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.
Michael,
I am the caretaker of my 80 year old Mom who has dementia and we live in Alabama. I recently was served papers from Midland Funding, who are suing my mom for debt owed to Citibank in the amount of $7846. Her only income is social security in the amount of $2150 monthly. She owns a home that is about to be sold (closing next week) and owns no other assets. She lives with me as of two years ago so I could better take care of her needs. I have contacted Midland Funding to send the Power of Attorney so they would speak with me about this suit, but now I am not sure how much information to give to them. I know she is no danger of them attaching her ss income, but what about the home? Are there any other issues I should be aware of before speaking to Midland? Thanks in advance.
I have not covered Alabama in the comments yet, so let me get to that first.
Alabama allows for up to 25% for wage garnishment.
The 3k exemption for an automobile in Alabama also must cover household goods and tools (not great protection at all).
Only 5k of home equity is protected.
Cash in bank accounts in Alabama must also be covered by that 3k wild card that already has to cover so much.
Alabama is ungood for consumer protections when it comes to collections 🙁
The sale was in motion and is going to close. If it were me I would file an answer to defend the suit and buy time to negotiate the outcome. If you were dealing directly with Midland Funding to settle my feedback would be more straight forward. Now that an attorney and the courts are involved it is often a good idea to connect with your own attorney in order to respond in court. That said, if you have resources now to fund a 50% settlement, you may be able to negotiate that now with the attorney for Midland.
Can you raise the money needed to settle without waiting for the home to close?
Wow about Alabama….Unfortunately, no, as far as raising funds. Her social security barely covers her medical needs at this time. This was the main reason why I had to stop paying her debt. Once it closes, can they still attach a lien if they do win a judgment? I wished I had been getting the collection letters, but I did not get anything until the lawsuit was filed and they found my address. So I will try and buy some time and hopefully the sale will close as scheduled next week. I really would like to put the proceeds from the sale of her home in an account to help pay her medical costs for however long she has left, but sounds like to me in the state of Alabama I might not get that option.
It does sound like you can settle the account with proceeds from the sale though. If everything goes through on schedule, you could start negotiating now. But these things have away of being delayed, so if it were me, I would file a general denial with the court and then circle back to negotiate a settlement for less when I have cash in hand.
As long as there is no judgment in the court record, her bank account is safe.
Thanks so much for your help.
Sorry- for some reason I didn’t see my original answer, so I answered twice. 🙂
I deleted the duplicate. The system held the first comment attempt for moderation because you left you last name off. Your comments will go through either way now.
Hi Michael,
I live in TN and had been on Tenncare for many years. Back in January 2013 I was working and for some reason through Hrs my case worker wanted me to get health care through them which I could not afford so I stopped going to my doctor and off meds and ended up in the hospital a few times. I ended up on medical leave, applied for disability and in the meantime pleaded with my Hrs caseworker because I was on medical leave to put me back on Tenncare, they did. On one of the hospital visits I made the mistake of giving them $100 towards the bill. I only did this because I had tax return money. This was months before I was approved for Ssi also. Now I’m being sued and HAVE to go to court March 7 2016 (show of cause) didn’t go the first time because I just figured its a debt collector. My question is will the judge dismiss my case if I go to court and explain this and show that I only receive Ssi as my income?
Thanks,
Amanda
My experience would suggest no, the judge will not dismiss the collection case based on affordability. They may never be able to collect from you when your only source of money is exempt from judgment creditors, but the court is not there to determine all of that at this juncture.
I don’t understand. If Ssi is my only income, and they can’t garnish that. I wouldn’t be able to pay it. What does ” the court is not there to determine all of that at this juncture.” mean?
Currently the court is looking at whether you legitimately owe a debt and if a judgment should be granted against you. Income and affordability is not really under consideration pre judgment. You can talk about not being able to pay, and exempt income and assets, but that typically does not impact a courts decision on whether to enter judgment or not.
It is not until after a judgment is entered that exemptions and exclusions become meaningful.
I can’t afford to pay my credit card debts. I have a fixed income from the Veterans Administration and disability income. I have tried to stay afloat after my husband died in Oct 2013. I now used all my saving trying to stay above.
If i stop paying my credit cards and my home is paid in full and is in a Trust can they go after my home? I live in the state of Florida
I would also like to keep paying on my Car. Also If my American Express’s are all current will they leave them alone.
I thought I was getting a free answer, but I had to put $5.00 on my credit card and I didn’t like that. if you can credit it I’d appreciate it
A trust protects your home in many cases, but so does living in Florida.
Your car is not at risk if you are still making payments on it, as you do not own it yet.
AMEX will not bother you unless you fall behind with them… as far as collections go. But they do periodic reviews of their account holders credit reports, and may shut down your accounts, or lower your available limits, if they see you not paying other bills.
Hi Michael, I live in Marquette, MI and my husband, daughter and I were sued by a landlord. My husband and I were fully responsible for all bills and rent. He is only going after my daughter because she is over 18. We were evicted for having a cat, we always paid our rent on time and there was never any problem until he found out we had a cat. With that said we went to court and he was awarded $1300 in damages plus our deposit which was $1250. Now he did not produce any kind of evidence that he fixed the damages and the majority of them were there when we moved in. We offered to make payments of $20 a month and he declined. He is now taking us back to court, I am currently disabled and my husband and daughter are unemployed. We survive off of disability and child support for my younger daughter. My daughter has her own vehicle and I have my own. What right does he have to take against us and can they force us to pay if we have no income? Also doesn’t he have to produce proof that he repaired what he claims we destroyed? In the judgement he asked for a percentage of a bill that he did not pay and has the gas company coming after me.
The time for proofs was likely before the judgment was entered. The court is going to enforce a judgment at this point.
Your disability is exempt.
How much are the cars worth according to Kelly Blue Book?
I am not sure what to say about the gas company bill, but I would bring that up if you are appearing at an asset discovery hearing.
You want to appear at any court hearing at this point.
One of the cars is worth about 1500 and mine is brand new with payments on it. When we had our hearing he asked the judge then to make us disclose assets and the judge said no, file again after 21 days. He is requesting bank accounts, taxes and employment verification. I am not to concerned about my personal account but I do have a small business that run from home.
You want to comply with any court requirements here.
The car you are making payments on is off limits. The one worth 1500 is borderline.
I would need more information about the small business to offer feedback, but the less money it brings in, the less of a concern it will be. If the business is structured, like in an LLC or corporation, it has its own protections.
My mother is 64 years old and retired almost 2 years ago due to a medical condition. She lives in Central Florida and receives approx $700/month in SS payments. That is her only source of income. She has a vehicle that is paid off and worth about 8k. She short sold her home in Miami about two years ago, and moved near me where she now lives in a second home I own. She pays for the taxes (3.5k /year), insurance (700/ year), and monthly utilities on the home, but doesn’t pay any rent. I also give her spending money each month for watching my kids. She currently owes about 19k in credit card debt and is still current, but can no longer pay it since she retired. She has used the saving she did have to pay her monthly payments since retirement. She owes 10k to Chase (230 mo), 7k to Discover (160 mo), and 2k to Sears (40 mo). All cards are about 18-20% interest. She has no saving left to speak of, and about 10k in personal possessions in addition to her car.
I feel she is best served by no longer paying the credit cards and using that money to pay her living expenses. She is even afraid that when she turns 65 she will have to pay for Medicare which she can’t afford. What should she do.
I would encourage you and your mother to talk to a bankruptcy attorney about resolving the debts in a chapter 7.
If there is some reason to avoid the chapter 7, I would still advise my own mom to stop making her minimum payments. She cannot afford to, and there is little they can do to collect from her. If she is sued I would only be concerned about cash in her bank account that is not from an exempted source, which can be managed.
Hi Michael, its me again Kathleen in snowy idaho , and I mean snowy this year! Last time we communicated I was about to lose the travel trailer ,but we managed to barely keep it. So now the situation stands as follows : I am still on SSD, making my ends meet barely. My boyfriend works construction which was off and on all of 2015. The work market here is very sluggish. I signed the polaris snowplow/quad over in his name approx 6 months ago ,we really need that plow especially this yr! I have also had to have an unexpected tooth extraction which wasn’t covered by my ins and other dental issues. We keep the place at 65 degrees and its cold. I haven’t been able to pay the 3 credit cards Wells Fargo just keeps sending statements I am 5-6 months behind and owe $4,984.05, US Bank I owe $8,171.00 they sent it to united recovery systems for collection, and then discover I owe $5,991 and they sent me a note saying they were going to send my acct to an attorney if they don’t hear from me by 1/31/16. With his fluctuations in work and my ssd I cannot pay anyone! were broke! only reason we scraped to keep the trailer was because we don’t want a repo to deal with. Bankruptcy costs money. My plan is to just go to court and represent myself if Im sued by discover, which sounds very likely. My only question would be , if Im sued do I have to report my boyfriends meager income? we only share expenses. The home on 2.5 acres, my HHR and all credit cards mentioned are in my name only. I know you have already given me the list of exemptions for idaho which I have kept for reference, I am basically just giving you an update for comment……Thank you so much for all your help
Try to find a local paralegal that advertises they do bankruptcy paperwork. I have seen very reasonable fees for that type of assistance, and you do want the paperwork done right. There is also a decent book that NOLO Press puts out that is affordable.
Your bankruptcy trustee is going to consider household income. Whether or not your boyfriend would be considered part of the household I do not know, but I do find it likely.
I am 73 living in NJ 6 years I had a Citi Bank card My daughter used the card and didn’t pay me a dime.I am on SS I offered to make payments but they refused wanted it all.Fast forward Got a judgement against my pay. I just found out they took $1423 out of my checking acct. My SS is $1523 a mo. They denied saying they sent a letter to my employer. I have some serious health issues {lung disease} COPD I ONLY WORK PART TIME I don’t want to lose my home Should I file in small claims to get my money back?
You should file with the court and contest the any garnishment from wages and from your bank account. Do that ASAP and let me know how things progress.
Please help me. I live in Florida, am a 74 year old retired public school teacher (30 years), and my only income is the Florida Retirement pension each month and my Social Security each month. I own nothing, have no savings of any kind, and have no assets of any kind.
I am being sued by Bank of America for $8000 even though I filed for bankruptcy in 2015. Can they take my Florida Teacher Retirement? I am so worried, I cannot think straight because I could not possibly live without that retirement.
Appreciate any help!
The lawsuit may not be legitimate if the account was included in your bankruptcy. If the account was accidentally left out of your filing contact your bankruptcy attorney about what you can do about that.
I would also encourage you to talk with an experienced debt collection defense attorney in your state. I can send you am email with contact details to any I know of in your area if you post the name of a large city near you.
Thank you for your reply. I live in St. Augustine – Jacksonville would be the closest big city. I am so worried about the possibility of losing my pension, I am now sick. I had always heard that retirement pensions were like Social Security pensions – and since I have nothing else, I would be secure.
Now I have heard they can take retirement even if it is all I have.
Again, thank you for your help – it is appreciated very much and your calm advice is helping keep me calm too.
I sent you an email with contact details to different attorneys in the area. Call and confirm what your exposure to extraordinary judgment collection looks like.
Thank you so much!
Hi Any chance you will answer my question that I have asked twice now?
Your comments are not coming through for some reason. The site can be glitchy on it’s own, but I have also learned peoples browsers can be the problem (using an old version of IE for example).
Here is what you submitted via email:
“Hi Michael I am 62 yo female that has long story, to make short, lost job in 2013 had uneloyment for 8 months that’s it. I applied to over 100 jobs, worked in health care 38 years at pay scale. Still can’t get a job. I owed fed tax which they put me in “uncollectable”, and I receive survivor benefits from ex of $1150 a month. IRS knows this, they called me and put me in uncollectable. The state of Massachusetts I owe $750 in state tax I started paying $25 a month, but I can’t do it I run out of money and have no food or anything for up to a week sometimes 10 days, so I stopped paying. They sent me a letter and says they will attach my checking account, which I don’t have, SS goes on the debit card, can they just take my money? This is terrible worked my whole life and this happens to me at 59 can the state just take my money, I have just sent them a letter saying this. Can you advise me about anything I could do? Thank you so much.
My Reply:
The state cannot take your Social Security income. As soon as you get work, or even a part time income, I would look to tackle the debt with MA. You may continue to get threatening letters from the state, that is common even when they know you cannot pay, and they cannot force you to.
Thank You so much,for going out of your way and seeing that my question was answered,you are very good at your job,and excellent with the way. you treat people,again,Thank You.I am going to try and send $10 a month.
I am a 62 year old male in Pennsylvania with three judgements against me:
AMEX – $1810.00 on 03/2010
Discover – $5100.00 0n 12/2010
Capital One – $4700.00 on 12/2012 (They have since issued me a new card, to ostensibly rebuilt my credit).
I do not own a home (I have been behind in my rent for some years now, and I work part time for my landlord), and my car is with about $1200.00. With gainful employment so difficult to find, I filed for an early pension. Starting this month, $1390.00 is directly deposited into my checking account. Part of my early retirement agreement was a lump payment of $15,900. At my age I will probably never see a lump some of that kind again. I know it would be unethical to receive that money and not settle with my creditors. But I need ti salvage as much of it as I possibly I can.
Are my direct deposits safe form garnishment? What can I do with my lump sum check? I am scared to death to deposit it into my checking account.
Your direct deposits from the social security administration are exempt as long as you do not mingle funds from another source in with that money in your bank account.
I would cash that larger check if I were worried about a bank account levy (as you should be). You can settle those judgments for likely less than half given the hardship situation. Call me for a consult if you want to go into details on what that would look like. I can be reached at 800-939-8357, option 2.
My direct deposits are from a Federally recognized pension plan, not Social Security. So are those deposits safe? Since I don’t earn much in wages the average daily balance in that account is pretty low; the money (including my pension payments) comes in and then goes out to cover my monthly bills. It doesn’t appear that placing a levy on that account would benefit my creditors at the present time.
I don’t see how I could cash a check that large without first depositing it, wait for it to clear and then withdraw it. Can depositing a check that size, even if only for a week for it to clear, bring it to the attention of my creditors or to the court?
This may sound naive or paranoid, but are they monitoring my account for any large fluctuations in activity?
Check with a local consumer law attorney to be sure your pension type is exempt.
Cashing a check that size can often be done at the issuing bank.
Debt collectors are not watching your bank account… they cannot do that in the way you are thinking. A judgment creditor has to get permission from the court to levy or freeze a bank account. That permission is typically good for a day. They tend to do these at the beginning and end of month in my experience.
I will check with a consumer law attorney.
I have been under the impression that wages in the state of PA are exempt from judgements.
Unfortunately the issuing bank is in California; I’m in PA.
I have a 30 year old savings account with a credit union that I never use. The balance is low, barely enough to maintain it. I have never listed on any forms because I never considered to be an asset. Do you think that account is on their radar as well?
Hello Michael, we live in Virginia my Mom has unsecured credit card debt and we are entering into a debt consolidation program. to negotiate settlement or lower payments. My father just passed away last year and some debt is in his name only and some are joint. She is on SS and his pension for income but does have some cash, her home, and several vehicles. Our question is, if we settle for lower payments, a settlement, or if they are in his name only write-offs, can the creditors seize any of her assets? The house is in both names (right of survivorship), cars are some in both some in just his name, and money in her name.
None of the debt is extremely past due at this time and there are no judgments. We want to keep that way.
Give me a call for a phone consult Cheryl. I can be reached at 800-939-8357, option 2. I am on the phone a lot so be sure to leave a message if you must and I will return the call.
I am disabled and live in NY. I am collecting SSD. I was filing claims with an accident only insurer and they were sending checks to cover those accidents for years. I was paying my credit cards with that money. the SSD was used to cover very basic living expenses. nothing was left over, not even for food. after many years, the insurance company stopped sending checks for nearly 2 years and all my credit accounts went into default. I own a home and continue to pay mortgage. I own a car and continue to make monthly payments. I also have debt with government agencies that continue to get paid (those were all getting paid from SSD). the insurance checks were deposited to a separate account and used mainly for food, credit card bills and things not affordable with SSD income. I suddenly got checks from the insurance company after 2 years, after all the credit cards were defaulted and closed. those checks came, just prior to filing a chapter 7, and then some more checks came post filing. those funds I had believed were not considered income and weren’t listed on the chapter 7 paperwork. my debts were discharged but then the company notified the court of those checks they sent (apparently they were keeping an eye on my credit report and saw that I declared bankruptcy). I just got a notice that the court wants to reverse the discharge because of that new information received from the company. I am mainly concerned about the house and car, which are essential to my survival. my second concern is: although I realize the SSD income can’t be touched, I am concerned about the account where I deposit the insurance checks (which don’t come to me often, but if I do get any checks from them, how much of that money can be kept in a bank account ? that money isn’t protected like SSD. I live in NY.
Is my house exempt , and is my car exempt from confiscation by creditors and how much money can be kept in an account without having it confiscated
Have you connected with your bankruptcy attorney about your options?
If your bankruptcy is unwound your creditors would first have to sue, and get a judgment, before you would worry about extra ordinary collection options they have. You have some protections from collectors that include:
New York protects 90 percent of wages earned in the last 2 months.
Up to $4,000 of your cars value.
In New York, your homes protection is different by county. Up to 150k can be protected in some counties.
All household stuff is safe from judgment creditors.
New York protects up to 1,740 dollars in your bank account, with 1k more than that if no homestead exemption is taken.
Hi Michael,
I have a judgement in New Jersey, Essex County from Midland Funding for Home depot for approx. $2,100.00
I now have Pressler and Pressler coming after me via an Information Subpoena.
My only income is Social Security Disability and NJ Teachers Pension (regular Disability retirement option).
I have both automatically deposited into my checking account monthly.
I have sent P&P my rewards letters for both SS and Pension, stating they are both exempt and that they should not try and collect exempt income.
Is the the correct way to handle this?
I have a house in foreclosure, an investment property with about 20,000 in equity, a 1999 car, (mercedes in bad condition), and household goods not worth very much.
Am I protected? What advise can you give me.
Thank you very much, for all that you do to help people.
If it were not for the 20k in equity in the rental, you could probably qualify for Midland hardship guidelines (where they leave you alone as far as trying to collect.
You can scroll up to my response to Eyelene from July 11 2014 and see the major exemptions listed for New Jersey.
Your investment property makes you look more collection worthy than you really are. Can you pull together 50% of that you owe if they were wiling to settle the Midland Funding account for that?
Thanks Michael.
I don’t have no money to settle.
The rent I receive just covers the mortgage and expenses in the investment property. My main residence is upside down and in foreclosure. My credit isn’t good enough to get an equity loan and I’m not selling the property. Will they just put a lien on the rental?
Thanks
You could end up with a lien on the property. You can always look to circle back and settle with Pressler and Pressler when you have some cash to work with.
Ok. my last concern is Pressler getting a levy on my Bank Account. Can they still do this even though all money in there is from exempt income?
Thanks
Years ago I would see judgment creditors levy bank accounts that only have exempt funds in them fairly often. Nowadays I rarely hear of it. Banks are protecting their account holders from this better than ever before.
I do not see a bank levy as much risk, but do not mingle any funds in your account that are not from an exempt source.
Thank you very much, Michael
Dear Mr. Bovee,
My father has a credit card debt he can’t pay, he is 65 years old and now lives on his social security which is like $500 a month, and has a condo which he has equity of about $50,000 if he sold it, but a debt collector is taking him to court for $7500, my dad lives in Virginia and he is out of the country for medical reason, what can I do, and can they take his house, he has no money in the bank the Social security is deposited in to my account and I pay some of his bills, the court date in a month, any advice on what I can do, so he doesn’t lose his house.
Thank you
First things first… when was he supposed to have been served the lawsuit? Was he out of the country at that time?
Virginia has terrible protections from judgment debt collectors for home equity. It is only 5k with the potential to double that for some elders. I am not saying a judgment creditor would start an involuntary action to force the sale, but they would file a lien after the judgment.
Who is the creditor/collector suing him?
Hello, i live in sc and got myself into credit card debt with first citizens. It’s almost at 15,000 and i am unable to make the payments. The card is in my name only and i am paying on my wife’s car and mortgage payments also. What is the worse that will happen if I stop paying on it?I have another credit card that I am trying to pay off. That one is at 7000. Thank you
Wages are exempt from garnishment in South Carolina. If you were sued and a judgment entered against you, further protections from collector could include:
Up to $5,625.00 of value in your vehicle (with another $5625 potential exemption added to that as an unused wildcard).
Only $56,150.00 of home equity is protected from judgment creditors in SC.
$4,500 worth of your household goods are protected, with some additional value possible from other unused exemptions.
You have an ability to claim $5,625 as a protected cash asset if you do not claim a homestead exemption. That appears to be shared with your vehicle and household goods exemption.
Do you have the ability to save up to settle the debt for less than what is owed after you have stopped making payments for some time? Have you looked into chapter 7 bankruptcy?
If I stopped paying I would be able to save 500/ month. I own a car that is payed off with the blue book value at 4000 and my wifes car is in her name only and still making payments, we purchased it about 2 years ago. I have not looked into chapter 7. I bought the house for 140 k and still owe 125 k. Can they go after the car in my wife’s name as well?
You would be able to save up and settle inside of a 12 month period, and that means you could avoid the risk of being sued that would put you at risk. You will want to save up even more than 500 dollars whenever possible (tax refund for example) in order to get this done even quicker. If you are sued you could file bankruptcy.
Your car and home appear to be protected in a chapter 7 bankruptcy (or if there were a judgment against you), and your wife would be able to reconfirm her car loan and keep it in a chapter 7. Her car is not at risk from debt collectors.
Thank you for your help. I think I will take a hit on my credit report and save the 500 and wait until I get a notice from collections about paying half? Is that how it works? Also should i transfer banks due to it being their card?
Yes and no. Settling with an original creditor like Citizens bank is different than settling with a debt collection company. I have an article series about settling with your bank.
Settling with a debt collector is more straight forward, and I cover all the generalities here: https://consumerrecoverynetwork.com/question/settling-charged-off-credit-card-debts-with-collection-company/
I do prefer you switch banks if you are dealing with the same one you will settle with.
Thank you for your help, where can I find good information about settling with my bank?
I am obviously a bit bias, but many people refer to this site as being one of the better resources for information about settling your debts at all stages of collection.
My prior comment replies to you contained clickable links.I highly recommend you read through the articles and formulate your strategy from there. If you want help after that you can call me at 800-939-8357, choose option 2 to get to my desk.
unless I receive a transplant. I simply have no resources to pay this debt.
When I received the summons, I responded to the magistrate that I will be contesting the suit, which pushed the date back a little.
Is there a chance going before the magistrate and explaining my situation will have this debt forgiven? Since disability is my only source of income, what do I have to tell my bank to prevent a levy on that money?
April – Call me for quick phone consult about your issue. I can be reached at 800-939-8357, choose option 2 which rings to me.
My wife has a Summary Judgment for $6,500 ++ on an alleged credit debt which was bought by CACH, LLC. from Bank of America,
The judge just asked my wife if she wanted to settle for $4,000, to which she responded that it was not her account.
All the plaintiff was able to provide was 7 monthly statements with accruing interest and penalties; no proof that she ever used the card, etc.
Anyway, be that as it may. The question is; she does not work, she does not have a bank account and the house is in my name only.
We are in the state of New York. Can they come against the house or contents of the house (car is leased) or do anything with a joint tax return.
Thanx!
New York protects you from judgment creditors in the following ways:
90 percent of wages are protected from garnishment in New York.
The value of your car is protected by up to $4,000.
Your home equity judgment exemption in New York can vary significantly by county (between 75k and 150k).
All household furniture, stove, fridge, and many other items are protected.
$1,740.00 cash in your bank account is protected, with an additional 1k possible if you do not use a homestead exemption.
They would not be able to touch your tax refund for this type of debt.
Hi M…..I have about 30,000 in credit card card debt from money I borrowed off of cards for lawyers after a not so healthy divorce here in New York..my credit was impeccable till then ….these debts are over 10 years old..I am on disibility collecting social security and pension checks and have been doing so for 10 years…the car was bought under my dads name ,something he insisted on doing,who now sadly has passed away 2 years ago…I am an insured on the car but was wondering what the credit card co’s rights are if we put the car under my name… I have not been bothered in a long time by mail or phone & one has written it off….the car is paid off in 3 years..it would completely ruin and devistate me if they somehow they took the car…..Thank you sir very much for any help and info that you can lend…
Were you ever sued on any of the debts?
Can you confirm that the last payment on any of the credit cards was more than 6 years ago?
Hello please help me with some info if possible…
my mother is 66 years old, lives in California and gets disability…she had debt 3 years ago, we offered settlement for all but only some accepted which they got paid. But now one of the ones that denied the settlement is taking her to court. She has no property, no car, nothing to her name. She rents and has no other income coming into her bank account. What is the worse thing that can happen at court, or ordered by the judge?
Typically, the worst thing to happen is a judgment is entered in the court record, and shortly after that on her credit reports. The court grants judgment creditors extra ordinary collection options when there is a judgment in place. I cover California judgment protections above.
With no assets, and the only income going into her bank account being from a protected source, there is little the debt collector can do to get paid. They may occasionally contact her to collect on the judgment, but unless her situation changes, the debt collectors will be wasting their time.
Who is the creditor that was unwilling to settle? Is that who is taking her to court, or is the named plaintiff different than her original bank?
Sorry for the delay…the original company is US bank & the amount + fees is $3477. ,
However, the plaintiff is Portfolio Recovery Associates LLC and they are taking her to court…they require 30 days written notice…limited civil…etc etc…
What action should we take? Or should we ignore it?
I have had an experience with both US Bank and PFR. I defaulted on a Credit Union credit card and PFR tired to collect. I stupidly ignored it and end up facing Howard Schiff law firm in mediation. Unfortunately, I had no funds to work out a settlement so I am now paying them $50 a month until I can get into a better position to settle it,
It is best to talk over your options with an experienced debt collection defense attorney in these situations.
Your options include:
File an answer and defend the case to dismissal.
File an answer but with the goal of getting the extra time you need to settle with PRA (her situation is one I see them settling for 50%).
Do nothing and they get the judgment. When they call and write you could respond with her financial situation and that she is judgment proof. You may get occasional asset discovery questions in the mail.
What are you inclined to do?
Thank you for the reply…
we can’t offer any more cash settlement, we did the best we could & offered settlement to all of her creditors 2 years ago, total of 5, of which only 3 agreed and got paid.
We don’t care if her credit is bad now, she is not using her credit & has nothing to her name.
If we wait and hear from them, we’ll write the letter explaining that her income is only disability assistance & hope that would do it….
But if we don’t hear from them by letter and get a court date instead is there a special form of paper to write, or would the judge put in the judgment anyway…in which case is that going to affect her? Besides staining her credit report, which would not bother us…
When you mentioned about the judgment proof letter, is there a sample I could follow?…can I write to the plaintiff this letter asap? Or should I wait for them to contact first….
Thanks a heap for replying….
A letter outlining her inability to pay now, or going forward, and that speaks to there being no assets and a fixed income, can be as short as I just made it. I would prefer that kind of thing to be part of the court record, sent to the attorney for PRA, and to Portfolio Recovery Associates too.
PRA does not care that they will never get paid on this. But it is good to notify everyone of the situation.
If you do not deny the claim in some way, there will likely be a judgment. Based on what you shared about her situation, the only risk will be to her bank account, but if she only keeps SSI money in there, it should be safe. Do not let money accumulate in the account.
I am asking advice for my Dad. He is 79, he will be 80 on 11/24. Up until August of this year his income consisted of SS & part time work as a rural paper carrier. He suffered a stroke in August and was hospitalized for 2 & 1/2 months. The stroke affected his speech & he still has limited speech at this point. He is home now but needless to say he lost his part time job due to the stroke. He has a little over 17k in credit card debt & had a new car but we have completed the paperwork to surrender it back to the dealership. We visited a local bankruptcy attorney to see what options were available to him. To file a Chapter 7, he would have to pay 1500. up front with the possibility of losing his home. Chapter 7 would be a monthly payment of 125. for 3 years.
I really don’t know what would be the best options for him at this point. He is receiving a lot of phone calls from the creditors. He lives in Louisiana.
Since he cannot afford to file bankruptcy, if he does nothing, what will his creditors do?
Creditors and debt collectors will make collection calls and send notices in the mail. That is manageable for the most part. There is the risk that he is sued for collection. If bankruptcy would cause him to lose the house, he may be able to just react to any collections that become aggressive. If he receives a collection notice from an in state attorney, it would be a good time to consider options to handle that specific debt. I can talk to you more about that in a phone consult if you like. Call 800-939-8357, choose option 2.
If a creditor was to sue your father and get a judgment, Louisiana protects him from certain collection actions.
75% of his wages would be protected from garnishment.
Louisiana protects up to $7,500 in vehicle value.
$35,000 of home equity is protected from judgment creditors in LA.
All necessary household items are protected in LA.
Louisiana does not protect any amount of cash on deposit in your bank account. But, as you know, there are exempt sources that cannot be touched in his bank account (when no other money is mingled in), such as social security payments.