Why file bk if I'm judgment proof?

[ajm]

We are in Texas with no wage garnishment, etc. We have nothing and owe a lot. But we're judgment proof.

What's the benefit of filing bk instead of just not paying and letting creditors sue and get default judgments they can't collect on?

Credit is still messe up but it's messed up for 7 years if you don't file vs 10 if you do.

Any thoughts?

[magyar123]

They might not be able to garnish your wages, but they can freeze your bank accounts, unless you get your employer to issue you paper checks which you can cash.

[treehugger1]

And, how much is a "lot of debt?" Your other debts will keep gaining interest and potentially fees. What if your debt eventually grows so big that you don't qualify for a 7 or 13?

On the other hand, as magyar pointed out, if you decide to sit it out for a while, you still need to protect your bank accounts.

[junker]

almost seven years ago i stopped paying all credit debt, two creditors eventually filed suit, mbna filed and got a judgement 4 years ago, and another creditor sued but lost a couple of years ago. i am judgement proof also, nothing in my name, and have no checking acct. in a few months all will fall off credit report except judgement which is on till 2012 i cash my checks at wally world. and use netspend prepaid debit cards. about three years ago credit card offers came in. and i now have 4 new credit cards. although not too high of limits. the car value is the biggest concern, my income is exempt.and in a few months i will draw social security, which is also exempt.
if you are careful about what you put in your name, being judgement proof is better than bk.in my opinion.

[ajm]

not sure I understand...

Not sure I understand why I wouldn't qualify for chap 7 or 13 if my debts grew.

In texas, the only ones that can freeze accounts are the irs, or for state or city taxes.

If bad credit stays on your report for 7 years, when does the clock start? When you've made your last payment?

We just visited a lawyer and he said a couple things that I'm not sure are correct:

1. If a creditor sells bad debt to a collection agency, they can keep it on your credit for as long as they have a judgment which is 20 years. I thought it is for 7 years.

2. Husband's income is $70,000 which is 16,000 over qualifying without the means test. He said there is no way we'd pass the means test and he said the only option is a Chap 13. We have $55k in cc debt debt and no assets to speak of. I've been reading that people make a whole lot more and still file chapter 7. I'm not sure why he didn't even think it was an option.

[Bandit]

1. If a creditor sells bad debt to a collection agency, they can keep it on your credit for as long as they have a judgment which is 20 years. I thought it is for 7 years.

That is probably true once they get a judgment. I think a lot of people think judgments are easy to make disappear. I will bet they are not because they even take special attention in a BK.

Most people don't stay judgment proof forever & they know this so why not get a judgment if they can?
Maybe SOL is 7 years without a judgment & 20 with.

I've been reading that people make a whole lot more and still file chapter 7

It isn't just about what you make. you have to consider how much is left over each month to make a ch13 payment. All you need is $100 extra and you can be in a CH 13. 70,000 is starting to get up there where it might go either direction especially after you dump the CC debt, they will want to know what is left every month if you are claiming a ch7, after expenses.

and you will say_______?

[debtmonster]

We are in Texas with no wage garnishment, etc. We have nothing and owe a lot. But we're judgment proof.

What's the benefit of filing bk instead of just not paying and letting creditors sue and get default judgments they can't collect on?

Credit is still messe up but it's messed up for 7 years if you don't file vs 10 if you do.

Any thoughts?

It's a pain because if you ever manage to have a nice car paid off, they can come and put a lien on it and snatch it.

They did this to a friend of mine. He owed a credit card $5,000 back in 2000. In 2007 he had his SUV paid off. The debt collector found the asset, put a lien on it and repo'd it while he was at work. They came back to him and told him, "If you want it back, you'll have to pay us $7500."

I posted all of my stuff on here and everybody here ragged on me and told me to file BK. So now I am. Hopefully by April I will file. I have 3 more payments to pay my bankruptcy attorney.

[epiphany]

Credit is still messe up but it's messed up for 7 years if you don't file vs 10 if you d

That shouldn't be anyone's first concern but truly your credit will be more hosed (and stay hosed) with judgments than by filing. If you BK, your credit score will start to rise assuming you stay responsible. My credit score has already gone up 100 points since August and I am not even discharged yet.

It's a fresh start, albeit somewhere towards the bottom. I have to wonder seriously, if you have nothing, why wouldn't you BK?

ep

[danaf]

because judgments can be renewed for much longer than bk would be on your record.

[FU2MI]

This is not true in Texas. Your vehicle is exempt from collection as well as your primary residence. $30,000 value for single, $60,000 for family (exemptions).

A debtor's homestead and one or more lots used for a place of burial of the dead are exempt from seizure for the claims of creditors. (Prop. C. 41.001.) If used for the purposes of an urban home or as a place to exercise a calling or business in the same urban area, the homestead of a family or a single, adult person, not otherwise entitled to a homestead, consists of not more than one acre of land which may be in one or more lots, together with any improvements thereon. (Prop. C. 41.002(a).) If used for the purposes of a rural home, the homestead consists of:


(1) for a family, not more than 200 acres, which may be in one or more parcels, with the improvements thereon; or

(2) for a single, adult person, not otherwise entitled to a homestead, not more than 100 acres, which may be in one or more parcels, with the improvements thereon. (Prop. C. 41.002(b).)

Personal property of a debtor which may be exempt from garnishment, attachment, execution or other seizure may include property having an aggregate fair market value of not more than $60,000, exclusive of liens, security interests, or other encumbrances if it is provided for a family, or an aggregate fair market value of not more than $30,000, exclusive of liens, security interests, or other encumbrances if it is owned by a single adult. (Prop. C. 42.001(a).) These property may include home furnishings, including family heirlooms; provisions for consumption; farming or ranching vehicles and implements; tools, equipment, books, and apparatus, including boats and motor vehicles used in a trade or profession; wearing apparel; jewelry not to exceed 25 percent of the aggregate limitations prescribed by Section 42.001(a); two firearms; athletic and sporting equipment, including bicycles; a two-wheeled, three-wheeled, or four-wheeled motor vehicle for each member of a family or single adult who holds a driver's license or who does not hold a driver's license but who relies on another person to operate the vehicle for the benefit of the nonlicensed person; certain animals and forage on hand for their consumption; household pets; and the present value of any life insurance policy to the extent that a member of the family of the insured or a dependent of a single insured adult claiming the exemption is a beneficiary of the policy. (Prop. C. 42.002.)

Other personal property, which may be exempt from seizure, may include current wages for personal services, professionally prescribed health aids of a debtor or a dependent, alimony, support, or separate maintenance received or to be received by the debtor or for the support of his dependent, qualified retirement plan, annuity or account. (Prop. C. 42.0021

That shouldn't be anyone's first concern but truly your credit will be more hosed (and stay hosed) with judgments than by filing. If you BK, your credit score will start to rise assuming you stay responsible. My credit score has already gone up 100 points since August and I am not even discharged yet.

It's a fresh start, albeit somewhere towards the bottom. I have to wonder seriously, if you have nothing, why wouldn't you BK?

ep

[FU2MI]

A judgment entered in a court of the State of Texas is generally enforceable for a period of ten (10) years. If a writ of execution is not issued within 10 years after its rendition, the judgment is dormant and execution may not be issued on the judgment unless it is revived. (Civ. P. & Rem. C. 34.001.) A dormant judgment may be revived by scire facias or by an action of debt brought not later than the second anniversary of the date that the judgment becomes dormant. (Civ. P. & Rem. C. 31.006.)

A judgment may become a lien on the real property of a judgment debtor located in the county in which an abstract of judgment is recorded and indexed. (Prop. C. 52.001.) A judgment lien continues for 10 years following the date of recording and indexing the abstract; however, if the judgment becomes dormant during that period, the lien ceases to exist. (Prop. C. 52.006.)

A judgment creditor generally may request the issuance of a writ of execution thirty (30) days after the entry of a final judgment. (Texas R.C.P. Rule 627.) All of the property of a judgment debtor, not exempt by law, may be subject to levy and sale to satisfy the judgment. The levying officer is required to call upon the judgment debtor first to designate such property as may be levied upon. If the judgment debtor is absent or if no property is designated, the levying officer generally may execute upon any property of the judgment debtor which is subject to execution. (Texas R.C.P. Rule 637.) Personal wages of a judgment debtor generally is not subject to garnishment; however, any unpaid commissions for personal services, not to exceed 25 percent of the aggregate limitations prescribed by Subsection (a) of Section 42.001 of the Property Code, may be garnished to satisfy a judgment

Confession of judgment is permitted in the State of Texas. Under Rule 314 of the Texas Rule of Civil Procedure, any person against whom a cause of action exist may, without process, appear in person or by attorney, and confess judgment in open Court. The person must file a petition, under oath, stating the justness of the debt or cause of action by the person in whose favor the judgment is confessed. If the judgment is confessed by an attorney, a power of attorney must be filed with the court and the contents thereof must be recited in the judgment. A judgment by confession generally operates as a release of all errors in the record thereof, and may be impeached for fraud or other equitable cause.

[FU2MI]

Texas, is by far, the most debtor friendly state in the Union.

No wage garnishment.

100% primary residence exemption

$30,000/$60,000 single/family personal property exemtpion.


I thank my lucky stars that I moved to Texas from creditor friendly Michigan

[gilwilliams1]

Old Dismissed 13 and Judgement Proof, Georgia

.I've been trying to look at this "Judgment proof" issue and also just how long debt collectors have to garnish/attach. About seven years ago I entered a Chapter 13 in Georgia under the 1978 statues. My wife during that time was in the process of establishing her disability, which she received. Also we separated due to her mental issues and still lives at another address. More then four years ago, I also became disabled, lost my job, the bankruptcy was dismissed. Just last year, after three years in a shed, I finally won my claim. I've also clocked up another 60-70K in medical bills and still have not received Medicare help, and will probably will clock up 10's of thousands more soon. I did receive the back portion of my disability, but quickly spent that turning the utilities back on and acquiring an RV to live in. She gets around $800(SSI) a month, and I get $1400(SSI) a month. I thought this would see me through better, but my health is lousy, and we barely scrap through each month. Now she get a collection notice for her old truck back from 1999, and I get one from my old truck from 1996. Mine refers to a judgment, which I guess is their original one. As far as property, I seriously doubt she has $3500 of property. I may have $5000 worth of stuff. I want to avoid BK as she will be very hard to manage through it. Then I still have three current pay agreements for big medical procedures and an IRS claim I'm sure they've claimed twice. And there's even a malpractice suit of mine floating around, but the doctor has fled the country! Would our economic state be "Judgment Proof". And after more then four years since the Chapter 13 dismissal, can they still try to collect? Any help would be very welcome.

Thanks

[treehugger1]

You might be able to file for BK 7 since the 13 was dismissed. It might not hurt to make you post on the general discussion area of this board and see what others have say. Other than that, it seems you are probably judgment proof. As a precaution, make sure you do not have active bank accounts out there that someone can levy.

[gilwilliams1]

Thank you. I'll re-post it on General discussion. I tried to match the post to the topic column as best as I could. But the more answers the better. Man, that will mean an Auto insurance snafu, they require a bank account.Just can't win!