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
Short answer
Your social security income cannot be garnished at the source, and most pensions are exempt from garnishment too. A collector would first have to sue you and get a judgment entered in court. The risk that is left after that is a bank levy, on the money once it is sitting in your bank account.
Key points on this page
- Social security cannot be garnished at the source. Most pensions are exempt from garnishment as well.
- Nothing can reach your money until a creditor sues you and a judgment is entered in court.
- The remaining exposure is a bank levy, because the funds lose their protection in the eyes of a collector once they are on deposit.
- What a judgment creditor can reach, meaning bank funds, wages, personal property and a car, is set by your state exemption laws. The amount of protection you have may surprise you.
- Before it goes that far, weigh the alternatives: a lower fixed payment through credit counseling if about 2 percent of your combined balances is affordable, settling for less if you can pool roughly half your balances within 36 months, or chapter 7, which can cost under 2,000 dollars and removes the risk of suit, levy, garnishment and liens.
- Some people on a protected fixed income stop paying and accept whatever comes, because their income and property are already exempt. HELPS assists seniors and people receiving disability or VA benefits.
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.
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?