It finally happened. received a summons yesterday.. Do I have everything down?

[aimhighlow]

Received a summons from Discover yesterday. My only asset is a $5K car and I am currently making $0 income. I have maybe $100 in my bank account which I plan on emptying and about $100 in my wallet.

From my understanding the lawsuit will become a money judgment, where they will possibly put a lien on my car and levy my empty bank accounts. They most likely will not seize my car given its low value.

If I were to file for BK after a lien is put on my car, I would still be able to discharge both a) my credit card debt and b) the money judgment. I would also be able to remove the lien for about $500 (depending on attorney's extra fees).

Does everything I stated sound correct?

And after the BK, my bank accounts should be free and clear of any levies so I can use them normally again?

Given my situation, would there be any benefits to filing for BK before the lawsuit becomes a money judgment?


Thank you in advance.

[IamOld]

Hello! First and foremost, best wishes to you.

I would say if you can file before the judgment, you may as well - you save the time, expense, and trouble of having to vacate a judgment.

[SunshineGal]

I highly doubt the creditor would go after your car, and since you have no income they can't garnish your wages. I would guess you can also exempt a certain amount of money in the bank. I don't see any benefit to filing when you have no income, and this is even more true if you don't have health insurance.

[bcohen]

I agree that you should wait. In most states, there are nonbankruptcy exemptions, which are dollar amounts (both in liquid assets and in personal property) that are exempt from being seized/levied/garnished/liened by judgement creditors. Even in Arizona, which has some of the lowest nonbankruptcy exemptions in the country, the first $150 in a bank account, $5000 in equity in a motor vehicle, and $150000 equity in a homestead are exempt from judgement creditors. In California, the motor vehicle exemption is only $2300, however, if your car has a retail value of approximately $5000, then the auction value is probably around $2000-$2400, so you don't have to worry about a judgement creditor seizing your car.

It is best to wait until you are working, and have wages to protect. Also, by waiting, you allow for the possiblity that any other non-voluntary debts (such as medical bills) can be discharged when you do file. If you don't have health insurance, then waiting to file for bankruptcy is your "health insurance".

[AngelinaCatHub]

I agree that you should wait. In most states, there are nonbankruptcy exemptions, which are dollar amounts (both in liquid assets and in personal property) that are exempt from being seized/levied/garnished/liened by judgement creditors. Even in Arizona, which has some of the lowest nonbankruptcy exemptions in the country, the first $150 in a bank account, $5000 in equity in a motor vehicle, and $150000 equity in a homestead are exempt from judgement creditors. In California, the motor vehicle exemption is only $2300, however, if your car has a retail value of approximately $5000, then the auction value is probably around $2000-$2400, so you don't have to worry about a judgement creditor seizing your car.

It is best to wait until you are working, and have wages to protect. Also, by waiting, you allow for the possiblity that any other non-voluntary debts (such as medical bills) can be discharged when you do file. If you don't have health insurance, then waiting to file for bankruptcy is your "health insurance".

I have to agree. However, do answer the hearing. Tell the Judge and Plaintiff your situation. Depending on the debt owed, you would be in small claims (below 15K in FL) or a Civil suit. A Judgment can haunt you in the future and can last an average of 20 years with renewals. A lien is permanent if you in the future acquire something to lien against. I would fight it earnestly but on your own. Keep it cheap as you are uncollectable as your state exemptions from seizure are too small. Just hand in here, learn more and approach the problems when they present themselves. 'Hub

[ttg1]

It is best to wait until you are working, and have wages to protect. Also, by waiting, you allow for the possiblity that any other non-voluntary debts (such as medical bills) can be discharged when you do file. If you don't have health insurance, then waiting to file for bankruptcy is your "health insurance".

You are quite correct that there is a real financial risk to filing without a job/health insurance. But that risk has to be weighed against the risk of hanging on to a bad situation that robs you of your time, attention, and piece of mind. There is a real psychological benefit to filing. The purpose of a BK is to give you a new start and how can you get a new start when you are still dealing with the debris of the past? The #1 comment people make post discharge is that they waited too long to file.

The decision to file when you are unemployed/underemployed is a difficult one because there are no guarantees. Personally, after getting sued multiple times and spending way more time in court than I ever desired, I threw in the towel. The way I view it is that I jumped. Did I jump from the frying pan into the fire or did I jump from the frying pan into the kitchen. Only time will tell. But the one thing I know know for certain is that I'm not in the frying pan anymore.

In most states, there are nonbankruptcy exemptions, which are dollar amounts (both in liquid assets and in personal property) that are exempt from being seized/levied/garnished/liened by judgement creditors.

Ultimately, all this is doing is declaring BK through the back door. In both cases, you have publicly declared you are bankrupt. Only in the first instance you have done so in reaction to a lawsuit against you and in the other case you have taken the initiative to solve the problem on your own. I think there is a real psychological benefit to being pro-active.

[btbeme]

Answer the summons at the last moment and buy some time. Depending on the court, you can get several to many months of time between being served a summons and getting to a judgement.

Judgements suck. They are a PITA to scrape off in bankruptcy, and if you screw up they will haunt you like Casper the Unfriendly Ghost.

No need to file just because you have a summons...but it is important that you answer it to buy some time. My opinion is to file before judgements, but only just before.

[blockhead]

Answer the summons at the last moment and buy some time. Depending on the court, you can get several to many months of time between being served a summons and getting to a judgement.

Judgements suck. They are a PITA to scrape off in bankruptcy, and if you screw up they will haunt you like Casper the Unfriendly Ghost.

No need to file just because you have a summons...but it is important that you answer it to buy some time. My opinion is to file before judgements, but only just before.

Totally agree - costs little to file an answer with the court

[SunshineGal]

I agree with Bcohen,

There is NO benefit to filing a BK when you have no income, or "exempt" income, and no assets to protect. Even if you have health insurance, you could land in the ER with a high co-pay and expenses, next thing you know your "fresh start" is out the window, your credit is worse off because now you have derogs after a BK, and you're still broke with nothing for the judgment creditor to take even if you hadn't filed for BK.

While I agree to answer the summons, prepare to lose, and then make sure what little assets you have are protected.