switching to self employed

[fugazzi]

I've been an employee at a consulting company for 11 yrs. This company has some employees and also contractors that do work for it. If i swapped to self employed instead of an employee, would those 1099 earnings be subject to wage garnishment for unpaid credit card judgments?

[fugazzi]

Anyone?

[catleg]

I'm not sure if you'll get a good answer but I'll give it a whack.
My thinking is, no wage garnishment, since they're not wages.
However, a creditor can get an order against a business for the sheriff to collect money coming in as it hits the till, not sure what that's called.
If they apply the same kind of order to your employer, but now where you are a vendor and the money coming in is accounts receivable to you, accounts payable to them, it could be bad.
I believe this gives you even less protection since they wouldn't be limited to taking 25% of after tax wages.

[ryan]

I'm not sure but since no one has replied, (oops Catleg justbeat me to it)

here's my thought. Technically, the 'employer' becomes your 'client' since you are now self-employed...so, it should not be lawful for a judgment-holding creditor to garnish them, (i Think)....You still would have risk over bank account levies, and other remedies creditors seek like filing liens on property etc. The other trick an aggressive creditor could use would be to get an order from court forcing your 'client' to turn over funds they would have paid to you, to the court instead.

I see Catleg covered the same ground, sorry.

[catleg]

great minds think alike. :-)

[HHM]

I'm not sure but since no one has replied, (oops Catleg justbeat me to it)

here's my thought. Technically, the 'employer' becomes your 'client' since you are now self-employed...so, it should not be lawful for a judgment-holding creditor to garnish them, (i Think)....You still would have risk over bank account levies, and other remedies creditors seek like filing liens on property etc. The other trick an aggressive creditor could use would be to get an order from court forcing your 'client' to turn over funds they would have paid to you, to the court instead.

I see Catleg covered the same ground, sorry.

Wrong, wrong, wrong. Creditors can go after ANY non-exempt asset. If you go to self-employed, you most likely lose any "wage" exemption and YES, creditors can go after ANYONE that owes you money...the challenge for creditors in the self employed context is "finding" the clients. If an asset garnishment were served on your "client" the creditor gets 100%.

Also, there are other issues...there are the tax implications, loss of benefits...in the big picture, probably a bad idea. Just deal with the debt issues head on, why play cat and mouse, that is not a solution.

[catleg]

I think that is what I basically said.

[CCC]

I'm pretty positive that it might buy you some time because if you're contracted it's going to be a lot harder for creditors to find your "clients" vs finding your employer.

but I agree with some of the posters here that you should probably try to deal with your debt head on.

[HHM]

I'm pretty positive that it might buy you some time because if you're contracted it's going to be a lot harder for creditors to find your "clients" vs finding your employer.

but I agree with some of the posters here that you should probably try to deal with your debt head on.

The rub in this particular case is the "client" is the same as his current "employer", the OP would just be changing status. Not a good idea.

[catleg]

Yeah I agree with HHM, it's a bad idea, since you lose the protection of federal law over wage garnishment.
At least if you changed locations, moved to another state, worked for a different consulting company, it might take them a long time to track you down. And stay the heck off of facebook and linkedin!

[BigJohn]

If a creditor has the original poster appear before a judge for a debt examination - the truth comes out.

[catleg]

It's really best to leave the country, as that French guy who ran the IMF was trying to do when they caught him.

[ryan]

Wrong, wrong, wrong. Creditors can go after ANY non-exempt asset. If you go to self-employed, you most likely lose any "wage" exemption and YES, creditors can go after ANYONE that owes you money...

So, uh, I guess I was wrong, wrong, WRONG, :-)

...I never said they couldn't 'go after' any non-exempt asset..just that I 'thought' they weren't considered wages, so that a garnishment order wouldn't work any longer. I do agree his main strategy is flawed because he is just 'shifting' from one status to another with the same company....makes it way too easy to be targeted then, anyway.

Btw, my first time with a woman, that's all I heard "...wrong, wrong, wrong...."