Is my social security and pension exempt from debt collectors garnishing?
I was forcibly retired last year and am paying 8 credit card bills -1 in collection - with an income of ss and pension only. I can't do it anymore. What do i do?
Is my ss and pension exempt?
—elliot
It sounds like you are asking what will happen if you stopped paying on all, or maybe just the account you already have in collections. The quick answer is that your social security income cannot be garnished at the source, and most pensions are exempt from garnishment too. You would first have to be sued, and a judgment entered in court, before there is any risk to your money from a debt collector. And what risk there is, given the sources of the income, would be when that money is on deposit in your bank account, so in the form of a bank levy.
If your situation reaches a point where you have to be concerned about how a debt collector will go about trying to collect on a judgment, you would then look to how much of your stuff (money in bank account, wages, personal property, car) is protected by state law. The amount of protection you have from creditors in your state may surprise you.
What state do you live in?
Bank Account and Wages – Limiting Your Risk from Debt Collectors
Before you react to how much risk you have if a creditor sues you in order to get paid, consider whether that can be avoided. Your not able to pay all 8 credit card debts today, so something has to give.
What if your credit card payment could be lowered, and fixed at a more affordable monthly amount?
Add up all of your credit card bills and then calculate two percent of that. Is that two percent much lower than what you are paying out to all 8 cards today? If it is, you are paying higher interest rates. If those rates are lowered (and fixed), would you be able to pay that amount consistently on your fixed income? If yes, read through the credit counseling section of my debt relief guide.
If roughly 2% of your consolidated credit card balances is out of the question, what about negotiating lower balance payoffs? Your credit card debts can be settle for less than what you owe once they reach a certain level of delinquency. If you are not making monthly payments to your credit cards, and saving up all the money you can instead, how long would it take you to pool together about half of your credit card totals?
If your answer is less than 36 months, settling these credit card bills may be the answer to avoid bankruptcy. Keep in mind that some creditors will accept settlement far lower than 50%. The review post about what major credit card lenders settle for is fairly accurate. Use that as a beginning guide to how much money you will need to settle with your banks.
You can post a list of your different creditors in the comment section below, with the balances as of today, and I can offer feedback about negotiation targets, timing, and prioritizing creditors who are the most likely to sue. Settling with the right creditors early can limit your risk of bank levy and property liens.
Put the Debt Behind You with Chapter 7 Bankruptcy
While bankruptcy is something most people want to avoid at all costs, I usually find they have not assessed the costs and benefits. While we talk about your credit card bills being affordable with credit counseling, or by settling for less above, chapter 7 bankruptcy is typically the ultimate in affordability.
Chapter 7 could cost you less than 2k from start to finish (I have seen costs less than 1k). Using bankruptcy you are able to discharge those credit card debts (and other bills), and once discharged, you remove any and all risk of being sued, or any type of bank levy, garnishment, and property liens.
You have to qualify for chapter 7 bankruptcy using an income means test specific to your state. And just like there are state exemption laws that protect you from debt collectors, there are state exemptions for what you are allowed to keep in a chapter 7 bankruptcy. If your stuff is valued at more than the exemptions in your state, you may look to a chapter 13 bankruptcy where you repay some, or all of the debt, over probably 5 years. But when it comes to people having to consider chapter 13, I have often found debt settlement to be a better alternative.
What if you just didn’t pay, and did nothing?
Some folks with too many bills, and not enough income and assets (such as being on fixed income from disability and social security), will stop making payments all together, and wait for whatever comes. If sued, and a court judgment entered, they already know they are not at risk because; their car and other personal belongings are protected by state law; they are not working in order to be garnished; wages are low enough in their state to be protected; live in a state where wage garnishment is not allowed; and funds like social security that are exempt are the only moneys deposited into their bank account.
Some people may feel that doing nothing is better than filing for bankruptcy, and there are many times I will agree. Check out the above interview I did with Eric Olsen, Executive director for HELPS. Eric and his team are available to help seniors, and those receiving disability and VA benefits, in order to protect themselves from all manner of debt collection:
This was a pretty long winded answer to a short question. My goal with this page is to bring the state exemptions from extra ordinary debt collection into focus. Anyone with questions or concerns about this topic can post in the comment section below. Please include the state you live in.
Need some personalized help?
I do offer a no cost initial consult to anyone trying to get their bearings on what to do about their particular situation. You can schedule the call using the Get Help tab at the top of this page.
I can usually offer actionable feedback in a brief call once I know the details of your situation.
You can post in the comments below anonymously, which I answer daily.
You can post in the comments of any of my YouTube videos.
About Michael BoveeMichael started CRN in 2004 with a mission to provide people in need with detailed debt and credit help and education. Michael has participated as an expert panelist in federal consumer protection rule making, collaborated on state law changes governing debt consolidation, has worked as an expert witness in court matters related to the debt relief industry. He is available to speak with you about your financial struggle and helps people resolve their debt problems daily.
My wife and I are already in bankruptcy In the 18 months since becoming bankrupt we have acquired 5 credit cards with about 10 000. total each consisting of about 2000 each We were paying these with her retirment account but it is about to be deleted She is 75 andI am 81 and both of us have health problems Her source of income will soon be only 1582.00 .mine is 1282.00 with a small pension of 964..00
The attorney who we used says he will not deal with the problem
We live in North Carolina we have about 40 k equity in a house that is in both our names
.Are we judgment proof
Your comments will be appeciated
North Carolina provides for up to $60,000 of home value exemption in certain elder situations (35k exemption otherwise). I would contact a low income legal aid office, or an experienced debt collection defense attorney in NC to find out if you meet the guideline for the extra protection.
Some creditors, and even debt buyers, are going to consider you uncollectable. Others will see the home as an asset and may push collections. Who are the creditors you owe?
In my name Discover 1100.00 capital one 1900.00 Amazon store card700.00
In my wife’s name capital one 1900.00 sycrony 1700.00
Barclays 1900.00
Capital One sues indiscriminately from what I see, and Synchrony sells debt to buyers who may see the mortgage being paid as an asset even when your equity may be exempt.
Many of the debt buyers you may come into contact with use sophisticated collection tools that can miss your being uncollectable. Post an update with any collectors you hear from and I can offer tips along the way.
Hi, I really need your help. My mom, who is 80 years old just got served from Capital One/Moore law group for $4156. She only has a social security income of $608 and owns nothing.
What should I do?
I want to call the Moore Law Group and offer them a deal. Like $1500.
Can they go after her if she only has Social Security?? Please help!!!
Thank you
I moved your comment to this page where I cover situations such as what your mom has going. There is nothing Capital One can do to touch her Social Security benefits. But there are other ways for creditors to enforce judgments. I know you said she owns nothing, but what state are you in?
Moore Law Group will be unlikely to accept anything less than 50% of the lawsuit amount. If your goal is to settle this debt, can you raise a bit more money?
Hello, I’m 58, single, on S.S. Disability permanently and have no personal property in my name. I receive $877.00 per month and have it put into my bank account. I have no other income. I have credit card debts amounting to $12000.00 I’ve been paying on time monthly but can no longer make any headway in seeing them get closer to paying any one of them off in a timely manor. My debts are 6,000. to Cirrus Master Card/Capital One MasterCard for 2000./ A Kroger Visa card for $2000. and a Barclay MasterCard for $2000., I can’t pay these down. I have to stop paying on them and only use my 977,00 per month to live on. I keep using my disability income to make payments on them all and in turn, have to use the cards again to pay my bills and have money to live on for medications. food. transportation fees etc. What am I exempt from if I were to be sued for not making payment to these companies any longer?
Should I look at Chapter 7 bankruptcy or a debt consolidation counselor? I’m thinking Chapter 7 bankruptcy because if I have to make monthly payments to the creditors, I will not have any money to live on. Help please. Thank you in advance for your guidance. Sincerely, Cindy
Your exemptions from judgment creditors are state specific. What state are you in?
Based on what you shared I would not choose debt consolidation with a credit counselor. While consolidation could help with a fixed lower monthly payment, it would not offer enough relief.
Look into chapter 7 bankruptcy. It will provide immediate relief if you qualify. Read my article about how to find the right bankruptcy attorney for you. Because of the fixed income and straight forward situation, yours might be a scenario where you focus on the most affordable attorney. You might want to look into whether their is a nearby low income legal aid office assisting with chapter 7 filings.
I live in Troy, Missouri. If I stop paying on the credit cards, do I wait for the credit card companies to contact me to reduce the amount they would settle for? Maybe I should start saving the 400.00 that I divide up to keep making small payment instead of defaulting completely. If I save that each month, and the creditors would reduce the amount they would settle for, I could pay them off one at a time but very slowly. I could pay off the 3 c.cards that are each 2000.00 in approx. 15 months. Then I could start working of the 6000.00 to Walmart MasterCard. Does that sound do able? I want to get this interest to stop as soon as possible that’s what is eating me alive. What do I say to the credit company to get the interest to stop accumulating now. If I just let it go till they are ready to settle for less, I’m fearful of how much interest it will come to in the end. Do you know of a company in my area , that you could suggest, that works with settling debts for low income? I want to thank you so much for your promptness, and guidance with this matter. You are a blessing!
If you are able follow through with that debt roll up payment approach, you would not need to settle.
If I understand your situation correctly, you are more looking to get your monthly payments reduced? If that is the case call my hot line at 800-939-8357, then press 1. You can consult with a counselor for free and get a to the penny quote of what you monthly payment will be.
If you are looking to settle with your creditors, start reading this article series: https://consumerrecoverynetwork.com/how-call-bank-negotiate-credit-card-yourself/
Thank you very much, I have a house that my father has a lien on, my car is a 99 dodge Durango and I don’t have much in the home due to divorce.. I have a 16 yr old son that lives with me and a 5 yr old daughter that I have 50/50 custody of…. what would you suggest if I have to default on this line of credit? I paid the 7000$ in full but unforseen circumstances arose and I ran it back up.. Thanks, Joe
If you have not alternative but to stop paying the account it just is what it is. I would suggest saving up money each paycheck. Save as much as you can and keep squirreling that away until you can offer a lump sum settlement proactively, or to have available if the collections does go to the court.
I do not like bankruptcy as an option for just the one account, and when considering the possibility you could settle it for half. That would be filing bankruptcy over $3500.
Hi, I’m Joe from North Carolina, I have a delinquent line of credit due to inability to pay.. I work but am divorced and I’m stressed out because of this 7,000$ debt that I can afford anymore. .. What are the repercussions of defaulting?
This line of credit is through a credit union. ..
I find Credit Unions to be less likely to sell unpaid accounts to debt buyers, and to have a higher incidence of using the courts to collect. This mostly applies to small credit unions. The larger the bank, that higher likelihood begins to diminish (think USAA, Navy Federal, etc).
The general repercussions are credit reporting and score damage and dealing with collection calls and notices. Ultimately you risk being sued for collection and a judgment entered, which is what this page is mostly about… exemptions from judgment creditors.
North Carolina does not allow wage garnishment.
Your car is protected for up to $3500.00 of value in North Carolina, and with an additional 5k if you do not take a homestead exemption.
There is up to $35,000 of your homes value that is protected from creditors with up to 60k for certain elder situations.
NC offers up to $5,000 of household goods value as exempt from judgment collectors (and on up from there depending on how many dependents you have), and more than that if no homestead.
Hi! Please advise: if filed the bankruptcy prior being sued for credit card debt, will it prevent from putting liens on the property acquired in the future (1-2 years after filing the bankruptcy)?
Did you file chapter 7 bankruptcy? Was the debt in question part of your bankruptcy filing?
You should speak with your bankruptcy attorney to confirm, but generally speaking, once you discharge a debt in chapter 7 there should be no collection lawsuit later on, which is what could then turn into a property lien.
We live in the state of Florida our combined income is 5441.00 monthly . My contribution is 680.00 monthly we owe around 55,000 in a loan and charge cards 27,000 on a car loan and around 47,000 on a mtg . We do not own the land we pay 460.00 monthly in land rent . My question is do you think we should do bankruptcy or struggle to pay the bills or just not pay at all and see what happens . My name is not on the car or personal loan or on the large credit card bill . Would I be responsible for this if he doesn’t pay even if my income is only 680.00 a month ?
How many people live in the household (include adult children attending college)? Chapter 7 bankruptcy has an income means test hurdle that you will have to clear.
Are the credit cards current? If late, by how much?
You would have to be sued before your income is at risk. It is unlikely you would be named in a suit for collection on a debt you are not liable for in Florida. If your husband is sued, and a judgment later entered against him, it is possible your money in a joint bank account could be at risk.
I currently owe about $2000 to the State of Arizona for back taxes from 2003, I believe that is the year. I now live in Arkansas. Can Arizona file a levy against my checking account I have here? My income is Social Security disability and survivorship pension from my late husband.
It is possible for your checking account to be levied for a judgment. I am not certain if your bank account can be levied for state administrative process, such as back taxes. I would talk to a debt defense expert in Arizona about this situation and see what they say.
I have not covered Arkansas debt collection exemptions yet on this page, so here are those details:
Arkansas allows up to 25% of wages to be garnished.
Arkansas is terrible for protecting your car. Only 1200 dollars of protection with a bankruptcy filing, but without that the exemption is 200 dollars, or 500 if head of household. And this must also cover personal property (household goods and cash in your bank account).
Arkansas does offer full protection of your home, regardless of value, from debt collectors, but not unlimited acreage.
I live in Nevada. I am retired and 65 years old. I retired early, at 62 in 2011, with no savings of any kind, as my 25 year old son had an accident which led to an injury that caused a stroke. His left side is paralyzed. He needed me for appointments and therapies.. I had great credit, no debts and was able to buy a 2 bdrm. $70,000 condo. He pays me room/board from his small disability, when he can. It goes into my Wells Fargo bank account. I have no savings account. Furniture is years old and bought second hand. My pension and SS also go into my WF checking account.
I receive a small pension from the county of $1158, before taxes and medical. My pension pays for 75% of my medical. I also was receiving $234 a month SS widow’s benefit. However, the county ” strongly ” suggested that I accept Medicare plan A&B, . They now take that out of my SS, so I am now getting only $129 from SS. My net pension is $845, for a total income of $974 a month.
When I bought my home it was a short sale and had a lot of needed repairs. When my son moved in, I needed a bed for him, bedding and other furniture as I had been living alone in a small studio for the past 8 years. Soon my two credit card debts crept up as I can barely make minimum payments and have nothing left for food, car maintenance. My car needed many repairs as it is from 2001 and not worth that much, anymore but gets me to the store, doctors etc. and those repairs also went on the cards.
I have no other assets besides my home, which is worth about $100,ooo. and I owe $60,000. I also owe $181 a month to HOA for a total of $652 a mo. I have not missed a payment on it or utilities, my first priority. But, I often put medicine, food and gas on the cards because I’m out of money each month after paying the card’s minimums, They have grown to the point I owe about $29,000.
We go no where, barely eat, have no entertainment so since 2011 nothing has gone on the cards except necessities. I believe now, if I didn’t have the payments on the cards, USAA and Wells Fargo, I could meet my monthly expenses, including food. My son does get $90 in food stamps.
I also have had several strokes and been in the hospital in the past 6 months, twice. I have stage 3 kidney failure, so I have hospital debts which I make small payments on. I told them when they first took me to the hospital, I couldn’t make the co-pays, but they kept me anyway. The first time I walked out after a few hours, refusing to stay overnight because of the money. Fortunately, I’m not disabled but the money situation is causing the strokes, I’m sure.
My credit FICO score is still good, but not for long, it just shows I’ve been a good budgeter until now. With my drop in income and added medical expenses, I can no longer pay them.
Should I just stop paying them? File bankruptcy? I don’t know how I would afford bankruptcy. If I just stop paying them, will be credit be ruined forever? I feel like such a poor example of a mother.
If I were in your shoes I would stop paying the credit cards in preparation for filing chapter 7 bankruptcy. You should consult with a bankruptcy attorney or two in your area. They will likely tell you to stop making payments on unsecured accounts too.
You could essentially blow off the credit card bills without filing the bankruptcy, but you are not fully judgment proof, and the collection activity that would commence will likely aggravate your health concerns.
Debt and credit has nothing to do with being a mother, so stop carrying that baggage around immediately.
Let me know what your thoughts are after you consult with a bankruptcy attorney.
For other readers in Nevada, here are the exemptions from judgment creditors:
Wages in Nevada are protected up to 75% (the federal minimum standard), or 50 times the federal minimum wage.
Nevada has one of the strongest protections for the value of your automobile, covering up to $15,000.00 of value.
Your personal residence is protected from judgment creditors in Nevada to the tune of $550,000.00.
Household goods are protected from the debt collectors by up to $12,000.00.
$400.00 dollars of cash on deposit in your bank account is protected (with some other wildcards of up to 1k unused exemptions). And of course your SSI is protected.
Thank you for your quick reply. In what way am I not judgement proof? I don’t have $400 in cash, my SSI is protected, and I think my county pension is too. My home is worth less than $550, 000.00 and I have a homestead exemption on it, too. My car isn’t worth that much either. What am I missing………besides ruining my credit which Bankruptcy will do, also. I’m not working. Dunno if I can find a lawyer I trust and I’ve met a lot of them (used to be married to one). Let alone for free ( I think there is a long waiting list?) I agree about the aggravation of having my two cards going after me but if I can’t pay, I can’t pay.
Thank you about my not being a bad mother. I’ve tried to be a good example, including paying bills and debts, but I simply can’t anymore.
My comment about collection proof was not as much from an enforce-ability of the judgment angle, but directed at how collectors will see you. Having a home will often raise your collection score that debt collectors use (regardless of the exemptions, or whether the property meets them), and with your health concerns aggravated by stress, I do think it a good idea to alleviate that pressure.
It can be difficult to find a bankruptcy attorney for free. Even low income legal aid I think wants some money, and there are filing fees regardless of professional fees (a bit over 300). You may be able to find a paralegal that will do the forms for a very reasonable amount. You may also be able to find a reasonable attorney. The national average cost of filing chapter 7 is roughly $1800. That is all costs. The more inland you get the costs can be down in the $1500 range.
OMIGOSH. That is what I was afraid of. If I don’t pay my two cards, it would mean we can eat and cover emergencies, like the battery my car now needs. It doesn’t mean I’ll have money to save for a lawyer, that would take me years.
Sounds like I’m stuck. You are right, I’ve checked around, everyone wants some money and by ‘some’ I am talking it’ll take me years to save enough. Even at $100 a month, we are talking a year and a half or so. Oh dear. Talk about between a rock and a hard place.
Thank you for your expertise. I suspected I was in a bad place.
You cannot get around the court fees of a few hundred dollars. You can do the forms yourself, I just don’t recommend it. NOLO puts out a decent DIY bankruptcy book that is affordable.
Thank you. I’ve seen the NOLO book and also almost every thing I’ve read says NOT to do it without a lawyer, it is too easy to miss a step and lose the house. With my strokes, I can’t trust my brain to not miss something, anymore. Yes, court fees alone would be something I could do in 6 months rather than years, but I’m petrified to try it myself.
I guess no one can help me, too poor for bankruptcy, too brain addled to trust myself to do it myself. Thank you for trying to help.
Hi Michael-
My father is 72 yrs. old, living in Oregon, retired and receiving his pension and SS. He has recently become ill and can no longer work part-time to pay his rent and credit card bills. He has $13k in CC debt. I have asked him to come live with me in NJ. What would happen if he stopped paying his CC’s? Could they come after me or my home? What is his best option?
You’re help is greatly appreciated.
Credit card banks and debt collectors cannot hit you up for any of your dad’s unpaid bills. There is not much they would be able to do to collect from him. He may be able to ignore the payment and collection attempts entirely, or may want to look into chapter 7 bankruptcy to wipe the debts away and eliminate any stresses that can often come with unpaid bills in the hands of debt collectors.
I’m a 75 yr. old retired female living in Georgia and my only income is social security, Ga. teachers retirement and FL teachers retirement all directly deposited in to my checking acct. Four years ago I sold my triple wide manufactured home to neighbors (which they moved to their property)with an existing mortgage left in my name. They just took over the payments and have been late a numerous times, missed 2 payments in 2012 and 2 payments in 2013. I rent an apartment and have my own expenses and can’t afford to make the payments for the buyers. Their late and missed payments are hurting my credit. If I should decide to let the bank repose it due to my inability to pay and the present buyers are always late and have missed a total of 4 payments and the bank sells for less than owed, then sues me for the deficient funds to pay off the mortgage, can the bank garnish any of my income which I have very little left over after bills are paid? Do you have any other suggestions?
They cannot garnish at the source, but if they sue and get a judgment, your bank account is at risk from being levied. You will have options along the way to deal with the debt. Post an update with the shape of things and this goes along.
I do not see where I have covered Georgia judgment credit exemptions above, so here are those:
Wages in Georgia can be garnished up to 25%.
You have a $5,000.00 car value exemption, but that amount must cover household goods too.
Home equity in Georgia is protected up to $21,500.00.
Cash in your bank account is protected in Georgia by up to $5,000.00. It is referred to by some as a wild card exemption because it has to cover all personal property (car, household goods, etc).
When I was a kid (15,16) I remember my mother boasting about only $2k more and the house was paid. I am now 54yo moved out when I was 18 and never inquired as to my mother and fathers financials. Two years ago my father died and I started looking in to my mothers financials. I’m dumb-founded! My mothers mortgage is $269K! She does not remember all the particulars; I believe predatory lending, but she needed my fathers pension and ss to supplement hers to make ends meet. She is 78 retired and has 22 years left on a 30 y mort. at 6%.
I did the numbers for her and she will sink just like Titanic. I’ve told her to walk away and come live with me. She receives SS and a pension from her union (local 1099 hospital workers in NY). Since hers was more than my fathers, SS was cancelled so was his pension, no continuance for her. She’s insistant on staying saying “she doesn’t want to ruin her credit”! Admirable, but foolish. I’m estimating 14mths till I have to buy her groceries. We have already turned off the phone and cable service. I got her a prepaid phone and loan her cd’s to watch.
I’m not proud of telling her to walk away, but, if she leaves and combines her money with mine I don’t think it can be attached. The money that she can accumulate will give her funds to enjoy a little retirement that may be left her.
Can I hide my mothers money with mine to care for her without attachment from default of her mortgage?
You may not have to hide her money at all if it comes from an exempt source. She may be able to maintain her bank account.
I would suggest walking away and filing chapter 7 bankruptcy to discharge all debts if this were my mother. That way there are no collection stresses to be concerned with later on.
I have a client who is 64 and collecting retirement in the form SSI, she is married and he is 65 also on SSI and they reside in Indiana. They owe Citi Bank 5,000 and a lawyer is suing them on the banks behalf. They own their home outright and are worried of the collection law’s in their state. What can happen.
Andrew
If it is Citibank that still owns the debt and who is suing, they are likely better of settling for as low a lump sum pay off as can be negotiated. This would prevent a lien on the property.
Indiana protects only $17,600.00 in home value from judgment creditors.
Wages in Indiana can be garnished up to 25%.
Value of your car up to $9,350.00 in Indiana is one of the stronger protections among all states, but this must also cover the value exemption of household goods.
Indiana protects $350 of cash on deposit in your bank account from levy that could result from a debt collection judgment. Their Social Security is protected in the bank account, but it is problematic when there are other nonexempt sources of money on deposit in the same bank account.
Can they pull together a lump sum of money to settle?
Your advice is wonderful and greatly appreciated.
My 84 year old father has gotten himself into severe debt. Me and my sibling are helping by kicking in cash each month, but are in need of a more comprehensive solution. Our goal is for them to be able to live and stay in their home (my mother likley to outlive my father by a bit).
They live in Wi and in a nutshell, has an interest only mortgage of ~$325K plus a $10k line of credit on a home worth roughly that balance total.
He has also amassed ~$50k in CC debt on which he pays the monthly minimums totalling ~$900/month. Monthly interest accrual is $400-425, and obviously on the rise.
Only income is SS, at a total of $2300 between mother and father. Given that, and the lack of other assets (they lease a car), I don’t see much benefit to Chapter 7, as opposed to simply stopping payment on the CC’s (and potentially any medical bill said), and continuing to make the mortgage and property tax payments, insurance, etc. religiously to retain the house. Doing so would free up that $900 in cash and quite honestly get the CC’s out of his hands. Would more or less have the same impact as bankruptcy, as I don’t see any real additional protection that the bankruptcy law. would provide in this case.
My siblings will continue to contribute to paying utility bills, groceries, etc,, but as much as I hate making it the bank’s problem, I don’t see a scenario where all that debt can be paid off.
Am I off? What am I missing?
The chapter 7 bankruptcy would benefit greatly to the following:
All collection efforts cease. I cannot convey well enough in a comment reply the amount of pressure and stress this can relieve your folks of.
Creditors and debt collectors do sue for non payment, and regardless if the situation suggests that would be pointless. This is not only a form of additional stress and collection pressures, but can end up with liens on the home, and potentially bank account levies.
Given the amounts owed on the credit cards, and the cost of a straight chapter 7 bankruptcy (under 2k), I would look to the relief from chapter 7.
Thank you very much for that quick and helpful response. I think you are probably right. Also looking at the Keeping Home Affordable (HAMP) program if they will qualify – which I think I they may. Any timing considerations on when to file Chapter 7 and possible implications. Thanks again.
If there are timing concerns for filing now, or delaying for a few months, it is something to talk over with the Bankruptcy attorney. I encourage your folks, or anyone in your family involved in locating an attorney, to read my article about how to find the attorney you will hire.
Michael, thank you I read the link you provided, I really cant afford that trailer anymore, and DMV costs, and tags have gone up this year in Idaho, I just paid my HHR registration for 2015 and it went up 20 dollars ! I really don’t want the trailer anymore either,it just sits in the driveway depreciating ,with gas costs etc Im just not as interested in it as before I went on disability. My boyfriends work in this economy has been very erratic and unstable, still no actual work and no solid start date, despite looking on internet, employment agencies etc.
It sounds like it is time to voluntarily surrender. It is no different than a repossession really. You arrange to give the stuff back, or for pick up, and they auction the stuff at a discount. The amount left as owed after the auction proceeds are subtracted from the loan balance is a deficiency balance, and will become an unsecured collection account (but based on a written contract).
Your risks and collection exposure will be the same as dealing with collection agencies for credit cards and the like.
Michael, First of all I appreciate all your help , Thank you! Unfortunately now I am up against another problem , due to my boyfriend being laid off again for the past 7 weeks I cannot pay the RV payment of $204.00 per month. US bank has started calling me for the money, It is now over 30 days late and they said I have to pay that payment on this 12th of Aug when I get my disability check and then to “catch up” I have to pay another payment on the 25th of Aug. I have tried to privately sell it and I called my son last night and he cannot afford to take over payments. …..I have had stellar payment record until right now with them. The trailer it is an R Pod is also underwater I owe more than it is worth. I purchased it in 2011 for $ 25,000 and I still owe $13,500. One lady at the bank suggested I do a voluntary repo after she spoke with me, what are the pitfalls for me? She said something about charging for storage etc and sending it to auction. At this point I really have no other options, the insurance on it and the cars is due this month also and thats 347.00 , He is fervently searching for work, the most earliest time he could possibly start is 17th of Aug, I told the bank this ,but they want the money, Is voluntary a better choice than the other option?
How much do you want to keep the trailer? How certain are you of your boyfriend getting back to work? Are you ready to let the items go?
If you let the items go to auction you will end up with a deficiency balance that is collectable afterward. You can read more about the risks and options afterward here: https://consumerrecoverynetwork.com/question/debt-collection-auto-loan-deficiency-surrender-repo-wage-garnishment/
The focus of that reader question, my feedback, and the comments, tend to be about auto repossession, but the entire discussion would apply to RV’s, boats, trailers, etc.
Your collection risks would be the same as we have discussed prior – for this type of debt – after the items are auctioned.
Hi Michael,
First I want to thank you for giving us the opportunity to get advice from you.
My situation is as follows:
I live in NJ and am currently waiting to SSDI. It is need based because I never worked long enough to get any benefits. While waiting for my hearing I am living with my son who has put a roof over my head and food on the table. He has gotten into enormous debt trying to keep up with my needs. My medications, credit cards, drs. etc. I have no medical insurance because we couldn’t afford it any longer. So my question in a nutshell is this…I have no income at all. My car is 11 years old. I have almost nothing of value. (a few odd pieces of jewelry). I’ve been trying to pay the creditors or collections agencies as little as possible but that has become more than we can handle. I had to go to the food pantry for food this week. That was when the lights went on and I realized something had to be done. My son is not responsible for my credit cards. So, my question is what can they do to me if I stop paying? What can the possibly take from me? If my SSDI comes through I will at some point get the back money from SS which can be a few thousand dollars. But who knows when that will be. I keep hoping it will come through so I can pay these creditors. I don’t owe an enormous amount. I’d say about $5,000. Please tell me what can happen if I chose to stop paying. Thanks for your help.
Scroll up a bit in the comments to July 8th 2015 where I cover New Jersey exemptions from judgment creditors. NJ is not great with consumer protections when dealing with debt collection.
That said, it sounds like you are close, if not fully judgment proof.
If you stop paying there will be collection calls and notices in the mail. Nothing more happens than that unless you are sued. You will have options to negotiate settlements with the creditors and debt collectors all along the way. Post updates in this comment string when you have some extra cash to work with that you would like to use to settle a debt or two and lets go from there. For now, if it were me, I would let the payments to the cards go until I have an income to work with.
I am embarrassed beyond belief but you’re right I need to consult an attorney. We both had hoped to work many more years. And now we have had to resort to the humiliation of food stamps. It’s surreal. I will keep you posted if anything new arises. You don’t know what it means to have someone nonjudgmental to talk to. Thank you for your help and thank you for listening. The work you do is helping many people. I hope you are aware you have been a help when there was no other resources. God bless!
Cindy
Michael, Thank you for all the information and answer per above, you answered my last question already the first time, I just had to re-read it this AM and process the information again as follows: “If the only money you have coming in is your SSDI, it is protected from garnishment including by Wells Fargo. But even though that is the case, I understand why someone would want to move checking and savings away from a bank they have unpaid credit cards with, but it would not be necessary unless you do get non exempt funds from time to time.” I just reread your answer again this AM to re clarify it for my self and maybe anyone else who was a little confused by my second question. Thank you for all your help ! Kathleen
Michael, How long after I have quit paying my credit cards can they initiate a lawsuit ? I live in Idaho. Is there anyway to know who will sue ? I have credit cards with Wells Fargo, Discover and USA Bank. My SSI Disability check goes in my Wells Fargo account, my only bank account. I know that I heard you can’t mingle funds with SSDI, SSDI is my only form of income. Can I take some money from my primary checking and open a savings in another bank ? would that money be exempt? Of course it would not be US Bank! Thank you for taking time to help me , it is much appreciated.
Idaho has a 5 year SOL to legitimately sue for credit card debts.
There is some predictability to which creditors are more likely to sue, but that logic can change depending on how collectable someone looks. I would say you are most likely to be sued by Discover, and by a debt buyer US Bank may sell your account to. Wells Fargo has some pent up debt sales that could lead to your being sued by a debt buyer too, or your account may be older and already with a debt buyer.
If the only money you have coming in is your SSDI, it is protected from garnishment including by Wells Fargo. But even though that is the case, I understand why someone would want to move checking and savings away from a bank they have unpaid credit cards with, but it would not be necessary unless you do get non exempt funds from time to time.
I can see I have not covered Idaho exemptions in the above comments before so here are those:
75% of wages are protected from judgment creditors in Idaho.
Up to $7,000.00 of automobile value is protected.
Idaho protects $100,000.00 of home equity.
$7,500.00 of your household goods are protected from being seized to satisfy a judgment.
There is no exemption for cash in your bank account in Idaho. But as you know, sources of funds like SSI and SSDI are protected in your bank account when not mingled. Do not let several months worth of those funds build up in your account.
Michael, I do not receive exempt funds in my Wells Fargo account, Could they refuse service to me ?(I use their bill pay system) after my SSDI is direct deposited in my account at wells fargo.
I cannot think of a single instance where Wells Fargo has closed someones account over an issue like you are facing with unpaid credit cards with them.
Hi Michael,
Thank you so much for your service; this is a treasure trove of information. I have a few questions about my situation involving an unsecured debt..
I was just served a summons from a NJ district court. It lists a NYC-based company called Stephen Einstein & Associates, P.C. as the plaintiff, on behalf of my original second mortgage company, Bank of America. They’re suing me for a defaulted loan on a second mortgage I had taken out back in 2007 for a house I have since foreclosed on. My first mortgage company has forgiven that portion of the loan as of 2014. I had hoped that the second mortgage creditor would just go away, but after repeated collection efforts over mail and phone, it has come to this.
Anyway, since receiving the summons I’ve contacted some pro bono legal services in my area (I’m unemployed at the moment and living off my savings), and am seeking their help with filing a formal response with the court. Meanwhile, I want to prepare myself for the worse possible scenario of a judgment being handed down against me, in which case a bank levy and wage garnishment, as I’m learning, are possible in NJ. What else could happen to me?
I’m also wondering–I have a small amount of investments (stocks, mutual funds, retirement accounts, and education savings account for my child). Do you know if any of these are exempt in NJ? My job situation has changed recently, so I now only work part-time (during academic year only), and I’m a single mom, so I can’t imagine what will happen to us, if my bank account and the small amount of savings/investment I own are wiped out. Also, can they take my car? It’s financed @ 18% (I have poor credit from the foreclosure) and still has about $9,000 owed on it. I imagine it’s worth about that much if one were to try to sell it.
If you can share any specific knowledge regarding NJ, I’d appreciate it so much!
Thank you!!!
Talk about your exemptions from judgment creditors with the attorney you are working with to file the answer. Generally speaking, retirement accounts are protected, and college savings plans done correctly can be too.
New Jersey protects 90% of your wages.
You receive zero home equity protection from judgment collection enforcement in NJ.
The remaining exemptions for value in car, household goods, and cash in your bank account, all are shared up to $1,000.00.
New Jersey is not very forgiving to its residents who find themselves in a tough financial spot.
You do not have to worry about wage garnishment, but you will appear to have other concerns.
How much is BofA suing for on the second? Is it actually BofA suing or is there another company name mentioned? It may be a debt buyer that is suing you.
Thanks for your response. Yes, I’m learning that NJ is not the best state for debtors facing bankruptcy, which is indeed what I may be resorting to if I can’t get the creditors to drop this case. To your last question–the court documents indicate Bank of America as the plaintiff, and a NYC-based firm as the attorneys on their behalf. But when I looked up this company, Stephen Einstein & Associates, it looks to be a firm specializing in debt recovery. In fact, they’ve been cited as having been sued for bad consumer practices by the NY Attorney General’s office. It appears, according to the promissory note they’ve furnished along with the summons, that my second mortgage company was indeed Bank of America. However, they have not been communicating with me directly. Before I defaulted on my mortgage, I had been making payments to a separate servicing company called Green Tree. I’ve been reading online about some possible defenses I may come up with, in order to file a response with the court. I was wondering….if this debt is classified as a “non-recourse” debt (as it appears so on the original promissory note), does a state like New Jersey (a ‘recourse’ state) still bring judgment against the debt holder? I had thought the non-recourse debt structure protects the default in case of default. In other words, do the state laws governing recourse/non-recourse trump the original structure of the loan? A lot of questions…thanks!
I would encourage you to talk those questions over with an experienced debt collection defense attorney. You can locate some near you with the experience you need at http://www.consumeradvocates.org using the “find an attorney” feature.
I had my car repo by the bank and got a letter saying i can settle by paying 12000 something before it goes any further i get social security disability amd definitley dont have any extra money can they garnish my soc. sec?
I moved your comment to a relevant article and discussion. Read the original question and answer above. Social Security cannot be garnished for the debt related to the repossession even if there were a judgment allowing it.
If I have not covered the main exemptions for your state already in the comments, post the name of your state and I will respond with those details.
Hi I am 67 female, disabled and get $753 Social security and SSI total income a month. I get food stamps. I am considered below poverty level so property taxes are waived each year. I live in Michigan. I am paying on a home on a land contract. I am registered in city records as owner for tax and utilities but to not hold title to the deed for 3 years yet. Home is assessed at $34,000· City also holds lein on it for 5 years siding program. I have no vehicles or other assets. I have accumulated about $20,000 in credit card debt and one unsecured loan of $5000· I have tried up until 2 months ago to pay on time but just can’t do it anymore. I have no income to live on for necessities as it is. I filed a chapter 7 bankruptcy 6 years ago, rebuilt my credit and now I am in debt again I cannot pay. The calls are just starting with the cards I have not paid.and can’t anymore. Soon they will all be in default. Flagrant bank $2890, Avant credit loan $5000, Paypal credit $2000, and several cards held by Synchrony Bank (Sam’s Club, Wal-Mart, Lowe’s, Best Buy) and two by Capital on $1200, 1 Barclay $890. What do I do now. Send them hardship letters? Ignore them all r what is best. I cannot file Bankruptcy again for 2 years a d that can See that on my credit report. Sincerely waiting for some advice.
In some situations, when you can’t pay, you just don’t. You appear to be in one.
All of these creditors can huff and puff but cannot really do anything to your limited income and assets.
If it were me I would stop payments and navigate any collection activity until I file bankruptcy 2 years from now. Check around and see if there is a low income legal aid office in the area that helps with bankruptcy. That could help keep the costs of that process down when you are ready.
Hi. My husband and I are almost 60 yrs old. We were doing good until Sept 2014. He fell Ill and lost his job. In Jan 2015 I was let go after 20+ yrs at my job for health reasons. He has been approved for ssdi. I am still waiting. We have guardianship 9 yr old granddaughter. Long story short we owe thousands Cred card debt house payments and small 2nd mortgage. Its our fault we owe but we PD and had credit scores approx 720. Now they are rock bottom because they figured out he doesn’t have job. Most Cred cards have cut us off but we still owe. Our house is worth approx $70000 we owe $48000 and $7000 on home. We have 2 vehicles now that are valued at about $5000 total for both. I never ever dreamed this would happen. If we file chap 7 can they take our home? We can never pay these debts now. At our age can we ever expect to recover if we file? I’m going to have to quit paying there’s not enough money. We have even been forced to get food stamps. I also cosigned for a student loan for 1 of my sons. He doesn’t seem to be able to pay and neither can I. We are humiliated and depressed but I know its our only choice. If I contact creditors and explain what will happen or should I just quit paying. I want my granddaughter safe and happy. She’s been thru enough. Thank you for listening. Also we live in Indiana..
Don’t beat yourself up. And no, calling to tell everyone what is going on will not lead to much. If it is cathartic for you, go ahead, but the lenders do not care and will only try to offer you hardship payment plans that will not be meaningful to you at this point.
I have not covered Indiana judgment exemptions in the comments of this post yet, so here goes. Indiana residents are protected in the following ways:
75% of wages are protected from garnishment in Indiana.
$9,350.00 in combined auto value and household goods are protected.
Only $17,600.00 of home equity is protected from judgment creditors in Indiana (pretty low compared to other states), but could double with a husband and wife when filing chapter 7 bankruptcy.
$350.00 in your bank account is protected.
You may learn that you can only keep one car in the bankruptcy, and if that is the case, keep the most dependable and lower maintenance cost one.
As far as recovering from bankruptcy, I assume you mean credit reporting and scoring wise? The answer to that may surprise you, as it is a resounding yes. Recent studies for the FED suggest people filing bankruptcy recover credit wise faster than others. Read more about credit scores and debt relief, and here is a good piece about the Federal Reserve Bank study on credit recovery.
I hate it has taken me so long to get back to you. I’m unclear, sorry, about what can happen to us. Will creditors be able to take our home?_my son cannot pay his student loan. This has been catastrophic to us. I just live in fear. My husband is in beginning stages of vascular dementia. He really can’t help in any way. I am afraid of losing home. As I said before my granddaughter is my focal point. I just don’t know what step to take. Believe me I never saw this coming. I do feel terrible that we can’t pay but the truth is there’s just no money. I really need to keep our home. Will they be able to do that? Even if we file bankruptcy I know that student loan can’t be filed on. The absolute fear of what will happen grips me everyday. I can’t even sleep anymore. Thank you so much. Cindy
You will likely be able to save your home, but talk about all of that with a local bankruptcy attorney.
The student loans are something your son is going to have to get a handle on. They are not going anywhere, and as you pointed out, are often not something you can wipe out with a chapter 7 bankruptcy.
Cindy – stop fretting and consult with a bankruptcy attorney today. You will be just fine, but losing sleep or worrying about debts you can wipe out is just not a good use of your time. If you find out something from the attorney that gives you pause for filing chapter 7, post an update about that and lets go from there.
Only income is SSDI and pension. I have under $5k in credit card debt, stopped using the cards over a year ago but cannot afford the monthly payments to pay them down. If I stop paying them, I understand I am protected from collection but what actions will be taken and how do I ensure my checking account is not frozen, even though I am supposedly protected from such action? Have heard horror stories about banks freezing accounts without checking sources of income.
Many on the stories you hear about only exempt money being deposited, but banks still allowing the account levies through, are dated. There were real and constant issues with this up to just a few years ago. Much has happened for banks to have cleaned up there act in this way.
Let your bank know you are concerned about the issue for good measure, and only deposit exempt funds in the account. Also be sure you do not let SSI and other exempt money build up in the account. The protections only go so far.
I’m on permanent disability and get 890.00 a month direct deposit. No extra income. I live in government housing . I have a 2005 Kia that’s paid for I own and that’s all. I got a Summons from Portfolo Recovery hired by GE Capital Retail Bank giving me 30 days to respond to the Complaint or Judgement by default will be entered. It’s for $2,754.63. I have several more credit cards I owe on but I’m not able to make any kind of payment on any of them. All together I owe maybe $5,000.00. I have told them I’m on disability but they keep sending bills. It’s says I must file my response also to the clerk of court. What do I do . I don’t want to have to go to court or keep being served. I live in Mississippi and ppl suing me are from Delaware. Thank you Cathy
Mississippi protects 75% of your wages, up to $10,000.00 value of your car, $75,000.00 equity in your home, $10,000.00 in value of household goods (more if meeting elder laws, and this also is a shared exemption with your car), and also has that 10k shared exemption for cash in your bank account (car value, household goods, bank account combined does not exceed 10k).
Portfolio Recovery Associates will not stop suing based on the inability to collect. Many debt collectors look to get the judgment in hopes that your situation turns around to the point that they can get paid something later.
Is your situation such that your finances can improve in the future?
I have a background of poor money management. I declared bankruptcy in 2012 which was discharged. I then decided to open a couple of credit accounts in 2013, and somehow, I began getting many pre-approvals for credit which I took without even thinking what I was doing. I have now totally ruined my credit again and have charge-offs and a few collection accounts listed. My credit score is less than 500 at this time. It is definitely my fault for not even considering that I only get $1633 from SSD, and this is my only income. I believe I have always had the idea that money grows on trees. You would think I would have learned by now, but I guess I haven’t.
I really would like to buy a car but realize that no one is going to give me the time of day once they see my credit report. I do not have any open accounts at this time, and I do want to either pay off or settle the accounts that are charged-off and in collections. My overall debt comes to about $10,000, but I am unable to pay this amount. Because I am living on SSD, I do not have much left over to pay on debts.
I would like to settle my debts and have read much about doing this. The only thing that is stopping me at this point is wondering if collection agencies or original creditors will settle for about 10% of the original amount owed. I cannot see any other way to take care of the debt if I am unable to do this, and I really do want to improve my credit as well as begin to be responsible with my financial affairs.
Is it good to explain my situation to the creditor or collector when trying to negotiate? I do understand that my Social Security earnings are protected from garnishment when it comes to credit card and loan debt. Would bringing this up to a debt collector help me to get a better deal with them? I would hope this would help as this may be the only way they will collect any money at all.
My goal is to get 2 secured credit cards and never get another unsecured card. I think this will be better with my history. I also know that I will need to save for a hefty down payment on a car if I don’t want to be in the same situation once again. When should I consider getting a secured card?
Thank you.
Susan
Ten percent settlements are not realistic.
Talking about your hardship and fixed income will lead any experienced collector to know that you are noncollectable, and a debt collector may even want to settle for as low as possible, but the systems and policies often prevent that. While I do suggest being upfront about it all, I suspect it will lead to the same settlements.
I see creditors and debt collectors sue people when they know their are no assets and the only source of income is social security, SSDI, or some other exempt source. They just do not care enough to put a wrinkle in their collection systems and protocols. Chase bank, and Midland Funding/Midland Credit, are the only two exceptions to this currently. If you have a Chase account let me know. If you later end up with accounts sold to Midland Funding, review their consumer pledge that they do honor.
I would not attempt to get a secured card until you are close to having settled the unpaid credit cards you have now.
Thank you so much for the information. It is not that I have a few credit card accounts but several. Most of them are store credit cards which I assume carry the same weight as major bank cards. The largest credit card balance is $1400 with Fingerhut which has now been sold to a collection agency.
I want to try and see what I can do with each card. I will have to work on one at a time due to my income and expenses. The two collection agencies that have purchased my accounts are Midland Funding and AFNI. I did read your article regarding Midland, but I wonder if you know anything about AFNI. When I looked at reviews of them online, there was not much positive at all.
I do feel that I need to do something as I definitely made these charges when I knew deep down that I should not have. I hope that as I progress along with this that I can ask you any further answers if needed.
Thank you for responding to me so quickly.
Susan
You can post to any page on the site with the comments open in order to get feedback.
Here is the page that discusses settling debts with AFNI. I cannot think of a debt collector that you will find nothing but positive reviews of. It is the nature of the business. If you do have a good experience with a debt collector, as many do, I invite you to post about it in the comments of this post: https://consumerrecoverynetwork.com/debt-collector-complaint-recognition-review/
I am a 62 year old disabled woman, my only sourse of income is SS and a federal pension, I am a Texas resident and I just recived “PLAINTIFF’S POST-JUDGEMENT REQUESTS FOR PRODUCTION TO DEFENDANT” It says that I am obligated to complete and return the requests within thirty days. What happens if I don’t do anything?
Thank you in advance for your help.
C. Ramos
If that request has the force and affect of being compelled by the court to respond, if you fail to, you could potentially end up with a bench warrant.
The request to produce information about your income and assets is normal post judgment. The attorney wants your help to lead them to how they are going to collect. I do not know if this request you received is compulsory or not, but you should check this out with an experienced debt collection defense attorney. I know of many in Texas. Post the name of a larger city nearby and I will send you an email with contact details to some.
The closest larger city is Corpus Christi, Tx. after that is San Antonio, Tx.
I sent you an email with 4 experienced debt collection defense attorneys in the area.
Let me know how things progress for you.
Hi Michael- I had medical bills from a few years ago and Wakefield and Associates have sent me letters and summons for repayment. I wasn’t able to pay so they filed a suit against my husband and me . Today I was devastated to find out that my 18 year old daughters teen bank account at wells fargo was wiped out because my social security # was on it. She has never had more than a couple hundred dollars in the account but she recently graduated high school an thanks to all her grandparents and family she had 4500 in her checking and savings. She was going to pay for college books and college on Friday! It was not my money, I can prove that every check written was to Jalissa Peterson for graduation but I cant prove the cash. I have a joint account at the same bank with my husband and they didn’t touch it because he gets disability deposited into it. Im heartbroken for her and don’t know what to do. Can they do this? Please help
They can levy the bank account because of your social security number attached to the account. But you/she can contest it formally with the court and get the money returned. Talk to the court clerk about what you need to file in order to get that rolling.
I appreciate your answering my post and thanks for your service to people in their hard times.
I get about 1300.00 a month in social security disability, don’t own a home or a car, no other income. I have 8 credit accounts and 2 hospital bills which all total. I am at the point where just making the minimum payments I can’t afford my living expenses, rent, food, doctor and meds. What would be best way to handle this?
What does all the debt total to?
Is your disability permanent or will there be opportunities for your income to increase?
Sometimes stopping payments on the debts that are unaffordable is the only immediate option, followed by doing nothing about the debt until something occurs that requires you to react. That could be a collection action filed, or the flip side where you increase your income and can put a plan together to resolve debts.
I am living on social security and have no savings. I am being sued for credit card debt that I can’t pay. I have a civil suit to respond to within 20 days. what is my best action? I live in Kentucky.
Who was the original credit card with, and is that who is suing? If not, what is the name of the company suing?
The have the following protections from judgment creditors in Kentucky:
Kentucky protects 75% of your wages.
Car value up to $2,500.00.
$5,000.00 of home equity is protected in Kentucky (one of the lowest amounts of all states).
Up to $3,000.00 of value in household goods.
And there is no cash exemption to prevent bank levies (other than the exempt sources like your social security).
Are there other outstanding bills that have not been paid besides this one, and if so, how much does that add up to?
I have social security directly deposited in to my checking account monthly. I have a car that is 15 years old and in really bad shape, maybe 200 dollars if that. also very little in household goods and clothing. most of that is used stuff I have had for years. I am custodial GRANDPARENT FOR AN 8 YEAR OLD GIRL. I can not pay all my bills any longer. I was hospitaled 3 times in oct, December and the first of February for 3 and 4 days time each. they stuck me in the ICU and the treatment was no different than on a medical floor. i told them i did not want to be on ICU floor b/c it cost so much but they kept me there anyway.I forgot to say, I am a retired LPN and once worked in a hospital. those with aNY INSURANCE ARE SENT TO icu B/C THE HOSP KNOWS THEY WILL BE PAID. however I have a lot of medical and doctors bills. if I dont pay some of them but pay on the 2 credit cards I have, will that do a lot of damage to my credit? Humana is as bad as u can get IMO. they don’t want to pay hardly anything.
The unpaid medical bills will indeed damage your credit reports. Medical collections do not hurt as quickly, or even as much, as they did just last year. But if the debts remain unresolved they will drag down your score and financing options. How overwhelming are those amounts? Has your condition improved?
no, my position has not changed. I am paying a total of 35 dollars on the 3 hospital accounts and they call all the time wanting me to pay more on each. I told them I am paying all I can. the ambulance service that transported me to the hosp have ALSO BEEN WRITING AND CALLING. I am paying them a total of 30.00 dollars for the 3 trips which were 1200, 1200, and 1500 dollars. then I have 2 CC that I want to keep mostly for emergency reasons. I am paying on them as much as I can but it is keeping me out of trouble with them. my daughter wants me to stop paying on the hosp and ambulance bills and let them do what they want to. they cant get my SS funds nor my Household stuff. and my car is very old. I want to buy a car before I do this b/c I can make payment on a used car by October when some other bills are paid off. what do you think?
I think dependable transportation for you when you have medical issues and appointments, as well as running a grandma taxi service, is a priority.
You do appear to be judgment proof based on what you have shared so far.
Im on disability SSI making $1,823. dollars month and owe 15,000 in credit card debit that I cannot pay.
My boyfriend is a carpenter and only does odd jobs ,barely working these past 6 winter months, all properties
mentioned are in my name. I own a home worth $148,000 and have 60,000 in equity.
My car is paid for its a 2009 HHR LT in good condition. I also have an 2014 ATV Polaris sportsman HO paid for
which is worth $5,000 I use this to plow snow to get access to the road in winter, I consider it a necessity,
if there was an emergency in winter how could emergency vehicles get to us? I am paying $203.43 month on a small R Pod
travel trailer . A local attorney told me that if I file chapter 7 they could take the ATV as collateral to help pay off debit.
I really feel filing bankruptcy is very serious and I don’t want to enter into it lightly.
Then he suggested Ch 13 ,but it all sounds so complicated. I don’t feel I can afford an attorney ,
My monthly expenses per month are approx $1,000 not including food, propane(very expensive) and vehicle insurance.
I have stopped paying 2 out of 3 credit cards as of April 2014 so Im not 90 days late as of yet, only nearing 30 days,
Discover kept calling me 5x per day so I blocked them on my caller ID. I would like to wait if possible,
Am I judgement proof in Idaho? What items can they legally obtain?
Idaho protects you from judgment creditors in the following ways:
75% of your wages are protected, with the ability to exempt more by contesting an garnishment as causing an undo hardship directly with the court. This does not apply to you on disability.
Up to $7,000.00 of your car value is protected. What does your car list for on kbb?
Up to $100,000.00 of your home equity is protected.
$7,500.00 of your household goods are protected.
Idaho does not protect cash in your bank account from non exempt sources. Your SSDI is exempt, but be sure not to mingle that money in your account with non exempt money.
Based on what you shared with me to date the ATV is the only thing not protected, but it is not worth filing bankruptcy over if you are not already motivated to for other reasons. Not when you can sell that one, and pick up one used (with blade), and for possibly less than the cost of filing chapter 7.
I am up north. In 2007 and 2008 I swear I woke up with a shovel, and went to bed with one, most of the winter. I had just moved from the place we had with about a football fields length driveway. No way I could have done those years manually at that house. There are absolutely areas of our state that require a truck/tractor/ATV for clearing snow. Any bankruptcy trustee living in certain parts of Idaho would know that. I suppose they figure you would pay to get ploughed out.
Are you judgment proof? No, not really, but close enough to make navigating any later judgment, should one occur, not overly complicated.
We started a small business (LLC) incorporated in Nevada, but we live in Kansas, back in 2013. At that time my husband was healthy & working. In May of 2014 he went on medical leave from his job with no likeliness that he would be able to return to work. Most of that time was without much income so we have used some of his 401 through his job to pay bills. In November, 2014 he was approved for social security disability. He also receives a partial pension from (KPERS) from when he retired from the Sedgwick County Sheriff’s Department. He opted for a partial monthly retirement benefit and we rolled the rest over into IRA”S, etc. Then when we started our business we rolled that over into a SOLOK so we could borrow against it tax free for the business.. We were going to flip houses, but shortly after we started the business he got ill and we still have no answers as to what’s causing his medical issues.
We have several unsecured lines of credit through our business, however some of those we are a personal surety on. We have taken cash out from several of the credit cards/lines of credit to put into the business bank account in order to meet monthly business obligations. However, by October we will be out of money, will still owe a large sum of money to those credit lines, the business is not making any money and we will be seeking to dissolve the LLC.
We are unsure as to what our best option would be, whether to just quit paying the credit cards/lines of credit, to file bankruptcy or what. Since we are a personal surety (some only he is and some I am) on these I know we will probably have to file personal bankruptcy as well if we go this route.
We traded both our vehicles in and got another vehicle so we now only 1 vehicle with a debt for more than the car is worth due to being upside down with the trade ins. We just couldn’t afford to keep up with the 2 car payments. We own 2 motorcycles (2006 Harley paid off and one a 2008 Yamaha which we still owe about $3500 on). We have a house that we still owe about $60K on (guessing probably has about $30K – $40K in equity) but not much else worth any value (household furniture and stuff). We do have a timeshare, but are still paying on that as well.
If we file bankruptcy on both business and personal, what can they come after. Will they dip into his income? Will they come after his SoloK or his pension from KPERS? I make a very small amount of money each year which is commission only so not something we can bank on month to month. We are devastated and lost as to what to do. We have worked hard all our lives, have great credit as of right now (except our income debt ratio is way, way out of whack) and don’t want to lose everything and have no way of living.
Thank you for any advise or insight you can give on this!
You are protected from judgment creditors in Kansas in the following ways:
75% of wages are exempt from garnishment and possibly more when contesting garnishments in your local courts. Neither of you have a wage right now, and you are gearing more toward filing chapter 7 bankruptcy where this concern would be eliminated anyway.
Kansas has one of the highest auto value protections of any of the states at $20,000.00. That will not extend to the fully owned Harley, and you can reconfirm the other bike payments and your current car in the chapter 7. With some planning time, you may want to rework your vehicle situation to where you end up keeping a protected car you either own outright, or have a good amount of equity in. No sense wasting a perfectly good exemption if you are filing the chapter 7.
Your home value is completely protected in Kansas if under a certain amount of acreage, so no worries there.
All necessary household goods are protected in Kansas.
Your bank accounts in Kansas have no protection from judgment creditors. While that is not a concern for you if you are progressing to filing chapter 7 bankruptcy, it may be for other readers, and I have not covered Kansas in the comments before now.
I would shed the time share debt in the bankruptcy.
Retirement and pension accounts are generally protected from judgment creditors and from lenders in the event you file bankruptcy.
Based on all that you shared with me, chapter 7 is where I would be heading, but perhaps with a bit of a time delay. If you would like to talk about that, let me know with an email to the address you get these comment notifications from.
Thank you for your reply. It was very helpful. I will be emailing you for sure as I have some additional questions.
Thank you for your response..
As for the car, we just did the trade ins and accquired the car. We haven’t even made our first payment yet and we would like to keep the car. And as for the one motorcycle that we owe $3500 on, we would want to keep that as well since it’s almost paid off. So if we make those payments (reconfirm them) then they won’t take those?
I know my husband would really hate to lose his Harley, but I’m assuming they would probably take that? If so, can we just try to sell it and use the money to help pay bills?
As far as our house, we would like to just sell the house and use the equity to pay off maybe the car and/or a big chunk of the time share. We really would like to hold on to the timeshare as we’ve already invested a lot of money in it over the past few years. We also really liked using it for traveling in the past and would like to continue to travel in our future. Do they look at timeshares as assets in a bankruptch? If we do file the Chapter 7, then sell the house, would they then come after the equity we get from the sale? We would like to sell it due to my husband’s health as it’s just too big for us now and too much upkeep. We would like to relocate to a warmer climate and just rent somewhere. Would we be able to sell it? And if so, when would we be safe in doing that?
As far as my husband’s SoloK, when would we be able to access that to maybe use it to pay off the car and timeshare. Or when could we just cash it in for living in the future and not worry about anyone seizing it due to the bankruptcy. We just hate the position we’re in due to his health and a failing business and don’t want to lose literally everything he’s worked for all his life. He’s 65, I’m 60, and don’t have the time to get any of that back and would like to enjoy some of our life while we have it.
Also, what about tax returns, if any? Can they take those?
You said to take some time. What exactly did you mean by that? We have enough money from what we pulled off on credit cards for the business to make all business payments into October of this year at most. Once that money is depleated our only option would be to stop paying or pull out more cash which just gets us in deeper. We are already in debt literally thousands due to the business. Otherwise, personally, we would maybe be able to struggle through on our disability income and pension income even though we would be barely living.
I’m sure we’ll have more questions as we go, but I do appreciate your help so far. We’re just trying to figure out our best option.
Vicki
The car that you just bought will be in an immediate negative equity if you financed the whole thing, and is generally not going to be a problem to reconfirm and keep as long as you continue to make payments. The Yamaha may be a different story if you have equity built up, and even though you are still paying on it. I recommend talking with an experienced bankruptcy attorney in your state about how this will be viewed by the BK trustee.
Reconfirming items that you still owe money on (home, car) is how you keep those items in a chapter 7 bankruptcy. But those items must fall in with your states exemptions to begin with. I am pretty sure the time share will be viewed as a discretionary/luxury item by the trustee, as would the Harley you own outright. But talk about all of that with a local bankruptcy attorney.
If it were me, I would sell the Harley and use it to pay down bills, and probably the car. How much do you think it is worth?
If you want to sell the home and pay down bills (and the Harley for that matter) and then go rent somewhere nice and enjoy life a bit, perhaps we should be talking about how to do all that without filing chapter 7? If you want to look at how settling the debts with creditors compares to bankruptcy, post who you owe and how much (that is personally guaranteed, and not that is exclusively business debt), but do that in the comments of this page: https://consumerrecoverynetwork.com/find-bankruptcy-attorney/ as it is a better place for people to learn from our discussion. Settling could help you keep the Harley, or other assets that bankruptcy may not allow.
There is generally a look back, and look forward period, when filing chapter 7 (why I suggest timing your approach depending on your goals). This may/may not mean waiting 6 months or so after your chapter 7 bankruptcy discharge is complete before listing the home. This is another thing to nail down with an experienced attorney.
You are certainly safe selling the home after the chapter 7 and keeping the proceeds. You just may need to wait several months is all.
Same thing may apply to the SoloK… a short waiting period after the chapter 7.
Your tax refund is something else to plan around if you expect a good size return. If you are carrying forward losses on personal loans to the business, I could see that. Do you file quarterlies?
My suggestion to consider your timing for filing bankruptcy is often going to be related to making sure any major issues like medical bills and the like have stabilized, and for that look back period the trustee will be concerned with that I mentioned. Bankruptcy trustees have a lot of power in your life. They can undo property transfers, and even claw back money you already paid to creditors, in the months leading up to your filing chapter 7.
If I sold a Harley and used the money to pay down my car loan (but not to exceed 20k of equity in the car), I would want to wait the amount of time my attorney told me to file my bankruptcy petition.
The money you pulled out of credit cards to support the business is also a concern. Talk to the attorney about his/her experiences with your particular creditors filing objections due to recent cash advances and large merchant transactions in the months leading up to filing the bankruptcy. Some creditors will not bother, but others may, so timing things correctly can avoid any of that.
I am wondering what rights Discover has in relation to a 2,000 bill I have with them. The principle never goes down. I had a near fatal car accident which made it impossible for me to pay my bill. I had to pay late fees, interest and over the limit fees and of course I can’t use my card. I still owe the same amount i did five years ago.. They take 1.00 per month off of the principle. My question is can they still charge me all of this interest.. I also owed City and Chase money but they stopped the interest and took so much out each month. They are now paid. I owed over 5,000 to each one. Why is Discover doing what they are doing. Can they do this?
jewell
Discover card offers temporary and lifetime of your balance hardship repayment plans. If you have never been on one before, call and talk to them about it.
What is the interest rate discover is charging?
What is your monthly payment that you have been making?
My parents are 73 and 79 years old. They live only on SS that is 1800 a month in New Jersey. No IRA or any other savings. They keep 2000 on their bank account for multi purchases. They own the house, which is paid off, so there is no mortgage. They pay taxes about 8,500.00 a year, home, flood and car insurances. My mother has Medicaid. They have one 10 year old car. My father was very sick for 7 months. He has Medicare. Now they receive many bills. I was able to negotiate some of them, but got stuck with the hospital bills. The hospital’s charity department is dragging their case for so long that it was automatically sent to collection. Now I try to settle the payment, but they want too much money. Can my parents just ignore those calls? What other options do we have?
Post a break down of each medical bills balance, the date of the medical service, and whether insurance covered any of the costs for each bill now in collection.
Do your folks have supplemental insurance that they pay for?
I have a couple more questions, Michael. I have now missed 2 payments on first and second mortgages. They both have sent me mail regarding what they can do. Since I will not be able to make anymore payments, should I call both of them and explain my situation regarding my finances? Also I have heard of Cash for Keys, is that still in effect? What about Deed in lieu of Foreclosure?
I am a big fan of communicating with your creditors in this and other situations. Cash for keys and deed in lieu are both in play with lenders and loan servicers. Find out more about both when you speak with them. Just make decisions that first consider your goals and timing and not theirs.
Thank you Michael. I just wasn’t sure how much I should tell them about the fact that I cannot possibly pay any more payments. Should I be honest about that or maybe just tell them I can’t make a payment right now?
Based on everything we have talked about on this page, there is only one direction this is going to go, and that ends with you leaving the home eventually. I see no reason to let them know that the home has become unaffordable and will likely remain that way moving forward due to your fixed income.
Let me know how that conversation goes if you call.
Well Michael, I talked to my mortgage co. today. They offered mortgage modification, release of mortgage or foreclosure. I told them I think I would like to do a deed in lieu of foreclosure. He said with that they offer 3000 to 10000 dollars to help relocate. I asked him if they offer that for foreclosure too and he said no, they offer something but not that much. He said the process would take from 30 to 120 days to get paperwork done and then we would agree on a time to move out. I kind of think that might be the way I want to go. I just wonder what happens to the second mortgage then.
Would you like to talk about all of this with an experienced foreclosure defense attorney that practices in your courts? I can hunt one up and send you their contact details.
Yes Michael, I would appreciate the help. Thanks
Hi Michael,
I wanted to let you know that I got an approval for a deed in lieu of foreclosure from Wells Fargo. There are some things that bother me though. They are offering me $3,000 relocation money, but title must be clear and marketable by 8/20/2015, the vacate date. Then they say “to ensure the deed in lieu of foreclosure proceeds smoothly, it is essential for you to work with any other creditors immediately. Failure to resolve transactions with other lien holders could cause delays or even cancelation of the deed in lieu of foreclosure”. Does this mean that they expect me to pay second mortgage? Also, do you think maybe the vacate date could be negotiated? I don’t think I could be ready that soon.
The second mortgage will likely also have to be dealt with. Ask for another date to vacate. You are likely going to need more time to deal with the second anyway. Who is the servicer on the second mortgage?
Have you found a place you will move to?
CitiMortgage is the second mortgage servicer. I don’t know how I can settle with them since I have no money. When I told them I was trying to do a deed in lieu of foreclosure with my first mortgage servicer, they just said I should let them know when I had to move. Don’t know what that meant. I have not found a place to move yet, but would like to move to florida as since I am older now the Michigan winters are harder on me.
Call CitiMortgage and find out what they say about clear an marketable aspects of what Wells Fargo is willing to do.
Without a place to move to, I wonder if this is all moving a bit fast? Can you find a place to be in another state in that short a period of time? I did that once, cross country and within 60 days. It worked out well, but it was a bit nerve wracking at times.
hello. I’m in NC and have a judgment against me from an old credit card. I just received a Motion to Claim Exempt Property form to fill out. I am married but the judgment is in only my name. The house is in just my husbands name so should I list that at all? We do have joint bank accounts but just his paycheck is direct deposited. I do not work. Can the creditor levy those bank accounts? We do have a car in both our names and still owe $5000 to Ford Credit. I own nothing else except my personal things like clothes, shoes and a little jewelry. I know that I have to fill out this form. I just want to know how much if anything they will be able to get out of me.
I would encourage you to consult with an experience debt collection defense attorney in North Carolina about your risks and exposures. North Carolina is one of the more consumer protection friendly states when it comes to debt collection. Your name and social security number attached to any bank accounts is a concern.
Would you like me to email you contacts I have to experienced attorneys that offer no cost initial consults?
Michael,
Hi here is my story. I am 64 and live in Michigan and currently working and the state is garnishing my wages. I owe approx. 30K to credit cards and have stopped making payments to the majority of them. My wife will receive her first SS check at the end of next month for $824.00. I take home after taxes and the garnishment deduction $668.00 a week. My thought is that I will never pay off the garnishment of 18K the state wants, (the original over payment was $2,100.00) so why not retire and collect SS of around $1,696.00. This is the only income we have. Do you think I should retire and collect SS or should I file for chapter 7 ? My wife has not been able to work for the past 10 years due to her vision and she was turned down for SS disability about 18 months ago, therefore she has not been able to work at all. When I do the math for what I take home working 48 hours a week I can retire and make approx. $450.00 less a month. I understand I can earn up to 15K and still collect my full amount of SS. I should add that work and monies owed is really not helping my stress levels and health and I would like to retire. HELP I am a mess over here
Thank you~Tim
.
If you have not consulted with a bankruptcy attorney about chapter 7, you should. If you learn something that prevents you from filing chapter 7, and would have to file chapter 13, post an update and lets go from there.
If you have all the details you need about the impact of bankruptcy already, what has prevented you from filing?
Hello, I live in Nevada.
Back in 2005 I had filed for bankruptcy and everything went well. Unfortunately after that I worked hard to rebuild my credit. Well now being almost 10 years I have gotten myself extreme debt totaling over $67,500 spread across 29 credit card accounts.. I also have a personal loan with a balance of $6,500. I was able to keep up these payments on these accounts until last February when I became unable to work and had to file for Social Security Disability. I was always on time. Never late and now everything is ruined. I am scared to even go for a consultation with a bankruptcy attorney being the amount I owe is so great. Fortunately I have a very understanding family and I able to live with them to attempt to try to make hardship payments. I called several of the creditors and made those arrangements especially on the debts I owe $4000-$6,500 which is about 8 accounts. The problem is with my drastic income reduction even the hardship payments are going to take just about all my entire check. This don’t include all the others I owe less than $3,000 to. So now those ones I can’t even pay are calling every single day. I am starting to get certified letters. I just can make payments to all of them. This is such a nightmare. I can’t sleep at night. The interest rates on these accounts were well over 20% so the debt just crept up and up over the last 10 years. I don’t want these credit cards to try to say I was fraudulent and accuse me of it. I always paid on time up until I became disabled. I really don’t have much choice but to try to file chapter 7 again. I believe if its been over 8 years I would be able to? So now my next check will come on the 3rd and I am debating whether to even bother making the hardship payments or just give up on all of it. Such a huge mess. I noticed on many of my credit cards they are handled by the same bank which is called Synchrony Bank which totals about $40,000 of the debt. About $7,000 is combined owing Citibank & the rest are different banks. What are even my chances of discharging these debts thru bankruptcy a second time. Is there any hope? My social security income is a little over $1000 per month. They all refer me to credit counseling but with my low income and from what I am reading it would be a waste of time. I would be ever grateful for any advice you can offer me. Thank you , Michael
You are eligible to file chapter 7 after 8 years has passed from your last chapter 7.
Don’t beat yourself up about it. If you are going to file bankruptcy, those hardship payments you are making are a waste. If it were me I would stop those payments and use the money to file instead.
If you filed in 2005 just before the changes to bankruptcy laws, you will find the process is a little bit different today. Consult with a bankruptcy professional as soon as possible. I have a resource set up through the hotline at 800-939-8357, choose option 3, or look through your local phone book.
I live in California. I have a couple very old debts. 1) approx $2,500; 2) approx $3,000. recently I was served with judgements and court levy papers. I have social security. BUT; I work part time and make $750/mo. can they take that money or is that exempt.
They already served my bank and took $400 from savings account (all that was there). this happened before I was served. Can they garnish my wages or should I try to settle with them or should I forget about it?
Thank you
Cathy
That part time money may not be exempt from judgment creditors. I would keep it separate from your social security money that is protected. Maybe use the part time income to pay for things in cash until you resolve the judgment debts.
Who has the judgments against you?
Hi Micheal,
I am very confussed about my situation. I have a law firm coming after me again with a renewal of a judgment . in 2009/2010 I had them automatically every month taking out $850/950 out of my checking account for approximately $10,000. I was under the assumtion that it had been paid off because they never notified me of any problems and money stopped being taken out. I then became so involved with illnesses and deaths in the family in 2011, and forgot about it. a couple of months ago I got a letter from the Lawyers Hammeroff and they renewed the judgement against me again for $10,000. Even tho they stated I paid several payments for about 10 months or so . I sent them a letter and asked them what was going on and they sent me a reply stating that the bill had been paid down to only $3000. And they have added interest, court costs and legal fees all over again bringing the toltal to $12600. I am so baffled by this, and overwhelmed. I wish they would have contacted me back then and said something instead of going on thinking that it had been paid and then sock it to me almost five years later. I want to negotiated with them but am terrified to call them now. Any suggestions? Please help if you can. I live in Glendale Arizona. I was going to go to an attorney myself but I honestly do not trust them. And I wouldn’t even know how to start.
Thank you in advance.
I would go to an attorney, but choose one with debt collection defense experience. I can email you some contact details to the type I am talking about – who all offer a no cost initial consult – if you like?
You can negotiate a lower lump sum payoff in situations like this.
I am curious if you have looked into bankruptcy? Are there assets that are preventing you from discharging debts in a chapter 7, like home equity?
Yes, I would appreciate any info you can give me to help out.
We can’t file bankruptcy tho because we do own another house that my son and his family live in. Both homes are paid off and so is cars and such. I would like to pay off the old debt but I am affraid especially of one attorney (Hammeroff) because they really did not want to work with me years ago for lower payments. That is why they were automatically taking almost $950. directley out of my checking account for several months. This is the same debt I thought was paid off after 9 or 10 months back in 2010. Now they are getting another judgement for $12,600 because they say I owed $3000. In other words why would they stop taking out of that checking account and why would they not notify me back then that it wasn’t paid off.
If you think I should contact them to talk it out, I will try it.
I would like you to send some information on who to contact also.
Thank you again. I will wait to hear back from you.
I sent you an email with a few experienced debt collection defense attorneys. Not that you can defend the suit now, but those attorneys will be ideal to help you resolve this with Hammeroff.
Distance is not an issue in a case like yours, so any one of those attorneys can be just as effective if they are outside of the Phoenix area.
I would encourage you to ask the attorney you speak with about whether to file a debt collection complaint with the CFPB. The CFPB is currently weighing new debt collection rules, and would like to hear from people about the failures of debt collectors, including attorneys, to communicate. This situation with Hammeroff is a major fail that could have been averted with payment invoicing that collectors are simply not required to provide in most states.
I do not think you should contact the debt collector until you have talked this over with one or more of the attorneys I sent you.
Thank you Michael, I will contact one of the attorney’s which you mentioned in your email to me, this coming week.
I will keep you updated.
Again, Thank you so much.
Sincerely,
Maria
Michael, I am on ssi disability in Idaho. I bought a home in 2013 and paid 113,000. I have credit card debit from 3 separate cards, Wells Fargo, Discover it and USA bank. My credit card debit is approx 14,000 dollars between the three and I am not able to keep up payments. I have a 2008 HHR and a small travel trailer that I pay USA bank loan on. Im worried about my home, can they place a lien on my property? Please advise, Thanks Kathleen
I moved your comment and questions over to this page about exemptions. They have to sue you first, and get a judgment, before they can lien your property. I have covered many states in the comments so far, but not ours.
Idaho protects you from judgment creditors in the following way:
75 percent of wages are protected.
$7,000.00 value in your car.
$100,000.00 equity in your home.
$7,500.00 value of your personal household stuff.
There is no exemption or protection for any amount of money in your bank account.
Be sure to read the original article above though, as your SSDI cannot be garnished, and federal rules protect that money in your bank account if there are no other funds commingled. You should also not allow a surplus of monthly SS deposits to accumulate.
Thank you so much Michael, my HHR is paid for, in 2014 I bought a Polaris Quad sportsman HO and paid 8,000 on a credit card for it, can they take my quad if I am sued? I need that desperately tp plow the long driveway of snow up here so we can get out to the doctor in the winter, please advise………I forgot to mention I own this in my previous question.
What is the value of the HHR?
If a judgment is entered, it is possible that the quad is at risk, just not probable. Debt collectors are not overly aggressive in going after household, personal, and recreational items, here in Idaho. Not in my experience. Michigan and some other states… you bet.
Michael in response the HHR is a 2009 and worth about $3,000.00 that is what I determined with an attorney on the phone ,hope it is accurate,it is an LT in good condition, does that sound right to you ? or should I look it up in Kelly blue book.. The attorney called to discuss bankruptcy with me , but again that was his estimate. He said they could take the quad, but then I guess its not as much a risk as I thought. Then what do you think they could do ?
It does sound about right.
As far as how a debt collector could force the collection if they got a judgment, your home could end up with a lien filed against it. That lien could end up getting paid if you refinance or sell.
Michael, how long does it usually take after stopping credit card payments that a credit card company sues you? I am with Wells Fargo approx $4,500.00., Discover $5,505.00 and US Bank $7,359.00 . I assume each card attaches a lien separately and each card sues an individual differently..
There are many variables to list that would go into determining that for each person, bank, credit card, etc.
You have a home with a mortgage you are paying. That alone will make you score higher on the collection scale (to sue or not to sue). Discover sues regularly. Wells Fargo and USbank are not much for suing as your creditor, but they both sell unpaid debts to debt buyers who will target accounts for collection lawsuits.
Your risk of being sued does not generally begin until the account charges off, which typcially happens after 6 months on nonpayment (AMEX and some smaller credit unions are sometimes exceptions to quicker attorney placement, at least currently).
After 6 months, your risk profile will increase with the passage of time, with an even higher likelihood of being sued just before the state SOL to legitimately sue expires.
Now, after having said all of that, you may not be sued at all. It is just best to work under the assumption that it will happen, and plan accordingly.
Good morning Michael,
HELP please!
Live in: Florida
Situation: owe FIA Card Services approx $12,000 from past cc w Bank of Am (originally by another)–
last payment date 8/31/2011;
Andreau, Palma & Andreu, PL have been sending correspondence aggressively over a yr now, even received a summons 3/2014, then was dropped-seemed to just disappear (apparently there was a clerical error), then received notice of possibly dismissing case for lack of prosecution on 2/19/15, they showed judge good cause & now set for telephonic appearance by plaintiff on 4/24/15 , proceeding with motion for Default on Final Judgement since I have failed to file a responsive pleading, last page is a blank Fact Info Sheet but no instructions on what to do with it (is it wise to send them info)?
I also owe several smaller credit cards by various other companies, adding up to approx $6000.
I do not work; quit to care for elderly grandmother after stroke (she recently passed); husband owns business (my name not on main biz acct); he also owes several thousand for credit cards.
Mortgage on our home on about 2 1/2 acres, and my name is on a property that is my father’s (wondering how this will effect him)?
I have 03 minivan, according to kbb valued approx $4800, also ’97 work truck in my name, worth less than $1000
Instinct is to file bankruptcy, but unsure ….is it best option? Is it too late since only a wk away from court? if so, should hubby file as well or just me? will it effect my vehicles & most importantly my father’s property?
I sincerely appreciate your time,
Christine
It is not too late to file bankruptcy. If you have not already talked over your situation with a bankruptcy attorney, you can call my hotline 800-939-8357, and choose option 3. I would encourage you to read this article about finding and hiring a chapter 7 bankruptcy attorney.
Once you have all of your questions answered about how the chapter 7 would impact you, I think you will find your instincts are correct.
Whether you and your husband file together, or just you do, all household income and exemptions are typically going to calculate into the process. If all his credit cards add up to a fairly small amount, it may make sense to keep him out of the process.
Post an update with what you learn, or decide to do, and if you have additional questions. But I would try to knock out a bankruptcy consultation quickly in case you learn something that suggests you should avoid it, leaving yourself some time to consider other options for the FIA card services collection account.
I am on social security and so is my husband. My check goes into a joint account and his goes into his own personal account. I have racked up about 5300.00 in credit card debt on my own. This includes 2 cap one acct, 2 fist premier accounts, care credit, amazon and walmart, along with first savings and first national cards. I am making min payments but to no avail. I know that Social Security cannot be garnished but my question is if I go into default do credit card creditors typically put a lien on your home? We filed bankruptcy in 2011 and this has been discharge and we are paying regularly on our home but did not do a reaffirmation with the bank. Thanks for any help you can give me!
If you are sued, and a judgment entered, liens are one of several extra measures the debt collector has to get paid.
The state you live in can impact the likelihood of that happening. Where are you?
Thanks for you reply! In answer to you question I live in WA State.
Washington state judgment exemptions and protections include:
Limits wage garnishment of up to 25 percent.
Protects the value of your car up to 3,250 dollars with 3k of extra protection possible.
Up to 125 thousand dollars of home equity is protected in Washington.
6500 dollars in household goods value, and twice that if married, the potential for an additional 3k value in a wild card exemption.
Washington protects 200 dollars in your bank account, with the potential to claim an additional 500 dollars exempt from judgment collection as part of a larger wild card.
Hope that helps.
Yes it does thanks so much! I will continue to pay as per usual but was just worried that if it got to a point I couldn’t there would be major problems. We bought the house for 99000 and the loan left on it is approx 72000, so I assume I am safe there!
I’m retired and receive monthly deposit to a local credit union social security and AZ State retirement (ASRS) monies. Recently a garnishment attempt was made against this account from a court ordered judgement from a previously unpaid credit card debt. The response from the credit union to the credit card attorney indicated that the monies in the acct at the time was SSI and thus protected. But no mention of the ASRS monies.
Are Arizona retirement deposits protected from garnishment? Thanks
I would contact an experienced debt collection defense attorney in Arizona, or your plan administrators office, for a reliable answer. I can help with locating the type of attorney that is likelier to have a clue if you like. Let me know and I will send you an email with contact details.
Hi, I am 72 years old and live in SE Michigan. I am getting Social Security and have a 401k that I am drawing from every month just to pay the bills. That will run out in about 7 months. I filed bankruptcy, chapter 7 in 2011 and like an idiot, I was offered a credit card and now have that maxed out. I have 2 mortgages also.
When my 401k runs out, I don’t know how I will pay the bills. Do you have any suggestions for me? Can I stop paying the credit card and 2nd mortgage?
How much equity do you have in the home? How much is owed on the credit card? If you were not paying the credit card, would you be able to meet your bills?
Who is your second mortgage with?
No equity. Bottom fell out a few years back and has not returned yet. I owe almost $6,000.00 on the credit card and my second mortgage is with CitiMortgage.
Talk to a bankruptcy attorney about your options. You cannot file another chapter 7 for a few more years since the last one, but you may be able to do the chapter 13. You may be able to file chapter 13 and cram down the 2nd mortgage. If the math works out this way, you can even eliminate all/most of the credit card payment.
Will lower costs for the home help you make your bills?
Is the home just not something you are going to be able to keep?
If it were me, I would stop trying to sustain the unsustainable using money that creditors could not get to even if they sued (your 401k).
I actually need $1000.00 per month over and beyond my social security to make all of my payments. Credit card, mortgages, car payment and household bills. Between my two mortgage payments they equal about $1040.00.
Your situation is not sustainable. With no equity and the limited income, I would preserve all cash starting immediately, including stopping drawing from any retirement accounts. Besides the credit card bill, I may stop paying the first and second mortgage if I could not sell the home and break even, but stay in the home for strategic cash preservation reasons, saving up what I can to make a transition to some other living situation.
Talk over your situation with a bankruptcy professional right away. Figure out the timing implications of any decision to file chapter 13 bankruptcy. The only reason I would consider if I were in your shoes would be if I was going to try to stay in that home. And I would be very practical about that decision. If after calculating the payment on the 1st, taxes and impounds, costs for upkeep/repairs etc., it costs less to stay in the home than somewhere else, I try to stay. If not, I move on when ready.
Thank you very much Michael. The only reason I might like to stay in this home is that it was my mother and dad’s home. I was trying to improve it and have in many ways. But I was forced to retire and that’s when all this happened. I also put my nephew’s name on the house, jointly, a few years back. If I decide to let the house go to foreclosure, should I do a deed to remove him from title?
Is your nephew named on either mortgage?
No he is not. Both of the mortgages are in my name only.
Talk to him about it.
I will talk to him. But just wondered if it would be best to get him off the title.
I have stopped payment on my credit card and will not make anymore mortgage payments. The Credit card company has already started calling me and I am sure the mortgage companies will as well. Should I answer those calls?
It is not a bad idea to pick up calls from creditors once and a while. I encourage talking to creditors and collectors when peoples goal is to later settle their debts for less. With your debt solution expected to be bankruptcy, I still think it is a good idea for all of them to have notes in there files about your financial hardship and fixed income. In some cases it will lower the amount of collection calls you receive, so that is worth it. But you could also potentially prevent accounts from reaching critical stage collections for a longer time, which can allow for an easier/longer transition period before you file for bankruptcy.
Have you talked with a bankruptcy attorney yet? You should run all questions and concerns through the attorney you decide to work with. I just finished up an article I have long been meaning to write about how to interview and hire an attorney for filing chapter 7 bankruptcy.
No, I have not talked to an attorney yet. As we discussed earlier, I have already filed Chapter 7 and if I no longer can afford to keep the house, I don’t think Chapter 13 is an option, is it?
Thanks for reminding me of the prior chapter 7. You cannot file again for 8 years from the prior discharge you received.
Chapter 13 would not be an effective option, and you are fairly noncollectable. I would encourage you to read the collection calls article I linked in my above comment, and take a few of the creditor calls to relay your situation.
I have been thinking of possibly doing a short sale. At my age, do you think this is a good idea instead of going thru a foreclosure? I have seen a realtor and she gave me all the papers to fill out and it just seems overwhelming. I guess I would like your opinion on this.
Do you happen to know how long the foreclosure process can take in your area?
I have been told that it takes about 6 months and maybe another 6 months before eviction.
If I am concerned about where I am going after leaving, and the costs and expenses associated with the move, I would wait out the foreclosure, as opposed to the short sale.
Are you looking at the short sale as a cleaner break?
Yes, I am just trying to be responsible, but I don’t know if I am just wanting to do that to just save some embarrassment. I also am thinking of all the stuff I have accumulated and how to get rid of most of it before I have to move. If, I did do a short sale and it sold quick, I don’t know what I would do with everything.
I am normally all about preserving time and cash flow in these situations. If you need one or the other (or both), riding the foreclosure out is often worth the cost of some humble pie.
Hi, I am not sure if you can help me but here it goes.: I have three old debts. The one that has me overwhelmed is coming from an law firm. In 2008 & 2009 they were taking out of my checking account almost $1000. per month. (they would not accept less). It really put a drain on me since I had several other bills @ the time. I was getting a social security check in the amount of 643.00. Anyway, they stopped taking money out after 9 or 10 months. I assumed it was paid off. I did not hear from them again until this past November and they sent what looks like the same amount they are suing all over again. which is around 11,000.
My husband and I have just had a levy put against our account which is just social security that we were trying to save in case one of us gets sick or any major repairs to the house and etc.
I called the court and they said that they can in fact levy the social security money. This is another bad debt but that also seems like it was paid back in 2007. I can not understand how this can be happening. What can I do if anything?
It would help if you posted more details.
Who was the debt originally owed to?
When did you stop making payments?
What was the name of the plaintiff that sued you that then garnished you in 08? Who was the attorney collection firm that handled that case?
What was the amount of the judgment?
What state are you in?
Hi Michael. First I want to tell you Thank you for taking your time to have this site. I have learned so much reading others questions and your professional answers. I have written here before. I stopped paying my 6 credits cards 2 months ago as I just can’t pay them anymore. All cards together come to around 16,000. I have Social Security and small Qualified Pension 401( cant remember the letter they said but know it was not K) from Barclays. I plan on moving my pension from direct deposit to them sending me a check. It’s only $102. But I know they can’t touch my SSA but nervous about pension when it comes to a judgment and the bank. I also have a 2006 Toyota that’s paid for. I know I’m taking a big risk with my car. I live in Oregon. My question is I don’t understand the Judgment part. If one or more of my creditors brings a judgment against me, can they take my SSA and pension because of the judgment? I know they can’t touch my SSA without a judgment but can the take it if they file a judgment against me. Also would it be illegal to put a second owner on my car or sell my car to friend or family member. No matter what they do they can’t get any money from me. I don’t have it. I can verify that. Unless of course the question about judgment. One more question. should I send them letter telling them about my financial situation and income sources on why I cannot afford to pay?
Thanks
Unsecured creditors do need a judgment before they have any extra ordinary collection rights. There are a few exceptions to this, like child support, some tax debts (after some lengthy administrative processes), interception of a tax refund, and some other outliers. None of those apply here with your credit cards.
You may want to contact a legal aid office in Oregon and confirm with an in state attorney that you do not have much risk. It would set your mind at ease.
With ajudgment, that judgment creditor cannot garnish social security at all. And if you only have that on deposit in your bank account, not even then (but do not let the funds pile up in there).
Talk to an attorney about how you want to sell your car to a family member or close friend as a part of regular estate planning, and not to avoid creditors who may never pursue you in court anyway. See what he/she responds with.
Oh… and I would not send the letters if it were me in your shoes. I say that because I know it will not make a difference. It may be handy to write one up and have it to include in other communications with a few debt collectors that could potentially end up with one or more of your accounts.
Thanks so much Michael. And once again Thank You for your time and for what your doing.
Sincerely,
I live in Brooklyn, NY. Have 4 credit cards with total debt of close to $10,00. Stopped paying all about two months ago because I could not afford any more. I receive Social Security and small pension. This is my only monthly income. Have no bank account and no other assets. Received letter from collection agency on one of my accounts. Other companies keep calling me. Can they take my social security and pension? Should I call or write to them and explain all this? Don’t want to have my checking account frozen as this is my only account where I can access my money. What should I do?
What should I do in this situation to make sure my SS and pension cannot be touched.
They have to sue you and get a judgment first, before your at risk from extra ordinary collection actions. Even then, your monthly social security is going to be protected. Most pensions are protected from garnishment at the source, but not necessarily once the money is in you bank account.
Here are the protections from judgment creditors in New York:
90 percent of wages earned in the last 60 days, or 30 time federal minimum wage, are protected from creditors in NY.
Your car value in NY is protected up to 4k.
Home value protection in New York can vary by county, but ranges between 75 and 150 thousand dollars.
All household items are protected in NY.
New York residents have 1,740 dollars cash in their bank protected, with a possible 1k more that can be added if there is no homestead exemption taken.
Very similar to the reply I posted to Jane earlier today, you have options to think about later if sued.
Hi Michael
I am 61 yrs old and permanently disabled and live in Wisconsin. My income is a small amount of disability and the rest SSI. I have 30,000 dollars worth of credit card debt due to circumstances out of my control. I have not made any payments for 5 months. I can not afford to make payments with my low income. It is from 4 different cards. The most on one card is 12,000. My house is paid for and so is my car. My house is worth around $110,000. and my car $9,000. I was told by one attorney I would more than likely have my house taken away because the homestead exemption in WI is $75.000 and my car too because the exemption for that is $5.000.
I’m so upset. Can you give me any advise? Is this true? I’ve received a lot of phone calls and just bills in the mail so far. Appreciated any advice you could give me. Thank you.
Your bankruptcy exemptions are what they are. Sometimes you can plan ahead for these things with some estate planning, but talk to an experienced attorney about that.
If you do end up being sued on one or more accounts, you still have some options.
You can negotiate a lower lump sum pay off amount. It may be better to try and identify the accounts that are most likely to sue, and find a way to proactively settle those before being sued, as the deal you can get may be lower (sometimes much lower) than after the account reaches the court for collection.
You can defend against a deb collection lawsuit with the goal of getting it dismissed and protecting your stuff. It is sometimes less a cost to work with an experienced debt defense attorney of your own, than it is to settle. Your odds of succeeding with a dismissal are increased when debt buyers sue.
I do not see where I have posted exemptions from judgment creditors in Wisconsin, so here are those details:
Roughly 450 dollars per week of wages is exempt for a family of four.
Your car has 4k of value protect with a 12k wildcard.
Wisconsin protects 75k of your home value from judgment creditors.
Your household goods are protected up to 12k in value.
Cash in your bank account is protected up to 5k, and 10k if married.
I have a very old debt from 10-12 years ago that has been resurfaced. I’m guessing the law office that now has this debt purchased this debt from a credit union I owed when I was young and dumb. Every year for the past couple years, this law firm has taken my state refund. I am an Active Duty military member, and I’ve accumulated other debts that I couldn’t even begin to start a payment plan, so I figured they’re getting something back trough the State refunds.
Today, I tried to get groceries for my household and my debit card was denied at the cashier and also at the ATM. I contacted my Military bank and found out that there’s a hold on my accounts due to a garnishment from this law firm. Everything I’ve read says that the only way a military service member’s wages can be garnished is if it’s spousal/child support or alimony, federal or state tax debts. Seeing as how this law firm didn’t go through DFAS to actually garnish my wages, and went straight to my bank account, I have many questions. I don’t know the percentage they’re allowed to take or if they’re even able to do so because they couldn’t ever take my federal refund…so how can they take my federal pay checks (because that’s the only funds that’s deposited into the account)?
I’m in a very tough spot because today is Friday and I have two small children with little food in our home with all of my funds frozen. Any answers you could help me with would be great.
Lastly, I’m guessing they’ve been suing me every year to take those taxes when they did, but if that’s the case, how come I’ve never been served? In the past 7 years I have lived in 5 different locations due to my job, so how could I have been served properly and the only correspondence I’ve received to know I’d been sued is the letter from the State’s IRS office stating that my refund was going to the law firm…?
PLEASE HELP!!!
I know you need immediate help, but there is typically not much same day help that can help unravel all of this. But you can get to the bottom of all of this with help on Monday. Call my hotline at 800-939-8357 and select option 5 to connect with a law office for a no cost initial consult about your options. There may be collection violations that can be pursued at no cost to you, or options you can pursue to get a judgment unwound if you were never properly notified.
I would not waste any time looking into all of this. Call on Monday.
Hi. I have been ill the last few months and do not see it getting better anytime soon without many dr visits and possible hospital stays. To get to the point I am on disability SSI and Social Security for approximately four years now. In the last year I’ve acquired a personal loan and a few credit cards. The loan company knows of my SSI but the credit card companies I believe I had to check “other” where it said where my income came from because my choice wasn’t there. Anyhow I’ve come to find I got in way over my head I cannot make any of these payments not the personal loan (unsecured) or credit cards. This is the first month I haven’t paid and the phone calls are starting that I haven’t answered & have let go to voice mail. I’m so sick I can’t bare to talk about thus with any of them I don’t know what to do? My SSI’s get deposited into a checking account. I pay my rent at which I live at a senior disability apartment complex, my phone bill, my cable bill, take care of my very old car which needs monthly products to keep it in tact plus gas for usual dr appointments (as of now since I’ve been so ill tho I am not driving at all), buy good and personal items for the month as well as household products and I’m lucky to have $20 at the end of the month. What ways can I go about handling these companies? Do I really need to try to have a conversation with them & at some point if I do – what do I say? Can they mess with my SSI money in the bank? I’d really appreciate any advice you can offer, I know that anxiety will only make me sicker. I do feel bad but I though I’d be ok ” Why” I’m not sure. I wish they all just would have said no & actually feel they should have. Thank you so much for your time. Diane P.
Your social security cannot be intercepted at the source for any of these debts. Not even if they had a judgment. If SSI is the only money on deposit in your bank account, that money would not be touched there either. And not with a judgment.
You would want a reason to pick up the phone and talk with creditors, or the debt collectors that will be calling later on. If you cannot pay now, and do not expect that to change at all, there really is not much to say.
If you do pick up the phone by accident, or even out of curiosity, let them know your only source of money is social security, and that you have no assets and are living in senior housing. Leave it at that, and do not stay on the phone too long. If anyone gets nasty, post an update here and I can offer more feedback.
What state are you in?
While I do indeed love in Colorado, I also LIVE in Colorado.
I love in Colorado. I am 69. I have just been put into the category of charge-off by Nordstrom Bank. The outstanding debt is $11,500 ($1500 has accumulated in interest since I discontinued making payments 6 months ago.) I tried to contact Nordstrom Bank in writing several times to make arrangements and they never responded. – I had four different address). I now have communication from Portfolio Recovery as the buyer of the debt. I am married, but this credit card was only in my name. My only income is from SSI and Federal Civil Service Retirement. My car is worth approx 4K. The real estate market in Colorado has really heated up recently, so I believe I have about 80K equity. but lousy credit (561 FICO) so can’t get the 80K out of the house. I know Colorado has a homestead exemption of 90K, but as nearly as I can tell that applies only if you file for Bankruptcy. I don’t have any other funds. I have some other credit cards I am prepared to pay. Can I write to this collection agency that I am judgment proof, or is that large equity in my home something they will opt to go after? I would prefer to avoid bankruptcy
I would not consider you judgment proof. Not with an asset that can have a lien placed on it if sued and a judgment entered.
Here is a breakdown of what Colorado protects from judgment creditors:
30 times minimum wage – $7.78 per hour.
5000 dollars of car value.
Up to 90k home equity. But that does not mean a judgment lien could not be placed and paid off in full (with accrued judgment interest), when the home is sold or refinanced.
3000 dollars in household items.
There is no exemption that can be applied to bank accounts.
Writing to Portfolio Recovery is not going to lead to anything productive in my opinion.
Bankruptcy over this one account is something to avoid. How much do you owe on the others?
Thank you so much for responding.
Isn’t my Social Security and Federal Civilian Retirement judgment proof? That is the only money in my bank account. I thought I read somewhere that if those types of funds are the only funds in a bank account the banker cannot honor a freeze order.
You are saying not to write Porfolio Recovery. What SHOULD I do? Shouldn’t I attempt to negotiate? Could I back up and try to negotiate with Nordstrom again? Or is it too late once an account has been sold to a collection company?
I owe $11000 on one card at my credit union and $6000 to discover. I don’t want to “stiff” the credit union.
I’ll probably live in this house until I die. Will the lien be enforced if my husband or children try to sell it – or will it go away upon my death? (I have had two heart attacks)
I am not certain about the retirement money, so talk that over with an experienced debt defense attorney in your state. The SSI is exempt, but can still become a concern when deposited in an account with other non exempt money.
It was not clear from your first comment that settling was a motivation. If it is, I would not write, but call Portfolio Recovery in order to negotiate a settlement you can afford, and then get all of what is agreed to in writing. How much money can you pull together to fund a settlement?
It is indeed too late to work anything out with Nordstrom Bank now that they sold your account.
The property lien would typically survive your death, and need to be dealt with anyway. I would encourage you to talk this aspect over with an attorney as well, should something like this occur.
Sorry, correction to above post…her income is SSA ($960) a month.
Midland Funding is one very few debt collectors that will stop collection efforts when someone is essentially uncollectable like your mother. You have to communicate with them the details of the situation. Here is more about Midland’s attitude when collecting from folks on a fixed income (see 3b on that page).
My mother is 78 years old. She is being sued by Midland Funding for $4600. She rents an apartment and does not own anything. The only deposit in her bank account is her income SSI ($960 a month). Usually only $3 left in the account at the end of the month. What can happen if she doesn’t go to court?
Hi Michael,
The answers you’ve given to other people have already been so invaluable. Thank you so much for sharing your expertise. I have a question about judgments and writs. My parents fell into a tough period about 10 years ago where they weren’t able to meet their credit card payments. Long story short, Discover card sued them. We didn’t hear what the outcome of that was but I just checked the court site and found that the case resulted in a judgement in 2009 and then in 2012, they got a writ. Nothing has happened but I want to be proactive about finding out what is protected in this case. My parents do not have a home or car (they live with me now) and have <$5000 in their account. My mother works as a senior caregiver and makes about $400 a week pre-tax. They do however have IRAs totaling ~$10k and one annuity that is ~$10k from Prudential Financial. The last few accounts are for their retirement. They are both age 58. Can the judgements go after their IRAs and annuity? They live in CA. Thank you so much for your help!
Those retirement accounts are not generally going to be accessible to creditors, even with a judgment.
That bank account is another story. Whose name is the judgment in, or did Discover name them both in the lawsuit?
Thanks Michael for answering! Discover named both in the lawsuit. I think they will probably just keep the bare minimum of what they need in their bank account and put anything else over that in their IRA. For the time being, we haven’t heard anything at all so these are all just proactive measures. Thank you again!
I live in PA and am being sued by an attorney hired by Discover Card. I am disabled and have a teen age daughter. I receive SSDI and my17 year old daughter receives Social Security (but I’m NOT on my daughters bank account) because I’m disabled. I have a mortgage, and a 2002 vehicle. If the credit card company sues me and wins a judgment can they Sheriff Sale our personal property? I don’t own much and the property in our home is 2nd hand that I purchased at yard sales. What can I do?
The SSDI you receive, and the social security sent to your daughter, are both exempt from collectors like Discover Card.
I know this would not apply to you, at least not right now, but your wages cannot be garnished for debt like this in Pennsylvania.
Your car value is only protected from judgment creditors up to 300 dollars in PA. Yours is one of the worst states in the nation in this regard.
There is little to no protection for your home in PA. A judgment creditor is likely to place a lien on it, but may not go any further than that.
How much equity do you estimate you have in the home?
Your personal items in the home are not very well protected either. In PA, you get that same 300 dollar exemption for your household stuff, but you have to use that to protect other things like your car too.
PA is one of few states that protect wages from garnishment, but that is the only area of protection that it leads in. Every other area is a fail.
If you cannot settle with Discover Card, have you looked at your options with chapter 7 bankruptcy? You can speak to a professional about that using the hotline number you see to the right of the screen. The call is free.
I live in New York. A creditor has a judgement against me and wants to garnish my wages. I pay 90% of our families living expenses (Head of Household). New York allows up to 10% of gross income to be garnished. Does New York have a “Head of Household Exemption” from wage garnishment? If not, any advice?
You can ask for a hearing to show how your income and expenses should be viewed as further exempt than a plain reading of the statute. If you get a garnishment notice, follow your court ruled to request the hearing.
You may also want to reach out and consult with a legal aid office, or an experienced collection defense attorney.
Do debt collectors (or judgement collector) need to follow the State Laws in which the the debt was accrued (or judgement issued) or the State Laws the the debtor now live in (resides)?
Debt collectors need to follow the laws in both states, and federal laws on top of that. I am sure you are looking for some specific feedback. If so, provide more details in a follow up reply.
I am submitting the below comment on behalf of a reader who is experiencing complications posting herself.
“ok – I have been disabled for quite awhile but managed to work full time up until June of 2010 – I then went on short term disability and when that was over filed for ssdi – I was approved 100 percent in Feb 2013 – the company I was worried about the most was my Chase card whom I owed over 20,000 – well last year they sent me a 1099C and stated that although they assigned my debt to various collectors, they were now cancelling it out and no further attempts would be made – I filled this out and then acct had me fill out another form which found me insolvent – due to my lump sum payment from ss in 203 I was told that then and going forward I needed to file married filing single especially because our marriage has more or less turned into a room mate deal since my disability – then Calvary came after me for 1600.00 – I was unaware of their first attempt to serve as I was not home – I was not home the 2nd time either and believe what they did was not legal but none the less I had to appear in small claims court. My husband as in the garage – he was asked if I was home and responded “no” – they asked him to accept and sign for the paper work – he refused and told them that he had nothing to do with anything concerning me – the process server did not even ask him who he was but got angry when he would not sign and told him fine “I am just leaving it between the two doors and taking a picture” – well my husband was not on this card and he had no knowledge that anything of mine was even in collections for a court status…………however our already volatile relationship exploded when I got home because he then looked at the paperwork, pulled the case number up and showed for debt. I actually used to work for JP Morgan collections and we were highly trained that if the spouse was not on the card, that we could only request the location of the debtor or when the debtor might be home but we were not allowed to mention the word “debt” at all. If we did and we were being monitored, we would have been terminated. Do third party laws differ? I would think not – anyways, my husband reluctantly agreed to be my DPOA and speak for me at the small claims court hearing but they would not allow him to speak and the attorny for Calvary said I was doing just fine……….well I can appear to be doing fine but I am not as I am on 4 different psychotropic meds including 4 mg of Xanax a day – this attorny for Calvary advised me that a judgment would be in my best interest as Calvary had bigger fish to fry………..the judge (or whoever she was ) and the mediator just let me ramble about are you going to take my clothes, my wedding ring, etc…..then asked me if I understood and I said yes which of course I did not – I was told I would get a 45 questionnaire and that would be it………..well as you know that is not what I got – I got something called final judgment that gives me 45 days to collect things that I will never be able to get in 45 days – one is for a collateral loan sitting in Virginia and as it was a loan against my own money, I do not even receive statements. Then they asked marital status – I entered the truth – then they wanted spousal info – I marked see attached because my husband has always handled the mortgage, etc and he said he had nothing to do with this card and he is not giving me any info…………..I estimate the mortgage is around 900 but I cannot say for sure…………nor am I sure I can get a copy of the deed as he has all that stuff and will not give it to me – The house is the only thing I am on jointly with my husband and we still owe 66000 – he is 65 and I am 58 so it will not be paid off in our life time. So far all the info I have gotten has been some brief replies from cr counselors stating in a letter called an interrogatory? saying I have no access to this info and one guy said if hey want to file a deposition against you husband for 1600, let them do it…………..needless to say I am a nervous wreck – also I have Portfolio Recovery coming after me for a little over 10000 – now I disputed and notified both of these places that I had a very small pt job which I was advised by ss was too low for them to even garnish and my ssdi which they could not touch – I have iras floating around from when I worked full time but I could not tell you where they are now……..every now and then I get something from Fidelity and Chase…………..but I was told they could not take my IRA either…………so I am all messed up – Portfolio had a document notarized and signed that I did not dispute but I have a copy of the letter that was sent to them and a certification that they signed and also a cr counselor typed up letter for me and sent stating I was not gainfully employed and on ssdi which basically made me exempt from this……………the only other thing I have are my pets – by personal property are they saying they can take my pets???????? and sell them?????? if so, I would rather let them loose and pray that someone picks them up ……….I am very nervous about all of this………I also have Unifund in collections now but I called them and all they asked for was a copy of my award letter from ss and they would close out the file………….also under advisement from the ss office they said although banks were not allowed to freeze ssdi, they often did and advised me to just close out and put on us treasury debit card – so I closed out everything – my pt job sent my last couple of paychecks to a debit card (the store closed) – I was given a “seasonal job” but at min wage and so far only worked 9 hrs so I am not even worried about that…………..but I am very worried about this judgment and also if they can take the clothes off my back, the furniture which is not even mine – my husband had it from a prev marriage but the pets are in my name………I don’t want to sell them to him because then it will look like fraud………please help…….
What can they and can’t they take in judgment and is it true that I am exempt if I am on ssdi 100 %?”
With the collection lawsuit being a public record, and your place of residence being the courts common practice for being served, there is not much to take Cavalry, the process server, or the attorney collector to task with. The attorney for Cavalry lied to you. A judgment is not in your best interest. You had alternative you could have pursued.
I would encourage you to speak with an experienced consumer law attorney who regularly defends collection suits from debt buyers like Portfolio Recovery and Cavalry. I can help you locate one if you post the name of a larger city near you (I hope you can post to this page in reply to a comment, if not just email me like before).
It sounds like you have protected yourself from the different ways they have to collect on the judgment. But if you are in Virginia, here are your protections in more detail:
Your pets are likely yours to keep. I have never heard of an instance where a pet was taken from a judgment debtor.
Virgina allows up to 25% of wages to be garnished. You can petition the court to show how that level can create a hardship. None of this applies to you currently, as you are not really working,and SSDI is exempt.
Up to six thousand dollars value in your car is protected in Virginia.
Only 5k of home equity is protected from judgment creditors in Virginia. 10k if you meet elder law considerations,and there is a 500 dollar bump per dependent. This is one of the worst state home equity protections in the nation. With your being on title to the home, you could see a lien as a result.I doubt Cavalry would try to force sale a home over the dollars involved, or at all frankly.
Up to 5k of your household goods are protected. And I rarely hear of collectors coming knocking to take stock of how many toaster ovens you have (though I do have some stories I could share about crazy stuff in Michigan).
Depending on how much of the other exemptions you might rely on, your bank account in Virginia can be protected up to 5k (if used as a wild card, and not household exemptions etc). That would not appear to apply to you, so using the debt card with the SSDI is the right thing to do, and keep your name off of joint accounts with your husband or others… at least until you can get this resolved.
Are you in Virginia? You refer to the state, but I want to be sure that is where you live.
No……….I am actually in Largo Florida which is near Clearwater – the only reason I have a collateral loan in VA is because they had two branches here and they were the ONLY ones who even knew what a collateral loan was – the only reason I took it out was to in a small way show that I was making payments to something (they gave me like 12 yrs to pay it at 42.00 a month) so even though I am paying interest on my own money it has helped my credit score – but I doubt it will stay that way now with the lawsuit — I have written a response that Experian and the other two have to add next to the judgment explaining that I was on ssdi – am hoping that because it was 1600 will not affect as much but Portfolio I am worried about although I am hoping that my complaint to Consumer Protection gets rid of that………..I basically pointed out that by having a document notarized saying I did not dispute the amount made them purgur themselves – obviously even by their own actions of them going to the trouble of sending me 3 yrs worth of the front page of the statements was proof enuf that I had disputed it…………and that is not what I asked them for………..the loan was discharged and written off by the institution in 2011 – I told them I wanted a copy of my signature on the application and on the charges which of course they could not provide – I did also point out that it would be a waste of a courts time………the one consumer cr cnslr I have been dealing with (they answer the phone constitutional credit and something) keeps telling me I am judgment proof but apparently not as Calvary has a judgment – what should I do when (and I am assuming they will) Porfolio takes me to Civil Court? Does a judge normally throw that out ?/ I have been told (but again by an iffy cr cnslr, that because our home is still mortgaged to Citibank to the tune of 66,000 that in Fl they cannot put a lien on it because it is our homestead but even if they could at ages 58 and 65 it is not like we are going to go anywhere…………that is one of the main reasons we are still living in the home………..not quite sure what will happen when my husband retires………….but as I am sure you know the housing market is horrible in Fl (I think it has topped CA now) – just about every block where I live has at least two or more homes for sale or rent………….and there are no jobs so no one can afford a house……….what is this interrogatory letter they are talking about? it sounds like they are telling me under info that I don’t know to write “see attached” and then attach a separate lttr explaining the situation so that I do not mis state something in the final jdgmnt questionnaire………..which that apparently could cause them to arrest me for false statements?? They really are not helping my disability…………I am a wreck……..I can’t really do anything I am gathering about this judgment now can I ? And who knows if the person at this Unifund place was telling me the truth………………if I am supposedly judgment proof why are they pursuing me so much?? To tell you the truth I was relieved when Chase said it was not going to attempt to collect……….that was the one I was worried about………….but they never actually sold the loan to a bottom feeder collector they just outsourced it……………I have had nothing joint with my husband for many many years……….at one point I think he had my name on a checking account but had it removed………….except for maybe 80.00 the rest of the money that is sitting in VA is still on secured loan……..so worst comes to worst they would just keep the money if I could no longer make payments……..I have not had any car in my name since 2010 – I have insurance but I am not on any vehicle titles – the only thing I really own outright are my pets……….and clothing……….which I have been trying to sell without much luck on ebay………….I am a mess and hoping being in Florida helps me more…………I established the loan in Fl but when they closed the branches the main offices are out in VA so now that is where my payments have to be sent………they have some sort of deal with a local cr union here that allows me to withdraw money as it becomes available which I have been doing…….
Judgment proof refers to the inability to collect on a judgment due to your meeting state exemptions. Even when you spell out the facts to debt collectors, about how unlikely it will ever be that they get paid, many simply will not stop the collection machine from its grinding forward. You, your complaints to regulators, the economy, housing, job markets, and the occasional statistical anomaly … all of that stuff is just background noise to debt buyers. Even more so to debt collectors the size of PRA and Cavalry.
I will be curious to learn about what the outcome of your CFPB compliant is. I do not really get the gist of what you are saying you expected from PRA. They appear to have gone far beyond their legal obligation to validate the debt, but you expected something else, or had asked them for something else.
I responded to a reader from Florida near the top of the comments above. Scroll all the way up for your state details.
It appears to me that you are handling your affairs fully aware of what the collectors can and cannot come after. You will just have to remain alert to all of that while any judgments remain unresolved. You have quite a while to go before trying to improve your credit will be all that productive. Sending in personal commentary to add to your credit reports is not going to budge automated underwriting. A computer algorithm or software will not take your personal statement into account when approving or denying you credit. A person who may have occasion to manually underwrite a loan you are part of may weigh the personal statement, but if any judgment remains unpaid, it is going to hold you back.
Frankly… the situation is what it is. You live in one of the most friendly consumer protection states when it comes to debt collection. You should stay involved and aware of all of the collections activity, to be sure. But your home, pets, and clothes are not at risk. Just your tranquility. Try not to let debt collectors rattle you.
I just tried to post to you but got that same error message so making this short to see if it goes thru……
It comes through, but gets stuck in moderation. Comments stuck in moderation have to be manually approved.
Only comments with a link, or that are new, get held up. The system is looking at you as new when you change your appearance. If you post with your name spelled differently (including the use of capital letters, where you did not use any prior), or using a different email address, the system sees you as new.
My husband and I have accumulated $170K credit card debt over the last few years supplementing our income while we trained and changed careers. I wasn’t worried about it because I knew we had enough equity in our house to pay them off. We have had our house on the market going on 4 months now and it has not sold. I stopped paying our credit card payments this month Citibank last month) to preserve the cash in our checking account because we still do not make enough money to totally support ourselves. We were making over $4000 a month in credit card payments. I am 62 and he is 58. I am concerned that we will get a judgement against us before we can get our house sold and therefore preventing clear title. I did not count on it taking this long to sell our house. I want to get the house sold and settle with the credit companies for less than we owe so we will have enough money from the sell of our house to get into another house. I have a google voice phone number tied to all my accounts so my phone never rings but I can see Citibank is calling because I get an email. We have 4 Wells Fargo credit accounts so I was told to move my checking account from Wells Fargo to our credit union. My question, should I be corresponding with these creditors to keep them from becoming more aggressive and filing a law suite? Should we hire an attorney to protect us from being sued and settling our debt? We are in Texas. I don’t think we are a candidate for Chapter 7 because we make sl over the median income for a 2 family household.
You do not need anyone to settle for you, but I understand the desire to have someone do that. An attorney is not going to prevent you from being sued. It is the settling that prevents that.
Is the 4k monthly what you were paying out to Citibank and Wells, or are there other credit cards besides those?
How much is the Citibank balance?
You likely have at least 5 to 6 more months before you have to be concerned about Citibank suing, and many months after any lawsuit to collect could lead to a judgment (when handled correctly). That will allow more time to sell your home, but also allows for months of savings using the money you normally used to pay the credit cards. That savings can help you settle each account on a priority basis.
I am 62 , retired and live in Michigan. I receive a civil service pension monthly. My home was foreclosed in 2013 (on TU credit report it says foreclosed/redeemed). but my husband also had a second mortgage on the house in 2005 in both our names (I am primary). The second mortgage was charged off because we stopped making payments in 2011. The chargeoff was reported on my credit report but it disappeared on the report in June 2014. HSBC sent me a letter in April 2014 stating that Greentree would be servicing the charge off loan. Greentree has not reported it on my credit report. Greentree calls once a week but I cannot afford to pay the over $70000 charge off account. I will file bankruptcy before I pay this debt. Unfortunately my husband used that money for a now defunct business. I withdrew all my money from my 401K and paid cash for a condo. I have $1500 in savings. My husband is 64 and his income is SS.
What assets are protected in Michigan? Why did the charge off disappear on my credit report?
Your husbands social security is protected.
Your condo is only protected up to 3500 dollars in equity. Michigan is one of the worst states for debtors in this regard.
Your pension may be protected from garnishment at the source (judgment creditor cannot get the state to fork some over before they send you your pension benefit).
I would encourage you to talk to a n experienced collection defense attorney in your state. You are not being sued, but your questions and concerns revolve around your exposure if you were to be. And while filing bankruptcy is a way to get from under the second mortgage for good, it would likely force the sale of your condo. That purchase could have been planned better at the time, but your having not been sued yet means you can likely still make some adjustments. Talk to the attorney about your condo concern.
Things can disappear from your credit reports, only to reappear later. There may be more to it than that of course, but talk to the attorney about that too, in the event they have seen some oddities in your state and home loan market with those same lenders, and as relates to credit reporting.
I can send you contact details for experienced attorneys you may want to consult with. I just need to know the name of a larger city near you. You can email that to me if you do not want to post it.
I live in the Metro Detroit area. If I put my son name as coowner on the condo will that give me more protection?
I am not being harassed about the charge off debt, the original debt was with Decision One. Thank You for your response and please email the collection attorneys listing to me.
I would talk about adding your son, or him replacing you as owner, with one of the attorneys I sent you. It is certainly something to consider.
Thank you for your previous response. An Update: I found my original documents for the $70,000 home equity loan. the documents says the loan is secured with the original property that was foreclosed on. Decision One the original creditor signature also has w/o recourse on it. Does this mean that a civil judgement against me for the unpaid secured debt cannot be initiated and enforced?
It can in some situations. You should run this by an experienced consumer law attorney in your state, before making any decisions of what to do next.
Good Evening:
I have a few judgements issued against me in Michigan totaling about $9,000. I moved to S. Carolina 6 months ago. Can my wages be garnished while working in S. Carolina? Can my checking account at a S. Carolina bank be garnished? My only income is employment. Thanks for any help.
What type of debts were these judgments based on?
A judgment creditor can go to a court in South Carolina and get the Michigan judgment recognized as a foreign judgment. If that were to occur, here are your exemptions from collection:
For most debts, all wages are exempt from garnishment in South Carolina.
Up to $5,625.00 dollar value in your card is exempt, and you have an option to double that amount with a wild card.
Roughly 56k equity in your personal residence is protected in SC.
Your household stuff is protected up to 4500 dollars, but there are some additional amounts available if unused in other areas.
If you do not claim a homestead exemption in South Carolina, up to 5,625 dollars of cash or liquid assets are protected.
Overall, SC is not a bad place to be for consumer protections when there is a judgment in play.
Michael:
The Judgements were on a few credit card debts and on a repossed car. Medical issues made me fall behind. I’m glad to know what little I do have in my checking account is safe. Thank you for your help!
Those would qualify as most debts, so the exemptions listed apply.
If you do hear about any court actions in South Carolina, post an update.
I sure will. Thank you!
I am a 70 year old women from Michigan. My husband died and I was left with a house and cottage that went into foreclosure. Dyke O’Neill, a debt collector, is trying to collect $32,000 from a short fall after the one home sold at Sheriff’s sale. I receive Social Security, Veterans benefits as a widow of a disabled veteran and State of Michigan Public School retirement. I have no assets. I am renting a home and paying on a car. Is all of my income exempt from this debt collector?
How long has Dyke O’Neill been trying to collect on the deficiency balance after the foreclosure?
I want you to connect with an experienced consumer law attorney in Michigan about whether the pension money is protected once on deposit in your bank account. I can send you contact info to one or more attorney in your area that offers a no cost initial consult. What is the name of a nearby larger city?
Dear Michael,
I’m a 27 year old in PA with an extreme amount of debt. I have student loans totaling over $50,000 from when I attended college, but dropped out. I also have many other smaller debts such as credit cards and a cell phone debt. I now receive Social Security Disability amount of less than $1000/ per month. I am applying for discharge on the student loans with the US Dept of Education, but what are some suggestions on how to handle the smaller debts? I cannot afford to pay off all of them. Thank you
Post the amounts, who is owed, and the date you last made payments. Include all of the non student loan related debts. I can offer better feedback with a clearer picture of the debts.
November 28th, 2014
Dear Michael,
After receiving a Capital One Credit Card in 2010 (my first Credit Card ever and I’m 58 years old) which have remained low interest rates, low monthly payments and no added fees. Shortly after I was offered 2 other Credit Cards from what I thought was regular well known Companies, Credit One and Premier Credit Card Companies and realized with the yearly fees (they break it down into monthly payments) and also monthly service fees plus very high interest rates making my monthly payments on these two latter Credit Cards more then I can afford causing me to withdraw what I have left after making payments making it where it seems I’ll ever catch up paying these Cards off. I am disabled and receive SSI from Social Security, own a old car and not much in anything valuable. I live in North Carolina. I researched what would happen if I stopped paying payments on the two later Credit Cards and seen that they can’t garnish my SSI. I am wondering since the Capital One Credit Card is apparently a ‘real’ Credit Card Company and not as it seems a Company..run out of Las Vegas, Nevada, preying on unsuspected people as I was, I want to continue paying off my Credit Debt with Capital One and much faster since I plan to stop paying those other 2 Credit Card Companies. Will paying Capital One help keep some of my Credit Score somewhat fair or can I assume it will be totaled even if I pay off Capital One Card completely within a year? My other questions are: Do I need to file special Forms with my Bank and or with Social Security to assure my SSI Check is safe from Creditors. What is the best thing I can say to any Debt Collectors that all or write me to get them to not to continue to bother me?
Thanks you fr your time,
Maya
Your stopping payments to the other two credit cards will tank your credit score.
You do not have to say anything to anyone to protect your social security. It is protected without the need to speak to the fact. But if your bank account has money deposited, even occasionally, that is not protected from creditors, stop putting that money in the same account as your social security. You could open a different account, and at the same bank, or simply cash that money.
Remember, you have to be sued and a judgment entered before any of your money, accounts, etc., are at risk.
The best way to get debt collectors to stop calling and writing is to send a cease communication letter (send certified mail return receipt). Just know that when you tell creditors and collectors to no longer communicate with you, they are limited to only trying to collect through the courts.
Dear Michael, thanks for answering my questions. I have one more. You stated that by me stop paying on the other two Credit Cards would tank my Credit Score. I had mentioned I felt Capitol One was actually a real Credit Card and not like the Land Bank Sharks of the other two Cards and I wanted to keep paying on that Capitol One and pay it off as soon as I’m able to do..maybe in a year. By doing that, would that improve my Credit Score or will it tank forever anyway..or for how long before it can be better?
Thanks,
Maya
Michael, I had written you , asked questions on November 28th, 2014. You replied and I asked another question on December 2nd, 2014, but you didn’t reply. I was wondering if I stopped paying on those two credit cards, (you stated I’m noncollectable due to being on SSI, my credit score would tank) I asked if stopped paying the two other cards but I still made payments on Capital One credit card toward paying it off would that help build up my credit score gain or would that be a waste of time? Hoping for an answer. Thanks.
Sorry to have missed that one from the 2nd.
Your credit score is going to drop from the other two accounts not being paid, even if you are paying on the Capital One card. The sting from unpaid credit cards, if they remain that way, can keep your score down for a few years. It will be hard to rebuild that, but having the one account open and current when those two collection accounts drop off your credit report after 7 years, will be helpful. The current account could be more helpful to your score before that 7 years, but if I read your comment correctly, you have a very skinny credit profile. That makes it tough to bounce back quicker than someone who has a more robust and diverse credit reporting history.
Thanks for answering Michael.
I bought a car in 2005 from Chrysler that had 3 miles on it when I purchased it. The car shUT off several times while I was driving with my son. Chrysler wouldn’t fix the car and the salesman had the nerve to tell me that new cars need 3500+ miles on them to work out the kinks. Straight BS and I told him so. All of this took place within 2 weeks of the purchase. I told them I wasn’t making a payment until the car was fixed and they never agreed to fix it so I never paid on it. $2500 cash and an 02 BMW as trade was given and when I took the car back to them my car was already aold. This is when Chrysler had their 30 day buy back program. Well they lied! Anyway I signed with my husband at the time and they eventually came and got the car 3 months later and only after being threatened that the car would be left at the border running with the doors open! I live in San Diego… they got their quick to get the car that had only 500 miles at that point. They got a judgement against us for the loan that shot up $7000 over the contract price of the car. Here it is nearly 10 years after that car was repossessed and I’m getting a letter from an attorney in Newport Beach wanting money on the judgement they say is from 2007. To this day they have never tried to collect from my now exhusband who has had the same job for 7 years. I am single and have 2 kids in college and am the only one working. The attorney says they are going to garnish my wages which are less than $36k per year. I don’t want to file bankruptcy and have just started to get my credit back on the right track. Can they garnish me if I’m head of household and making less than $36k per year? I live paycheck to paycheck already. …. please give me some advice. They say I owe nearly $30k.
Judgment creditors can try to garnish you. Once they attempt to, you have the ability to contest the garnishment with the court. It is at that time that you would establish your exemptions and garnishment levels.
If you want to get a head start on understanding your collection exposure, or want to learn if there is anything that can still be done under lemon laws, or other consumer protections, call the attorney I am sending you contact details to. He is in your area and offers a no cost initial consult.
Hello, my grandmother lives in Florida and she is 80 years old. The ONLY income she has is Social Security (SS) in the amount of $1,064 a month. She currently has 2 credit cards, one with 16K and the other with about 12K, each payment is around $200 a month. She also has a reverse mortgage on her home (doesn’t have to pay back till death or sold house) The credit card payments are to much for her to continue to pay them, after all her bills including credit cards are paid she is left with $11 from her SS. Can she stop paying her credit cards? Will they garnish her SS or take her home?
Any insight will be helpful.
Your grandmother is fairly well protected from collectors if she chooses to stop paying those credit card bills. Her social security is protected from garnishment. Her home is not going to be taken from her.
I would encourage her to have any non social security funds held separate for other money, and keep little non SSI deposited bank account with very little money in it. This bank account issue is not a concern unless she is sued, and then a judgment entered in the court.
She should consider saving up the 400 a month for 4 or so months and not touching that money. It will cover most, if not all the cost of a straight chapter 7 bankruptcy. And that step may not be necessary, but would provider her piece of mind, and lower stress levels associated with having unpaid credit card debts shuffling from one debt collector to the next.
You said “This bank account issue is not a concern unless she is sued, and then a judgment entered in the court.”
If she is sued and a judgement entered she doesn’t have anything in that account but SS, so does that mean that they can take whats in it?
So in a way, the reverse mortgage protects her from having a lien against her home from the creditors?
Florida pretty much protects a persons personal residence entirely (unless on a huge parcel).
A bank account with just SS in it is completely protected from judgment creditors like this.
She is looking good as far as being protected from debt collectors in those areas.
Michael
I asked this question earlier. I’m from the state of Missouri, which has a judgement garnishment on me for unpaid back taxes.
I am a single woman, who does not own a home, car or anything. I don’t even own or have any life insurance! All I have is my Social Security and a widows pension from AT&T of 644.09. They are saying they are going to garnish this. If they do, I won’t have money to pay all of my bills!!!! I will end up in the street. I have no one to help me. What do I do???? I am totally terrified, to say the least! Please help!!
I would start by contacting a low income legal aid office near you and see if you qualify for free (or close to it) legal assistance. If not, I would next look for an elder law specialist in your area. If I knew the name of a nearby city, I may be able to help you locate one or more you can speak with.
Just realized bno I was never sued. So the money in account is federal financial aid sispursement meant for college expenses..
If the money is being pulled from an account at the same credit union, it is common to have cross collateral clauses where if you fall behind with one account, money from another account can be applied to that. And your original agreement would have likely covered that, like the credit union is telling you.
But of course, they are counting on no one reading all the fine print in those agreements. And they are right… very few people read the account agreements, and fully understand them.
I am going to suggest filing a debt collection complaint with the CFPB, with a focus on federal funds intend for education were taken and not being returned. You can file that complaint here: https://www.consumerfinance.gov/complaint/
What is the name of the credit union?
What is the name of the attorney debt collector they hired?
I’m not sure how up to date this sire is but here is my dilemma. I took a car loan many years ago my father as cosigner..my car was repossesses and we started making payments through an attorneys office as the credit Union wrote off the loan in their own words..my father fell very I’ll earlier this year and we are living off my workers comp income and I took an extra student loan this semester to finish covering bills..well went to get money out of bank and they froze my account and are now sending my 2000 to the attorneys pffice to pay for the loan as I Havant made a payment in nine months. Ironically o had sent a 100 payment yesterday Gmorning before I realized this. This is literally every penny I have to pay bills with..they are stating they have the right to do this as they are going by the terms in the original contract signed through the credit union on the loan..my question is van they do this? I know I vacant senr money in a while but had explained to them my situation and had started paying again..also I am in new York..TNA k you
Were you sued by the collection attorney office? Did you sign a consent to judgment, or stipulate to one?
Is the bank account that got hit still with the credit union, or at a different bank?
No judgement or paperwork has ever been signed. The bank is saying that they have the right to do this because of the original contract when I took the loan but then says they wrote off the loan which is why the loan is in the attorneys office for collection. Up until nine months ago I’d been paying steadily on it to the attorneys office when my dad got sick I called and told them I couldn’t pay until my financial situation got straightened out. Irony I mauled them a payment yesterday morning before I realized my account was frozen. The bank tells me to contact attorneys office so I did they refuse to talk to me or tell me anything besides they gave authorization for bank to forward frozen funds to them
JJR called me. Very rude, demanding payment on a judgement that is at least ten years old. I would not give my SS number over the phone and they would not say what account it was. The only thing I can think of is this judgement of a medical bill. I tried to make payments , but the lawyer would not agree and went to court. Nothing happened after that. I am 70 and closed my checking account in fear they would take the only money I have. SS and two small pension checks totaling 859.00 a month. I have no money, no car. House has no equity. Now I am running around trying to figure out how to cash the two checks. I got a debit card for the SS check. I was thinking do a bankruptsy, but I can’t even afford to pay a lawyer. Any suggestions you can give me would be appreciated. Thank you.
Your social security is protected in your personal bank account. It is possible that one or both of the pension checks are too.
What state are you in?
Thank you for your reply. I live in Fl but the debt is from NY. Also I have heard horror stories of banks freezing accounts even with just SS checks deposited. I don’t know how accurate the stories are.
Awful stories about bank levies and account freezes that only ever have social security money deposited into them are real enough, but nearly all of them will be dated a couple years old or more. That practice was curbed greatly.
I will probably open a new checking account and this time be sure to deposit only ss and my two small pension checks. I have a friend who suggested I call a service here in Fl for some guidance. I appreciate your help. Thank you very much.
I am 69 years old and live in Oregon. I have only Social Security and a very small pension as income. I own outright a 2006 Toyota Corolla worth about $7,900 FMV. I have been living partly off my credit cards a lot to make ends meet. I have about $16,800 in credit card debt. I cannot keep doing this and cannot afford a BK. I want to stop paying my credit card bills as I think I am Judgement proof. If I do stop paying my bills and one of my creditors brings a jugdement against me for my car, and they win the case in court, will the creditor get to keep all the funds they get from selling my car. Will I not receive any proceeds from the sell to purchase a junker to drive around to my Doctors appts and grocery shopping. Please help. Thank you
Your car is worth more than the 3k auto exemption in Oregon. And hypothetically, if what you are concerned about were to occur, your car would be priced for fire sale at auction, so I doubt there would be anything left to share.
The thing is, I rarely see judgment creditors for credit cards go after vehicles in the situation you are in.
If push came to shove, and I am being totally sarcastic here, you could take a hammer (sledge or otherwise) to the car and half that value in under a minute.
Thank you so much for your help Michael.
Michael
I have another question concerning sending a Judgment Proof letter. Since I do own my car 2006 corolla and Oregon has an exemption of $3000 on my car do I need to mention my car on the Judgment letter. Would it be illegal to say I am judgment proof when I have the car that would not pay off my total debts. I wrote comments and questions to you yesterday but I think I was in the wrong place so not sure where it is. Was under name Val not Valrae, but same email. If a creditor brings a judgment against will I have a chance to appear in court and plead my case. Since I’m not doing a BK can I add someone else on my title or sell my car to someone else?
Hi Mike, I just received a subpoena yesterday for court from Midland Funding, LLC. that bought my credit card debt of $7300 from Target National Bank. I am unemployed, homeless, (temp staying at Sisters) and have applied for Disability a few months back. My question is I know Tennessee provides a $10,000 personal property exemption from seizure to satisfy a judgement. Does this include my vehicles? One is worth $2500 and the other $1,000. (one doesnt run). I do need them as I will need to sell one to pay to fix the other. And if they are protected from judgement do I need to file a claim, w a written list , w them on it and under oath w the clerk of court? Is there a cost for this and is it done at my local courthouse?
Mike, please can I get a reply on this via my email account? I forgot to click the notify me via email box. Sorry.
I will send you an email with a link to these comments.
It would be a good idea to contact an experienced debt collection and consumer law attorney in TN about how to claim those exemptions. And not just for that purpose, but to discuss your options at this early stage of being sued.
Tennessee exemptions from judgment creditors include:
75% of wages are protected (but there are scenarios where you can contest a 25% garnishment due to hardships it may create).
That 10,000 dollar exemption for cars in Tennessee is shared with the exemption for household goods (often referred to as a wildcard). Are there household goods valued together that exceed 3,500 dollars?
Home value protection in TN can be as little as 5k and up to 25 thousand dollars. It will depend on your age, whether married, number of dependents.
Bank accounts are protected with that same car/household goods calculation, and up to 10k. In other words, if you had no car, and no stuff, but 10k in the bank, it may be protected.
What are your chances for disability? What about permanent disability?
Dont own any home.land, bank accunt, etc. Just the 2 autos and clothes. Getting food stamps any unemployment ended in July of this year . Not sure of my chances on the disability. I am using an attorney, and did get turned down first time which I am told is usually what happens. Going through 2nd round now w it. Cannot really work as I cannot stand on feet long, bad hips, knee, feet, other illness’s also. I am 61, not married, no dependants. Laid off after 14 years this last Jan. Lived where I worked so lost my apt at same time. Thats why I am staying here, there, where I can.
With all of that going on, and on public assistance for food, you may qualify for Midland Funding’s hardship program. They are the only debt collector I know that will look at ceasing collection when a file meets certain criteria. You can read more about that here, and then call them about it.
Hi Michael,
I have 2 questions, My Mother who lives in California is 70 and is on Social security has great credit nothing bad on her credit reports, but she has 2 credit cards from 2003 that went to credit collector years ago and she has been paying $20.00. Can she write a letter to them saying she does not owe anything because they are beyond the Statue of limitations?
One of the credit collector recently change to another Company name and they automatically took money from here account without telling her. Can they continue to take money from her account legally what if she changes her bank account number?
Kat,
Those payments she made likely reaged the debts so that now she could be sued for collection again, where as if 4 years of nonpayment went by, she could not have been sued.
I am not certain the new company taking the 20 dollars now, needed to reestablish those payments first with your mom. I would run that question by an experienced debt defense attorney. I will email you contact info to one you can consult with at no cost.
Good evening/morning,
Im a 30 yr old single mother of 2 children. I get no child support and the only income I have is from my full time job. Even with that job I still qualify for food assistance.
I received a letter in the mail late last week stating that garnishment for the amount of $3600 was going to start my next paycheck, which was today. I called the creditor and they stated they sent me notice of summons in 2007. They went on to say they’d stop garnishment if I paid $1800 as a settlement. Side note, I’m originally from MO where the judgement came from and now currently luve in AZ.
They are taking 25% of my check. Is there anything I can do to stop this? Ive have been seeing mentions if Head of household exemption but dont where to start.
Could you possibly help on what my options are?
Thank you in advance
Jessica
Contact the court clerk and ask for step by step instructions for how to request a hearing to contest the judgment. It is then you will likely be able to get the garnishment stopped or reduced, or at least I assume you will be able to, as qualifying for food assistance is a clear indication that you meet exemptions in your state.
You can also look into any assistance that might be available from a local low income legal aid office.
I have a request from another page on the site to cover exemptions from judgment creditors in Missouri.
Wages for head of household in Missouri are 90% protected.
Car is protected up to 3k value, and with some other wild card exemption value that can vary by head of household and how many dependents you have.
Missouri only protects 15k of your homes value.
3k of value in your stuff, or household goods, with some wild card additions too.
Missouri provides bank account levy exemptions, but shared amongst your other household goods and other wild card exemptions.
Hi I really need your help. I received a call from Midland the other day stating that we had a prior conversation about a unsecured card through Cap one. We did not have this call and I did not give him Info I asked for his name and number and I hung up. I had always made my payments on my cards until I had to move to Florida from Va In Dec of 08 right after surgery and was unable to work for months my daughter passed away just months later and I was given her beautiful daughter to raise that was 3 months old. I also have a 9 year ol son and have been separated for years. I was very confused back then and I am unsure who i discussed my hardships with but I think It was this acct that midland Is talking about. I hadn’t heard anything more from Cap one and they did a CO until I got a call from Midland the other day. Because my granddaughter has many health Issues I had to leave my job and we now live on her death benefit that pays the bills and I babysit a few days a week for gas etc. I am now on food stamps as well with no other income I hate this but she has many appointments and I’m 51 with depression to boot. I own a 2000 mini van In pretty bad shape and we rent an apartment. my bank account only has her death benefit. The debt is suppose to come off In a few months but I am worried that midland will put a judgement on me right away and I have no means to pay It, most of my bad credit Is also coming off around the same time because this Is where I ran Into problems with the surgery and death of daughter. Should I talk to Midland and explain everything or does that reopen the debt date for another 7 years because i contacted them. will they try and quickly put a judgement on me? what do you think Is best to do..The card was a 500 unsecured card and now they want 1,180 that I don’t have..please help..I went on Credit Karma to check my credit because I am want to apply for a habitat home and I think this triggered the call from midland. So sorry this is long…Please help…Thank You Tracee
If I understand what you shared correctly, you are at no risk of Midland suing, as you would be passed the statute of limitations in Florida for them to legitimately do that. And verbally confirming a debt is owed is not generally going to renew any limitations for Florida residents.
Can you confirm that indeed last paid Capital One, or anyone for that matter, back in 2008?
Call and talk with a counselor about consolidating your higher interest credit cards into one single payment. You can reach a counselor at 800-939-8357, and press option 1.
Who are the creditors you owe, and what are the interest rates?
I just had my credit report pulled and it appears that I have blemish on my account for $6,200 that is being collected by CASH, LLC. I reside in New York and was wondering how I should address this debt that was sold to MBNA. I am divorced and it appears that my husband who handled our debt stopped addressing payment. Unfortunately, the account is in my name. Can you be sued or garnished for unsecured debt in New York? Are there recommended agencies in New York that you could recommend. In advance, thank you for your time.
Desi – What is the date your credit reports show the account was last paid?
You can be sued and garnished in New York for this type of debt.
I can refer you to some helpful agencies. But first, what are your goals with this debt?
Thank you for responding so quickly. I believe the last payment that was made was over two years ago. I would like to come to some fair settlement and address payment. Ideally, I would like to work with an agency to accomplish this. What and who do you recommend. Thanks again.
Try calling 800-939-8357, and press option 1 if you are looking to work with an agency to establish monthly payments.
Call and talk to a specialist about settling the balance for less than is owed at that same number, but press option 2. Settlements are often going to be at the best savings when you can pay the negotiated amount all at once, or only split over a few months.
I Am being sued for non payment of a credit card by a collection agency, i do not work, just my SS and small pension can they make me pay from that, i barely get by month to month. thanks marianne
Who is the collection agency suing? What state are you in? Do you have other assets, like a home, that you need to be concerned with?
the collection agency is suing me on behalf of the bank, i live in the state of Indiana, no home no car, no assets.
Your fixed income is not in jeopardy of being garnished at the source for debts like this (when they become judgments).
Your concern will be bank levies should you mingle non exempt monies with your social security.
I would also suggest you contact a legal aid office nearest you about your situation and see if there is any assistance they can provide. You should ask them specifically about your pension type, and if it has protections that extend to when that monney is on deposit in your bank account (like protections for SSI).
I am 66 and have a judgement against me for debt incurred through a credit union.I now live in NC and my income consist only of funds from social security and a Florida teachers pension. Assets include household goods and clothing, and a car that is going on 13 years old with a 175,000 miles. Can my social security or pension be garnished? 7
You should be in good shape from garnishment at the source. My concern for you is from a bank account levy angle.
How much is the judgment for? Who was the plaintiff?
Judgement is 19,000. Plantiff is suncoast schools federal credit union.
I would run your scenario by regarding how much of your pension money, when on deposit in your bank account, is protected from judgment creditors in North Carolina. I can send you contact info to some that offer no cost consults. What is the name of a nearby larger city?
Was the judgment in a Florida court then?
A nearby larger city would be Charlotte. The judgement is debt acquired while I lived. In FL I moved to NC after my husband died and have been here 5yrs.
Larger city is Charlotte, nc. The judgement is debt I acquired while living in FL. I moved to NC after my husband died. I have been in NC 5 yrs.
I sent you an email with contact details to an experienced attorney I would call if I were in your shoes. He is not near Charlotte, but distance does not have to be an issue in these things. If it is, ask Chris for a referral to an attorney he may know in your area with the same type of law practice focus (consumer law and debt collection).
I am 69 years old live in Florida. My income is socials security and pension. I owe condo about $60k value. I have no savings. I have 2 cars. One is old one car 10 years old and the other one is a new car under bank loan which I m paying out now. I stopped paying most of my credit cards. What can happened to me? Can one my car be taken away? What is better for me to do?
Please post the names of your creditors, the approximate balances (round to nearest hundred), and the date you last made a payment to each account. I can better offer actionable feedback with that information.
Thank you for your response. Also, I apologize for my imperfect English.
This is info you asked me to post:
Original creditor Balance Last payment date
Premium Bank Card $600 February, 2014
Premium Bank Card (second) $600 January , 2014
Chevron / GECRB $500 January, 2014
Merrick Bank $2,200 October, 2013
Credit One Bank $700 December, 2013
Cerulean/Continental Finance $600 January, 2014
—————
Total: $5200
Of cause you know this is current amounts with accumulated interest from last payment.
Thank you for your help.
The total amount is just too little to file bankruptcy over. I would encourage you to be strict with a savings amount each month, and let that accumulate over time. If one of these accounts results in a local attorney contacting you, that will mean your risk of being sued is higher. Depending on which account the attorney is trying to collect, lets talk about it, and see if what you have save up at that point will help settle, or defend against the suit.
My Mother is having difficulty meeting her monthly bills. She is 71 years old and receiving Social Security and her monthly Pension. She and her husband have approx. $2000 income each month. She owes $11,000 in Credit Card bills. (1) If she uses a Credit Company to Restructure her debt to a reduced amount, Can she restructure the total owed to the Credit Companies and make monthly installment payments on this new reduced amount? Or will the Credit Card Company require the new amount paid in full. (2) Also, if she does nothing, can a lein be attached to her home , land or car. She owns her Home valued at $25,000 . Car is valued at $5000. Land Valued at $35,000. She lives in South Carolina
If you are referring to consolidating her credit cards through a credit counseling agency, and if she can afford one single payment of roughly 230 dollars each month, than that could be a workable solution. Call with her on the phone, or she can call on her own, and get an exact quote for the monthly payment: 800-939-8357, and press option 1.
If she were unable to pay at all, and one of the creditors sued and got a judgment, here is how she would be protected:
Wages are exempt from garnishment in South Carolina. I know your mom does not work any longer, but for later readers….
Cars valued at $5,625.00 are exempt from judgment creditors in SC. There are additional amounts of value that can be protected too, but that are situational.
South Carolina protects roughly 56k of home value from judgment creditors.
Household items are protected to 4500 dollars in value. There are additional protections of up to 5k more if other exemptions go unused.
The cash exemption amount is based on other exemptions not being used. Because her social security is completely exempt, I am curious how much pension she receives, and whether that should be treated differently than direct deposit.
All of that assumes she cannot afford the lower monthly payment working with a credit counselor to consolidate them all.
Sorry I forgot to add that I live in California.
The car is not exempt if you own it outright. California only protects 2900 of car value as exempt.
The equity in your home is not protected, but close to it if you are married, or qualify for additional elder citizen, disabled, or low income exemptions in California.
How much are the debts?
I own my home and have roughly 115,000 in equity, my car is worth 7500. I have two sources of income Social Security and a annuity that is a required IRA distribution it is only 560 a month. I am a 79 year old woman and I am considering not paying on my credit card debt anymore. Am I correct in believing that even if the credit card companies do sue me there is nothing they can take from me. I am just not able to pay them and make my monthly obligations. Thank you for your advice.
Hi Michael,
The interactions from CRN are very helpful. I am from California and this is my second issue. I had a small claims judgment for $2600 in Dec 2011 for an unpaid $6000 HOA fee for my home that was getting under water. Right after the court hearing I spoke with the collection personnel and we agreed that I submit a settlement request to the board but never got a response. The property foreclosed and I moved out in January 2012 and forgot all about it. Five days ago I received a letter from my employer saying that they got a wage garnishment order for $3100 (6/25/14) which does not include interest and will process it if they don’t receive a release order by 7/4/14. I called the law office from where the Writ of Execution came from (dated 2/28/14) and asked if I can pay lesser coz I cannot afford it but I may be able to borrow some amount. I was told that they can’t stop the process and will just incur more interest if I don’t pay. I don’t know what to do or how much time an Exemption can buy me. I need my salary as I’m a single parent, a full time student and working full time with one child in college and another in high school. I’m also taking care of my mother who has breast cancer. I occasionally get overtime but not regularly. It is not my nature to transact with collectors and I don’t know how to deal with negotiators so I get taken advantage of many times. What are my options at this point? Will the HOA still come after me in the future for the remaining balance?
Thanks
Olive
Other than the exemptions from collections in California I covered in the comment above, you can request a hearing to show the court how you are exempt from wage garnishment. If the papers you received are not instructive on how to request your hearing, call or show up at the court and ask the court clerk for help getting the hearing scheduled.
With all that you have going on, and the expenses related, you may find you are partially or fully exempt. You could stay that way for some time. The debt collector may try to continue to press the issue periodically, and you of course will have to address that each time, but you would buy time until you come up with the money to pay the judgment off, or negotiate a lower amount to pay off.
If the collection attorney is unable to garnish after the hearing, they may become more reasonable about accepting payments from you. Just be sure to only agree to payments you are confident you can afford.
Michael,
In following up on my earlier request, if the law suit is strictly for my wife, do I have to worry on the bank account that has both of our names ?
If Capital One refuses to accept my $ 2K settlement offer, what are my options?
Al
You could have to worry about joint bank accounts if a judgment is entered. Taking your wife off of joint accounts would remove the concern.
If you are unable to settle the collection lawsuit, you can hire an experienced collection defense attorney to defend the suit; navigate the collection process by being informed and alert until you save up enough money to settle the judgment; and in some instances (though perhaps not yours), stay uncollectable and ignore the judgment.
I have a judgment put on me in North Carolina for a credit card. I have now had a excemption of assets paper served to me. I do not own anything besided my car wich is the only one I have maybe worth 5,000 and paid for and my home wich is owned with my husband who is not on this credit card. Will the creditors be able to take my home or car? I do plan on paying for the credit card but this year is not possible as I have many other bills and I am expecting a child.
In North Carolina you have a 3500 dollar car value exemption from judgment creditors. You can use up to 5000 dollars in additional exemptions for your automobile if you do not use a homestead exemption.
You have 35,000 dollars exemption from creditors for your home. That amount nearly doubles based on meeting standards for certain elder laws in NC.
Your wages are exempt from garnishment in NC.
Your stuff (household items) is exempt from judgment creditors in NC up to 14,000 dollars, and can depend on whether you use a homestead exemption, or how many dependents you have.
I am trying to avoid bankruptcy for 13000 and trying to work this out on my own – But it looks like I have no hope 🙁
Thanks for the response Michael!
Hi Michael …..Previous Forum: “ Capital One said charge off will be on 06/23… I live in Florida , I have a minimum wage part time job and I receive child support, all together makes a $1200 income plus food stamps ( After 15 years married I never though I will be on food stamps help), ….but now capital One will charge off credit card account on 06/23 (180 days) I am so afraid of what is going to happen if aggressive collections start and if they sue me, I just can’t afford a lawyer again(after divorce). I live in my house the mortgage was fixed to 40 years loan modification on 12/2012 because was underwater and my car ( which I need it to go to work- but its not paid off) are my asset.
I f They Sue me and I don’t have the money to pay them…Would they take my asset and wage?
It sounds like not Hope for me….. please help
Nora – Read my responses to Bill higher up in the comments above. He is also from Florida.
If you are unable to settle the account with Capital One, and if collections to reach the courts and a judgment is entered, know that you can stop all collection activity on an account like this with bankruptcy. Chapter 7 will discharge a debt like this, while chapter 13 will force them to accept the amount of money the court tells them they are allowed to receive.
Capital one accepted settlement, and i received it in witten by mail. But i am not sure about what it says on my credit. They say ” ….at completion of the settllement the remainder balance of your account will be written off and the credit report will be updatef to show the account as settled with an outstanding balance…” Is it correct?
Norma – If I were you, I would:
1. Wait until after I pay the settlement according to the terms so that I am out of harms way, and then file a credit reporting complaint with the CFPB asking how it is Capital One can continue to report a balance owed when they agree that there is no balance; that the debt was settled via the agreement they accepted; and even informed me that they are required to tell the IRS about how they have forgiven the remaining amount (therefore not owed), so that I can include the forgiven amount as income for the current tax year. I wrote about this issue a few years back: https://consumerrecoverynetwork.com/why-does-capital-one-hate-america/
2. Contact an experienced FCRA attorney in my state and share all of this with them, and see what kind of advice they have to offer.
Thank you so much for all your help. God bless you.
Hi Michael,
I made my last payment of the settlement with Cap.One. …Now, What? DO they have to send me another letter or something or Do I have to call them?
Please advice
What was the date of your last payment?
Pull your credit reports and look to see if Capital One is still reporting a balance owed, but that the account is settled. Please post an update with what you see.
I just made last payment on 9/23/2014. I went to see my account online, it shows my next statement and minimun payment due 10/23/2014. But it also show : This account is currently restricted….
Check your free credit reports at http://www.annualcreditreport.com to see how Capital One updated your settlements later this month, say October 23rd. If you have already used your free access in a12 month period using that site, try one of the free credit report card tools at http://www.credit.com.
When you see what Capital One has updated their reporting with, post that and lets go from there.
I was thinking on on sending an e-mail to Mr. Richard D. Fairbank
President & CEO ( that is what I did when I requested the settlement).
This is (help me out) what I think I would say:
Mr. Richard D. Fairbank
President & CEO
Ref:: account # xx-xx-xx-xx-4832 /completion of the settlement
I paid in full the settlement according to the terms .
Now, reading again The settlement letter. Lets read number 8 on page.2 of the settlement letter:
….”8. Credit Reporting of Your Settled Account: If we report your settled account to a consumer reporting agency (credit bureaus),
we will report it as settled for less than the full balance” …..
BUT its contradicted on page 1 said ….. ” at completion of the settlement the remainder balance of your account will be written off and the credit report will be updated to show the account as settled with an outstanding balance…….” As per my understanding it only should be reported an accurate information to the Credit Reporting Agencies, therefore it should be reported/updated to show: …..the account settled for less of the full balance”…. Remember,Capital One agree that the debt was settled via the agreement accepted by both parties; and even informed me that they are required (1099-c ) to tell the IRS about how Cap.One have forgiven the remaining amount, It is on number 7 of page.2 of the settlement letter.
Be advice, Not balance is owed…..because, The above Account has been settled for a lesser amount agreed to by both parties, and cancel/forgive remaining of principal on the debt. Therefore should not be reporting as outstanding balance like it is still due and owing when it has been forgiven (1099-C ). IT would falsely (FCRA) the requirement to report. Only complete and accurate information to the Credit Reporting Agencies.
Therefore Credit Report should be updated to show: …..the account as settled for less of the full balance”..so, credit report not to contains erroneous information.
Please advice
You have some typos and grammatical changes to make, but I would fire something like that off if you are inclined to.
What are your expectations for sending this to their CEO?
Depending on what you see them update, and because I already saw you care about the issue, and would follow through with some suggestions, I would send you direct to the CFPB to file a credit reporting complaint against Capital One. But only once the nature of the updates are known. Capital One has their settlement agreement wording, as you point to, but I would wait to see what they actually report first, then follow through.
If you send the CEO letter first,and they make no corrections, that will become another element to your story (not a bad thing).
I will wait then….. and i will check my credit report https://www.credit.com. next month to see what was reported to my credit. Another thing is that I received their statement today a regular statement as every month…… I dont know what they are doing…. Why should I rcvd a statement if we agree on settled this account, and they already rcvd last payment? Is it normal?
It is normal for some original creditors to continue to send regular billing statements until your agreement to settle is paid in full, and their system has updated with that fact. But mistakes happen too.
You will have a full grip on all of this within a month, and can then take steps to correct anything necessary.
Thanks for your help. !! I was just trying to let Cap.One know in advance that after a settlement they cant report me with an outstanding balance…..I will post an update with what I see in my credit report next month…
Hi Michael
This is an update., They have sent me a letter ..” Thank you for your payment of $ xxx.xx This payment completes the settlement on your Capital One account and we’ll stop collection efforts on the remaining balance. As part of this settlement agreement if we canceled $600 or more of principal on a debt you owe, we must provide a 1099-c tax for to you and IRS. If we are reporting on your account, we’ll notify credit reporting agencies that your account has been settled for less than the full balance. The credit report agencies may take up to 90 days to update the information on your credit report” signed by Recoveries Specialist……
Does it sound like I am going to be OK? What do you think?
Thank you
Please advicce,
You are okay with anyone trying to collect on this account. Be sure to save that letter and proof of payment in a safe place.
You are not yet in the clear with credit reporting. You will want to check your credit reports to see that they update the account as settled. When you see that updated, also look to see if there is a remaining balance showing as owed. Let me know if they continue to report the unpaid balance as owed, along with reporting it as settled.
I would check after 30 days if the updates have not occurred as of today.
Update…
Capital One on my credit report. was paid /Settled less of full balance…… but. it says closed/Derogatory, why?,Should it say Paid (Closed).,??? It was paid by agree settled and they sent me a 1099 which I put it in my taxes… Please help, what to do, now? .
Norma – Please review this post about Capital One settlements and credit reporting. Tell me in the comments on that page if that is what you are seeing (with the portion they forgave and sent as a 1099c still showing as owed).
If they are showing as settled for less and the account closed only… that is typical.
I am disabled/lifetime, and on fixed income under $1,000 a month. I own a car paid off in my name only. I am 63 and live in southeast Michigan. I live in a senior subsidized apartment.
Way back in 2007 approx my son and daughter inlaw (whom I was living with at the time) needed a vehicle as theirs was toast. The only way they could get the loan was with my co-signing for them. They basically had a rough time paying but they managed with only 2 payments put in the back of the loan. 2 yrs ago Xmas eve, my son was in a serious accident, and the suv basically toast. The insurance company totaled the suv and paid off the loan directly from the finance co. My son’s lawyer said he no longer owed and the debt pay off was accepted. Now I am being harassed from Midland Credit company for the “balance owed” My son’s lawyer said I don’t have to deal with them. Ok, fine, but I am the one being harassed.
2- 6 calls a day. 7 days a week. My bills are paid monthly and I am up to date on anything I owe. My car is paid off. I own an 05 Chevy. son said it is worth less than $4,000 at this time.
Being it has hand controls and set up for me to use, I am fearful that this company will take my car. I cannot go without a car. What are my rights in Michigan. Every month, I pay off my bills owed and take the balance left minus $5 and take it out of my bank. I am worried about this mess. Oh by the way, the dealership my son dealt with was raided, for unscrupulous loan practices (fraud) and closed down. My son’s car debt went somewhere else. I have no idea if he even has any of the paperwork. So, I need an idea of what my options are.
Thank you
Laura
Michigan protects only one thousand dollars of vehicle value. I am not aware if handicap and modified for disability vehicles enjoy more exemptions. That said, Midland Funding would likely not pursue collections through your vehicle given the details you shared (if they knew them). But have you been sued on this debt? Is there a judgment?
Was sent a letter last spring, basically telling me I owed them x amount of $’s. It was not a notice to show cause or judgement. Never been served either. They cannot get into the building I live in, as it is only by my buzzing them in that would allow them to serve me. I really doubt that they would go that far. The phone calls are on going, they are using another number now, but the 877 gives them away. Either way, I will not speak with them.
They must know my social security number that I have nothing. Son says he thinks it is just that, they think that I will get frustrated and pay them off. They know nothing about my car, as far as I know – and I have been told to not give them any information.
Laura – In my experience and opinion, you should tell Midland everything you outlined in your posts. They would likely have no interest in trying to collect from you afterward.
Read this Midland pledge to consumers. Yours is the type of fixed income situation they will look to cease collection efforts on, let alone the fact this debt should not have anyone collecting on. And that consumer bill of rights is something I see them follow.
If you do not want to call them and tell them all of this, write to them… copy and past our comment exchange in a letter identifying yourself fully… but communicating with them is how to get this behind you.
Hi Michael, By your suggestion, I did contact Midland in their website. They had a form to give them some info, and what is the exact reason why I am asking them to stop calling. This was on August 4th. The phone calls continued for 3 days after that. Since the 7th, I have not heard a thing from them, I asked them not to call me and why, like I had explained to you. The silence is golden, however, what happens if they start up again? Then what? Hoping that my case doesn’t get sold to someone else and it starts up all over again. Those companies love to do this. However, at the moment, no calls. Do not want to see the other shoe drop! lol Thanks again. Laura
Midland Funding rarely resells their accounts. I would be surprised if they sold yours.
If something does pop up, post an update and lets go from there.
Thank you Michael, I am feeling a little less stressed. Here’s hoping I don’t need to contact you again, I thank you for leaving the door ajar for me if Midland does a flip… Thanks again and have a great rest of the summer.
Laura
Hi Michael, It has been over a month since I first made contact with Midland in their web site. Nothing, no phone calls, no mail, no nothing. Just thought I would update you on this wonderful silence. I sometimes check my phone to make sure it is working…haha. Still concerned, as I am still not certain they will continue to stop calling and communicating. Time will tell I guess. Thank you, and I hope I will not have to ask for your help again. Trying to pay down what credit cards I have as I would like to keep my cards for emergencies (that was my original intent) I will not stop paying on them and I pay more than asked and never late… One day I can take off my life vest and relax…
Thank you for posting the update about Midland Laura. It would be great if you continued to do that. One thing I miss about working paid client files is that I got to start from scratch with all the issues, and share in them getting resolved along the way. By focusing most of my time on the site, and offering feedback with a certain level of non commitment, I do not get to hear about nearly as many outcomes as I would like 🙂
Thank you Michael, Oh, believe me, I will keep your postings.
Like I mentioned before, I hope this business with Midland is over with. However, I will be happier when 6 full months have passed. Ha Ha.
Hi Michael, 7 months have passed since I made contact with Midland, and not one call , mail, or email has been sent to me.
Now then, I am wondering since my FICO score is so bad, Transunion has me listed as in the low 600’s and at the bottom it states Midland, non payment. It has been close to 7 yrs since the original loan was made in Las Vegas NV where the suv was bought. How much longer will Midland chose to keep me posted as non payment? I live in Michigan. Thanks
It can take up to 7 and one half years starting from the date of your nonpayment for the original loan to drop from your credit reports. Midland Funding’s credit reporting should fall off at the same time as the original.
When was it your son would have been considered late? Was it at the time of the accident? When was that precisely?
My son and his wife were beginning to pay late right from the first year of their loan. I believe it was within the 2nd yr of the loan that I had to agree to put two payments they didn’t pay on the back side of the loan in order for them to keep the suv. I didn’t want to do that but they didn’t have another car but mine, and I was not about to let them use mine. The car loan was in my name with my daughter-in-law., and I ended up getting taken to the bank so to speak. With their inability to make payments on time, we had to change the loan payments. If I remember right, they only started to pay on time after my daughter in law had a better job. Now then, when the accident happened 4 yrs ago, the insurance company totaled the suv as it was really messed up. The insurance company contacted the loan company which held the loan, after several loan companys bought and sold this loan. This specific loan company then proceeded to tell the insurance company what the pay off would be, they neglected to add the back end of the loan, which amounted to 2 payments. The loan company then decided to come after me to pay them. So, this is starting to become a nightmare, because I will be stuck with this for yrs. Even though Midland was the last company that handled this. Now then, the insurance company told my son, that the pay off was accepted in full. So, I am not even sure my son has the original’s loan papers, or anything. Midland did stop contacting me, after your advice, but now they have this nasty notice of non payment on my credit report. How in heavens name am I going to clean this up? I have no access to any of the documents which my son had. He is still recovering from this accident with head and brain injuries. So, his memory of any of this is foggy. He cannot help me with this.
Sorry for the delayed response Laura. I had to turn off comments to this page until someone could help me remove a subscriber who wanted to stop getting updates, but for some reason could not be deleted from the site.
You could try disputing the Midland Entry with the credit bureaus as paid. Based on what you shared in the above comment, it was paid, but a residual of the debt mistakenly made it into a bundle that was sold off to Midland. Send your dispute in writing via certified mail return receipt.
Midland may just drop it when they hear from the credit bureaus.
Hi I am continuing from your other site, as requested.
5 questions:
1.Will the ECMC non judgement account I have (private school loan) drop off as it says?
2.Your saying, with the 1 judgement School (private loan) I should contact the courts and just start making payments? Or could I ask for one time judgement delete (Oregon)? What ever it is called forgot.
3. I have 5 old loans that has a balance of $0 closed 7/2009. It is scheduled to be removed 6/2015. Will this drop off ?
4. If I have 5 bad credit accounts taking care of and they drop off how much will my vantage or Fico score go up? 99% of my debt is over 16 years old. My Transunion score is 599. My Vantage score is 655. Don’t know my Fico score.
5. I hear negative and positive things with getting another credit card to raise credit score? I have finally an opportunity to start fresh here and am so CAUTIOUS on everything this time around. I need to buy a house, rent $$ is going no where.
Thank you and your so appreciated, seriously.
Mary
P.S.
I won’t do anything until I have a very clear understanding of my situation and what to do. I am so nervous! 🙁 And checking for your reply constantly all day lol! 🙂
Thanks for moving the discussion about the collection risks for the judgment over to this page Mary.
1 & 2. The judgment showing on your credit report has a shelf life, just like the other collections accounts that have dropped off already, or are scheduled to. But an unresolved judgement, even though not appearing on your credit report any longer, can still be collected on, and can still prevent access to new credit prouducts, like a home loan.
Here are some exemptions in your state:
Up to 25% of your wages can be garnished in Oregon. If your income is lower than the federal standard (least favorable to you), you can show the courts in Oregon how your wages are too low to be garnished.
A car valued at less than 3 thousand dollars is exempt from judgment collectors in OR.
Your home is protected up to 40 thousand dollars, and 50k if married (included this for other readers).
Your personal stuff (household goods), is exempted from extra ordinary collections judgment creditors have, but only up to three thousand dollars of value.
Oregon protects deposited wages in your bank account. And there may be a 400 dollar wild card you can use for protecting money in your bank account from collection by judgment creditors.
As I mentioned in my reply on the other page, judgments in Oregon are collectable (using all of means above) for 10 years, and can be renewed for another 10 years. Renewals are simple and inexpensive, so 20 year collection time lines are realistic.
I do not know what a one time judgment delete in Oregon is. But the only way to get a judgment out of the court record is to get it vacated. It is not easy to do, and for most people, would be best attempted by retaining an attorney familiar with the process, which has its costs and no guarantees.
You would want to contact the judgment creditor, or the attorney they hired to sue you, and not the court, in order to set up payment arrangements. If I have not heard from anyone about this debt for some time, I may consider pulling together all of my resources and/or taking the time to save up half or more the mount owed, and work on negotiating a lump sum settlement offer instead of a payment plan.
How long would it take you to come up with half the amount owed on the judgment?
3. Those accounts should drop off as scheduled.
4. I cannot guess at how much your credit score would improve from old negatives dropping off as scheduled. Your score is factored using many criteria. Late pays and collections are only part of it, and each of us has a unique profile. But from what you shared, you score is held down as much from lack of recent positive credit, as much as old negative collections.
5. It is good to be cautious of credit advice. But it is fairly common to help rebuild your credit using unsecured credit cards (having one or two open with good payment history and low utilization).
I recommend the tools and details offered by credit.com that can help you understand what to, how to, and even who to use, to help rebuild credit.
You can get FHA type underwriting approval for a home loan with low credit scores. The judgment will be the first thing in the way of accomplishing that.
Thank you VERY much.
I am going to write a letter to the creditor who is suing me offer the judgement to work out a payment plan. ( If I can not come up with a lump some to settle fast enough).
I will wait for the others to drop off.
You say this will drop off? “Will the ECMC non judgement account I have (private school loan) drop off as it says?”
#3 I have a Capital One Master Card Platninium in Excellent standing, but just got it. Your saying, I should have one or two UNSECURED credit cards?
Thank you.
If I were rebuilding my credit from near scratch, I would look to establish 2 unsecured accounts, and one secured loan. The ideal secured loan for many will often be a vehicle loan.
Who would though approve a loan or approve a unsecured loan for me? Again my Transunion score is 599 and my Vantage score is 652 not great. I was shocked to get a Capital One credit card. Can you suggest 2 secure card companies and a car loan place?
Oregon
Hi Michael,
I tried reading back what you said to do with this one?
I have four school loans that have the same acct number with different amounts of money showing. Is this right? Also these were opened in 7/2009. Although the original delinquency was in 2003 ish . And is suppose to be removed 6/2016
Will it drop off as said? It’s is not a judgement.
Who is it that is reporting these ones?
ECMC from Oakdale, MN reporting these.
Placed for collection date is not true. It is old acct past 7 years.
It reads: Placed for collection : 7/16/2009 (which isn’t the correct date unless it was sold then started as new from what it looks like.) This is from LVNV last. Prior to LVNV was Wells Fargo EFS (Educational)
Scheduled to be removed (all of them same acct#) 6/2016
Last updated by ?? 06/1/2014
I applied for (doesn’t affect my score card app) a Unsecured Bank One card and I was denied.I think I should wait til I clean up what I can on my credit file then apply. 🙁 I won’t give up. I dream to have a credit score above 750 :))
I am nervous because they were not polite in the past. The judgment owing $3, 540 is from LVNV Funding LLC.
My experienced with LVNV, whether negotiating with them on behalf of clients, or coaching folks to do that for themselves, is that they are one of the easier collectors to work with.
If you are working with a different collector, like the outside collection law firms LVNV may hire to collect, it can be a bit daunting. But I still recommend calling and negotiating, followed by getting everything in writing before paying.
Ok will do asap. Thank you.
sites.google.com/a/financeknow.com/www/credit-counseling/removal-of-lvnv-funding-off-your-credit-report
Can you read this site I had read a few days ago. And your thoughts? It seems like it is saying since it is beyond 7 years it will drop off as said it would.
Read:
“If your SOL has expired, and you have found listing of LVNV funding on your credit report, send them the letter and push them not to contact you whereas with non-expired SOL you would ask them to validate your debt so that you get the real picture that you owe the debt.
Sometimes, you get LVNV listing on your credit report after a period of seven years and one hundred eighty days; in this situation you have legal rights to take credit collection agency in the court for creating disturbance to you. You should also contact credit bureaus requesting them to remove this listing immediately since it is legally not viable to show LVNV on credit report once this time period has lapsed. “
Is LVNV not the one with the judgment?
It is the judgement one. Date Filed 3/26/2008 and Last updated 6/19/2008
I guess since it is in judgment like you said I need to work it out with LVNV and even if dropped off my report it will haunt me after when I want to buy a house.:( If so, I will send a letter to LVNV.
HI Michael,
I am in California. I have just received a writ of execution from a collection attorney representing Capital One. They Sued me in 2010. I never went to court, i simply agreed to a payment plan. The original debt was for $250, yet I had fallen on bad times and had let all credit payments lapse. At the time of the Judgement they wanted $1650 which included debt. court costs etc. I started making payments and I thought I had completed them but I did not, apparently, I still owed $200 of that original debt and so now they are asking for a total of $975 more attorney fees etc.. The Levy has not yet been placed in my account although I was served on May 22, 2014. I talked with the Attornys office about payment plans etc. but am unsure if I should start paying them until this levy hits my account. Also, not sure about how to proceed with making deposits, paying bills etc. I don’t want to bounce check, have car isnurance lapse (on automatic withdrawals. and all of that. Also, I am concerned about making more payments,thinking I am done and then them coming after me again since I thought I had paid it off last year and now this! if they are adding 11 cents interest each day how do I pay in full and have them not come back to me a year later with more interest, etc. Any advice would be greatly appreciated.
Thank you,
Crystal
If you are able to pay the debt off in its entirety, call and get an exact amount owed, and submit that payment. Take good notes of the date and time of the call; the number you called and extension of anyone you are connected to; everyone’s name etc. Record the call, and tell them why. Ask them how long it will take them to update the court that the judgment is paid, etc.
As far as the bank account levy goes, California protects deposited wages. You can talk to an attorney that represents people against debt collectors regularly in California, and learn more about whether, in their opinion, it is better for people to not deposit their paychecks and pay bills from their account like normal, until the collection is resolved. If you do choose to pay bills a little differently than usual until you knock this down, I wouldn’t disagree.
While not part of your question, I should point out for later readers:
California protects 40 times the state minimum wage for an individual from garnishment.
A car is protected from judgment creditors in California up to 2900 dollars in value.
Your home equity is protected up to 75 thousand, and 100k if married. There is more protection if you meet certain elder, and low income qualifications.
All of your household goods are protected from creditors in CA.
Thank you Michael, this is very helpful. You are Awesome
So to clarify, even though I may have a levy, under law it may not actually affect my account due to the CA law about wages? The deposits I make are paychecks. If I pay the balance and then the levy hits my account, will the funds be returned to me? I understand that the court puts a hold on those funds only? So, I could in fact, be out the money I pay the collection first and whatever money is in my account too if I continue to try to use my account. I read on the local sheriff website that the levy needs to be in effect within 180 days of the service of the writ, so I could potentially have my account affected at any point within that time frame should the resolution take a while? Oh, boy, sorry more questions…The bottom line is, pay it off quickly and get proof, right?
Thanks again!
Crystal
You got it. That is the bottom line. And be sure they file satisfaction with the court asap.
If anything weird does happen, you can resolve it in a matter of days with the right documentation.
Thanks again!
Hey Michael I moved to this page as you requested. My home state is Florida. My concerns are that I will have to borrow money to offer a settlement to PRA and if I can not borrow enough to satisfy them then what would be worst case scenario if they do get a judgement against us. What might we expect? Garnished wages, seized vehicles… What do they do to get the money?
Head of household wages are well protected in Florida. Based on what you shared in your other post, your not working, and your spouses wages would probably not be at risk. I can refer you to an experienced debt defense attorney nearest you to talk about this concern in more detail.
Florida will protect up to 5 thousand dollars value of your car (1k, plus up to 4k of any unused homestead exemption, but that must cover household goods not covered by the 1000 dollar value of your personal stuff.
Your home exemption has a limit on acres, but not dollar value. Do you have much acreage with your personal residence?
No SIr, We do not have any acreage only the small lot that our home is built on.
I do have a small start up business, yet it is not generating an income yet, so I’m guessing my Wife would still be considered head of household. Correct? If so, then our only property at risk would be any vehicles that are in my Wife’s name or can they go after vehicles in my name (or both names) as well? Also, how would a lien on a vehicle affect the case? Remember the debt that PRA is after is in her name only.
In addition, I would like the reference to a local attorney that you offered.
I would say that your wife would be considered head of household for the purposes we are discussing. You can run that by an attorney you call to consult with. Post the name of a nearby larger city in Florida. I will email you contact details to all with the experience you need.
I do not see Portfolio Recovery chasing down a vehicle lien on a debt this size after a judgment is entered. Here again, talk to the attorney about that. He/She will have on the ground experiences they can relate to you about how often that is a concern for someone with your set of circumstances in your state.
Jacksonville. Thank you for your time!
UNIFUND CCR has a judgement on me. For $7000. They froze 3 joint accounts I had for $2000.
I am disabled but I have no income, my husband supports me. He has opened a checking account in his name so we can pay our bills. We live pay check to pay check.
I am scared because if I didnt have bad luck, I’d have none.
The order says to Glenn Mass, court officer is ORDERED to levy execution against goods and chattels, then it gives a list of all the things they can take like vehicles, bank accounts, jewelry, fur coats, instruments, electronics… Etc. to be sold. Local police are asked to assist in this writ, which expires 5/19/16. This does not authorize entry to the residence with force.
We have one older vehicle a conversion van that does not run in my name, and our 2003 car in his.
How likely is it that they will come to my home, do they have to give notice And how soon could it happen?
Thank you
Eyelene
Up to 7500 dollars in value is protected from judgment creditors in Massachusetts.
You have up to a 15,000.00 dollar exemption for your household goods in MA.
Massachusetts currently protects up to 2500 dollars on deposit in your bank account from judgment enforcement. Did the account freeze exceed this in aggregate?
How does all that stack up when you consider the value of your van, and other stuff?
You will not get much if any notice of an attempt to execute a writ.
Oh, i am sorry, I am not in MA I am in New Jersey. I was wondering why you wanted me to go to this page. Van worth $500. Car maybe $1000.
Sorry about that. I saw “Mass” in your post, and well….
I do want the focus of this page to be about exemptions from extra ordinary collections that can accompany a judgment against you, no matter the state. And New Jersey is just not a great place to be for consumer protections.
You have a 1000.00 dollar exemption for personal property (car) in New Jersey. You can add a 1000 dollar wild card for house hold stuff. The van in your name is probably good, but the household stuff is set really low for you.
Hi you seem very knowledgeable in the state of MA.. I got a summons in the mail for a magistrate hearing for a 3,700.00 debt for a credit card that went into collections and now to a lawyers office in MA. This all started while going threw my divorce. I’m collecting SSDI only but could give them 50.00 a month. Should I do this? Try and make a payment plan? Will they drop the lawsuit? I’m scared. Thanks, Lisa
What is the name of the plaintiff and the also the attorney collection firm suing?
It is a third party it started with GE Capital then portfolio recovery now to a law firm called Lustig, Glaser & Wilson pc out of Waltham ma and I live in Wilmington Ma
Unfortunately, PRA is not going to dismiss the case based on your fixed income, nor with the offer to pay $50.00 a month. And I am not a fan of paying that low of an amount that would likely just get eaten up by judgment interest.
Have you checked in with any low income legal aid offices nearby? Some offer debt collection defense assistance. If you have one near you that does, you should speak with them about whether they take on debt collectors like PRA.
Other than that, I do see PRA settle collection lawsuits for roughly half, and occasionally lower.
You know from this comment string that state law in MA provides some fairly good protections from judgment creditors. Sometimes it can be better to approach resolving debts when your financial situation improves.
Are there other debts outstanding besides the one PRA has, and if so, what does all your debt add up to?
Okay so what if I settle the debt before the hearing then what? Does it end there? I just want to get rid of this and want to make sure there is NO judgement against me. Now on the money the lose when settling do I pay taxes on that?
Be sure you negotiate the case be dismissed upon payment of the amount you get them to agree to. That will keep the judgment from being entered in the court and showing up on your credit reports.
You can be taxed on forgiven debt in excess of 600 dollars, but not always. Learn more about how to avoid that tax here: https://consumerrecoverynetwork.com/debt-forgiveness-taxes-settled-credit-card/
Ok hopefully last question.. I’ve come to a settlement agreement on the one I’m being sued for and they will withdraw the lawsuit. My question is.. I have also a small debt in collections that we also came to an agreement on and they want me to make payment today. Is it okay to give them my checking account info over the phone? I have two and this particular one I only keep 50$ in never anymore than that.
I like to get settlement agreements in writing before payments are made. When timing is important you can record any phone call you have with a legitimate debt collector, and tell them you are recording the call for proof of the agreement since you have no letter in hand.
I also like using a separate bank account for payment to debt collectors and settlements.
Hi Michael,
My mom is 72, lives in Arizona and works part time. She is spending all of her retirement money to stay current on her credit cards, but it is becoming too much and she is afraid she will be unable to retire in the years ahead.
She wants to stop paying on her cards, but does not want to go through bankruptcy as she did this 10 years prior. Her main concern – if she stops paying on her cards – is will social security be garnished (seems from your post above that this answer is ‘no’), will her pension be garnished, and most importantly, will her wages be garnished.
She’s desperate to get out of this situation; she’s worked since she was 14 years old and her prior debts were the result of medical care for her two daughters which wiped her out. She’s an honorable, hard-working but aging woman and we so want her out of this increasingly difficult circumstance. At the rate she’s going, she’ll have nothing left of her retirement savings in the near future.
Thank you in advance for any help you can offer.
Sincerely,
Deborah
Up to 25% of wages can be garnished in Arizona as the result of a judgment if your mom is sued by one of her creditors (or later debt collectors). There are partial/full exemptions from garnishment that can later be established with the court, and with a part time job, she may meet them, but the social security and pension income will skew that.
Her social security is exempt from garnishment. The concern I have is that, were there a judgment from her unpaid credit cards later, she would have her social security deposited in the same bank account as her other income sources. Arizona protects only up to 300 dollars in a bank account (that could potentially be more if the money on deposit only came from exempt sources like social security).
She could have 2 accounts at the same, or neighboring banks. One exclusive to social security (and maybe the pension), and one used for other nonexempt deposits.
How much of her monthly income is from the pension?
Does she own a car or home in Arizona?
Thank you, Michael. This is very helpful to know.
First, she owns her car outright, and she rents her home.
Second, here’s her income breakdown in a nutshell:
1. She gets $1,321.00 a month from social security.
2. I found out from her today that she has a 401K plan at her job, which she considers her “pension”, but is really a 401K. There is about $2,000.00 in it so far and she is sure it will never get to more than $4,000.00 or $5.000.00 before she simply must retire for age reasons. She has withdrawn from this already to pay for bills.
3. She also gets $135.00/month from my father’s pension (a genuine pension) that was part of their divorce agreement.
4. Her current income for her part-time work is approx. $1400/mo.
5. She has no other savings or retirement monies or accounts.
Hopefully this clarifies the picture. At 72 years old, we need her to be putting as much away for retirement as possible. She is at an important juncture now in terms of her credit cards and how trying to pay them is both straining her present day finances (not to mention her health) and markedly reducing her future capacity to retire before she simply cannot work anymore.
She has $25,000 in total credit card debt, BTW.
Deeply appreciative of your good help.
Warmly,
Deborah
For my part, were I in her situation, I would file for chapter 7 bankrupt and discharge the credit card debts. I would advise my mother to do the same. There is just nobody at the banks she has credit cards with, and none of their shareholders, that need that money more than her right now, and in the future. Unless there is a compelling reason to rebuild her credit for a major purchase, I see no utility function with preserving credit right now. With her limited income, and the bills she has, her debt to income is toast,and shows she cannot afford a new payment anyway.
If she is bent on avoiding bankruptcy, she is going to experience any myriad of collection calls and letters, and likely one or two will end with collection in the courts. Doing nothing when you cannot afford to pay bills is an option, but a temporary one.
How much is her car worth?
Hi Michael,
Her car is worth $5K – 6K at the most.
Thank you. I’ve been sharing your feedback with mom and she is most grateful.
Look forward to your reply,
Deborah
Arizona protects your car value up to 6k from judgment creditors, so that is in the clear too.