legal precedents suggest that while debt collectors have the right to pursue owed debts, they must do so within the bounds of the law, particularly regarding jurisdiction and fair collection practices.

Conclusion

This case is a critical reminder of the complexities inherent in cross-state debt collection. It emphasizes the necessity for consumers and debt collectors to be informed about and compliant with legal standards, ensuring fair and lawful debt collection practices.