Direct Deposit vs. Cashing Paychecks

[krispy12]

Ok, I got a new job recently & am planning on filing in 2 years. I have set up direct deposit & since I live in Texas I was not worried about wage garnishment. I was talking with a guy that filed Ch. 7 & he told me that his lawyer said Texas can garnish wages. I am assuming this is for taxes owed, not just credit card debt?

Also, I have no assets, a repo'd car under my name, & 50K in credit card debt. I will be filing in 2 years for a inside transfer my dad did.

I need to know:

1) Does Texas garnish wages for credit card debt? Like if a creditor sues me?

2) How far is the checking account lookback for filing Ch. 7?

3) Should I start cashing checks now or still do direct deposit?

4) If I'm withdrawing $1000 a month, is it ok as long as I show proof of what I did with the store receipts?

[Keebler]

I'm in Texas and it seems to me that there's only some rare cases where wages can be garnished. Your checking account it safe until you have a judgement against you.

I stopped paying creditors for more than a year and nothing was touched. I never bothered cashing checks and I preferred to use my debit card so the transactions were clearly captured instead of using cash.

[jribe]

as far as checking account lookback and your direct deposit - if you're saying you're wondering if you DD say, $1000 and get a check for the rest of the amount, assume $1000; your checking would show your $1000 only. However, important point here is that most require 2 years tax returns prior to filing- plus information on current year. I'm sorry if i was assuming that information and it was incorrect. Just letting you know they will look at taxes (and see total income reported).
So since your employer will be reporting your wages- they will know how much you make. So you could cash your checks (but they charge), but actual wage garnishment goes through the employer. So they wouldn't just take the DD out of your account, they basically tell your employer to take out $XXX amount before your check is given to you. make sense?

[krispy12]

I guess that's where I get confused. I keep getting told that I don't have to worry until I get a judgement but I thought that in Texas I don't have to worry even with a judgement since Texas does not do wage garnishment....?

Also, what is the lookback period for checking account history prior to filing?

Does it matter that I bought stuff at Department stores & that's listed on my bank statement? (I bought stuff for Christmas gifts & will be buying something for my bf's birthday in a few months)

[jribe]

I guess that's where I get confused. I keep getting told that I don't have to worry until I get a judgement but I thought that in Texas I don't have to worry even with a judgement since Texas does not do wage garnishment....?

Also, what is the lookback period for checking account history prior to filing?

Does it matter that I bought stuff at Department stores & that's listed on my bank statement? (I bought stuff for Christmas gifts & will be buying something for my bf's birthday in a few months)

they can ask for as much as 2 years. However, unless they think there is fraud or something you are trying to hide- they usually won't ask that far back. Typical is 6 months. How soon prior to filing did you buy things? If it was just out of your checking account, it should be fine. They look for credit card purchases 90 days prior.

[krispy12]

Well I'm filing in 2 years but want to make sure I don't do anything where I'd have to wait longer. I have already stopped using my credit cards & paying them Spring of 2008.

I decided to just start getting paper checks & cashing them. I know they will know how much I get paid from my W2's.

For anyone that has used cash, do you need to save every receipt for proof of what you spent your money on?

[treehugger1]

I went to paper checks and prepaid debit/gift cards a year ago. You can get prepaid debit gift cards up to $1500 at some banks. These can be used to pay utilities, phone bills, and just about anyone who accepts a 16 digit Visa account number. Most require some upfront cost, but there is no additional cost involved in their use unless you use them to withdraw money at an ATM. Some of them can be reloaded. Look for cards that also have FDIC insurance through the bank or financial institution that issued them.

If you can find a reloadable debit card, use this to buy groceries, bill-pay, utilities, etc for a record of your costs.

Don't ever think you are alone when it comes to moving to paper payroll and/or prepaid reloadable debit cards. This is becoming a big business as I understand it.

In the meantime, if you are in a garnishment state, you can probably expect judgments and wage garnishment. There's no reason to put "wood on the fire" by leaving bank accounts open for others to find.

Just my opnions...Do your own due diligence.

[jribe]

I went to paper checks and prepaid debit/gift cards a year ago. You can get prepaid debit gift cards up to $1500 at some banks. These can be used to pay utilities, phone bills, and just about anyone who accepts a 16 digit Visa account number. Most require some upfront cost, but there is no additional cost involved in their use unless you use them to withdraw money at an ATM. Some of them can be reloaded. Look for cards that also have FDIC insurance through the bank or financial institution that issued them.

If you can find a reloadable debit card, use this to buy groceries, bill-pay, utilities, etc for a record of your costs.

Don't ever think you are alone when it comes to moving to paper payroll and/or prepaid reloadable debit cards. This is becoming a big business as I understand it.

In the meantime, if you are in a garnishment state, you can probably expect judgments and wage garnishment. There's no reason to put "wood on the fire" by leaving bank accounts open for others to find.

Just my opnions...Do your own due diligence.

wells fargo bank has a good card like that- there's also no service fees if you have your pay direct deposited into the card. FDIC insured as well; accepted anywhere Visa is accepted. FYI- they will also do these type cards for minors. Wells is mostly on West Coast, and Mid West- but they are going through merger with Wachovia, so will be on the east coast by the beginning of 2009- for those of you out there...

[krispy12]

I have Wells Fargo right now. So is this direct deposit card just good for them not withdrawing it from wage garnishments?

I'm in Texas so not sure if I should go through the extra trouble to put it on this card because it would still show where I spent my money on....plus Texas doesn't do wage garnishment.

[NewDawn]

I just recently found out that Texas does not do wage garnishments directly from your employer except for the IRS and child support payments. HOWEVER, they can and will levy your bank accounts. Somehow it is not considered wages anymore once it is deposited into your bank account. I just asked a lawyer up in the Dallas, Texas area that specializes in collections on judgments. He tells me that can levy your bank accounts in your name up to the amount of the judgment. This means that if this leaves you with zero in your checking account, that's just too bad. This is very scary!

They do have to sue your first and get a judgment against you. Once they are awarded the money judgment, then they will get the court to issue them a writ of garnishment on your checking/savings accounts. The sheriff goes to your bank and serves them with the writ of garnishment. The bank then garnishes your bank account. This can lead to bounced check fees, etc. and can wreak havoc on your life.

If I were to ever have a creditor or somebody sue me and get a judgment against me, I would immediately close all accounts and have my employer issue me paper checks instead. Having said this, I believe (but not positive) that the writ of garnishment to levy your bank account is only good for the actual day it is served. That means it is a lot of trouble for creditors to collect by this method, but it is still possible.

[treehugger1]

NewDawn, In some states the bank levy is only good for the moment it is served on the bank. In other states, this is not necessarily the case. If you one knows a judgment is imminent, then there is no reason to keep bank accounts.

[NewDawn]

I just really think it stinks that your wages aren't protected once it is deposited. I was under the false belief that in Texas, where I live, this couldn't be done. I'm so glad I have filed and won't have to worry about this.

I did read that the same property that is protected in bankruptcy is also protected in lawsuit judgments in Texas. It's just the bank levies that are pretty scary.