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.
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
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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?