Secured debt vs unsecured debt: a legal injunction by a credit card company

[HHM]

how so??? if one doesn't own property, and closes one's bank account what then is the basis of the security?? unless the lien is attached to a car, a house, explain more in detail how it can be a secured judgment when one owns nothing? when there is no physical asset and one only has the possibly of a wage garnishment or grab a bank account. once the bk is filed and the a motion to vacate is ordered the judgment is gone. ( not really, one must work endlessly to get it off the record even after the motion has been granted).

inquiring minds would like to know.

also, whether secured or not, the process would not differ, as one would still have to go in and file the motion to vacate the judgment, which i understand there maybe time variances state by state. i.e. florida it is one year, while nj is immediate.

Because a "perfected" judgement lien attaches to all existing and future acquired property until it is satisfied or otherwise resolved.

The issue in BK is that you have to address the fact that it is now a "secured claim", not an unsecured claim. Judgments are not that big a deal in a BK if the "personal" assets are all exempt, then you file a 522(f) motion in the debtor's bankruptcy to extinguish the lien. Note, this is only an issue if the judgement lien has been perfected, which usually means recording the judgment at the secretary of states office in the state you reside. However, whether the judgment is perfected is a question of specific state law, not BK. In BK, you just get to crush the judgment lien under code section 522(f) assuming all assets are exempt.

Whether a debt is secured or unsecured goes to either the original documents or to operation of law. For example, a 2nd mortgage IS a secured claim against a debtor's residence AT THE TIME OF FILING. The operation of the BK law turns it into an unsecured claim if there is no equity in the property to attach to the lien. A judgement becomes a security interest by operation of law regardless of whether there exist any assets to which it would actually attach. Once the debtor files BK, THEN the judgment lien becomes unsecured, assuming no equity in assets. HOWEVER, let's say the debtor here has $2,000 worth of firearms and there is no exemption to protect thos in BK. The secured Judgement lien would take priority over the unsecured creditors (all things being equal).

[LadyInTheRed]

Seems to me the exemptions I qualify for are "217.50 per week", and perhaps, also, "75% of wages", although what I earn as a freelancer translator, editor, and custom paper writer is hardly a living wage.

You will need to prove that the money in the account is wages. You should probably kiss the money in the account that was a loan from your mother good bye unless you can find an exemption to cover it.

[Mirkosan]

Well, I appreciate the honest assessment. We'll see how it goes. If you're right it won't be hard to kiss it goodbye--been kissing everything else goodbye since losing my job.

[tobee43]

I would like to know that as well.

A judgment is a "secured" debt, however if it has no physical property that secures the debt, then what is that basis?

I see many "secured" debts/judgments that are demoted to general unsecured debt because the judgment has nothing that is attached to and interferes with your allowed exemptions. A motion/pleading to the bk court results in the debt not being secured.

that is exactly my understanding. so hopefully hhm will enlighten us ...




oppppppppppssssssssss!!!! i didn't see the enlightenment up there LOL!!

[tobee43]

Because a "perfected" judgement lien attaches to all existing and future acquired property until it is satisfied or otherwise resolved.

The issue in BK is that you have to address the fact that it is now a "secured claim", not an unsecured claim. Judgments are not that big a deal in a BK if the "personal" assets are all exempt, then you file a 522(f) motion in the debtor's bankruptcy to extinguish the lien. Note, this is only an issue if the judgement lien has been perfected, which usually means recording the judgment at the secretary of states office in the state you reside. However, whether the judgment is perfected is a question of specific state law, not BK. In BK, you just get to crush the judgment lien under code section 522(f) assuming all assets are exempt.

Whether a debt is secured or unsecured goes to either the original documents or to operation of law. For example, a 2nd mortgage IS a secured claim against a debtor's residence AT THE TIME OF FILING. The operation of the BK law turns it into an unsecured claim if there is no equity in the property to attach to the lien. A judgement becomes a security interest by operation of law regardless of whether there exist any assets to which it would actually attach. Once the debtor files BK, THEN the judgment lien becomes unsecured, assuming no equity in assets. HOWEVER, let's say the debtor here has $2,000 worth of firearms and there is no exemption to protect thos in BK. The secured Judgement lien would take priority over the unsecured creditors (all things being equal).

thank you, hhm, that clearly explains how this process works.

[Mirkosan]

Yes, yes, big, big thanks to HHM! I am filing TODAY and feel confident I have handled the judgment appropriately in the paperwork thanks to the help from everyone who has responded to my query.

[ValleYum]

Good luck Mirkosan!!

[tobee43]

it will go great!!!!

[Mirkosan]

Thanks, "Y'all"! So far so good and the clerk was much nicer than I had expected (for whatever reason). After the trustee meeting, I will let everyone know in specific how to deal with this kind of debt (judgment followed by checking account garnishment when defendant has no assets) in Chapter 7, at least here in Eugene, OR. If people are interested I'll let you know how the challenge to the garnishment goes on Monday.

[Mirkosan]

You will need to prove that the money in the account is wages. You should probably kiss the money in the account that was a loan from your mother good bye unless you can find an exemption to cover it.

As it turned out the bankruptcy filing seems to have cancelled out the checking account garnishment. I went to the garnishment challenge hearing today, and Discover Card had declined to attend due to the bankruptcy filing. Because of this, the court is returning all the money to me. So glad I didn't waste time in filing!

Also, I'm assuming the Discover debt is now definitely unsecured, as the garnishment, which was the result of the judgement, is nullified. I guess I'll find out once and for all when I meet the trustee at the meeting of creditors, but would welcome any thoughts on this.

[tobee43]

As it turned out the bankruptcy filing seems to have cancelled out the checking account garnishment. I went to the garnishment challenge hearing today, and Discover Card had declined to attend due to the bankruptcy filing. Because of this, the court is returning all the money to me. So glad I didn't waste time in filing!

Also, I'm assuming the Discover debt is now definitely unsecured, as the garnishment, which was the result of the judgement, is nullified. I guess I'll find out once and for all when I meet the trustee at the meeting of creditors, but would welcome any thoughts on this.

apparently due to the stay they stopped taking your money. it may be nullified for the moment, but you must still address the actual judgement when your bk is over or it will stay on the records for ever and a day.

[Mirkosan]

apparently due to the stay they stopped taking your money. it may be nullified for the moment, but you must still address the actual judgement when your bk is over or it will stay on the records for ever and a day.

I thank you for pointing this out to me, Tobee43. Indeed, as I think back on their actions thus far (the judgement, the garnishment) there is no reason to assume they would simply let go. In fact, when I get the money back (it hasn't happened yet) I still will not keep the bulk of it in the checking account. And when the bk is over, I am going to make sure there are no ugly loose threads to threaten my financial recovery efforts.

[tobee43]

I thank you for pointing this out to me, Tobee43. Indeed, as I think back on their actions thus far (the judgement, the garnishment) there is no reason to assume they would simply let go. In fact, when I get the money back (it hasn't happened yet) I still will not keep the bulk of it in the checking account. And when the bk is over, I am going to make sure there are no ugly loose threads to threaten my financial recovery efforts.

that is very wise Mirkosan! i know we had to do two motions to vacate judgements after our bk was over. since they were nj based suits we were able to file the motions immediately proceeding the discharge and close orders. however, here in florida, where we now reside, one must wait 1 year from what i have read on the forum. so, it does vary from state to state. however, if you do your due diligence, you will just fine.

[JJDog]

Hey, Mirkosan, did you receive any information Discover was going to take you to court before they garnished? I have heard this on the radio, that 'all of a sudden' people have injunctions against them, out of no-where, and were not notified. Is this common, and what is the minimal time wait (anyone?) ? I want to wait until April - no snow, to go to court, because of my disability.