Collection question

[albacore44]

Hi team, Haven't been in here for a while, but I have a issue for a relative I need to discuss.

a few years back my 84 year old mother-in-law co-signed for a CC/Motorcycle loan for my nephew. He has defaulted and returned the goods some time ago. the bank discharged the remaining debt, and it was bought by JDB, Curtis O Barnes.

Today she received a summons to collect a debt of $10K from the law office of Curtis O. Barnes, and I am sure the nephew has too.

My concern is to protect her income and assets.she receives SS and pension income of about $1500 monthly. she has 2 annuities about $75K each. and an old 2003 car paid off. No house, she lives with me.

The nephew works, and has an ok job.

My gut says, Barnes will go after the nephew and garnish his wages. But I dont know what they can attempt to take of hers. I need to protect her. I know her 750 credit score is shot now. hopefully, thats the worst of it

What do the Gurus here think ?

Thanks

[treehugger1]

Albacore, You are as beautiful as ever.

In my opinion, if they took the time to contact your mother-in-law, they will go after all possible sources of funding to satisfy the judgment. I would help her determine the best approach to protecting her exempt funds.

You might also spend a bit of time at your local courthouse reviewing cases by the attorny firm. Sometimes, you can get a feel as to how they approach judgments.

[GoingDown]

The SS income is exempt for sure. Then pension may or may not be exempt depending upon your state's laws for exemptions. If it is a federal pension, it is probably exempt. Be careful not to mix funds. And if it was me, I would make sure I withdrew all of the money in my checking account and kept it as cash. Every time there was a direct deposit, I would rush down and withdraw it.

More info about that here... http://www.bkforum.com/showthread.ph...aid-Debit-Card!

I would find out if the annuities were exempt from a judgment. With such a large amount of money, it might be worth going to talk to an attorney about this. If they are not exempt, I would cash them out before they get a judgment.

[treehugger1]

I think the pension is exempt in California.

The annuities might be problematic, as GD pointed out.

I will guess that the legal firm cannot know about the annuities, pension, or SS unless this information was divluged during the original loan application. Since you mother-in-law is currently 85, it is likely much of the retirement/pension information was shared upon loan origination. In that case, the attorney might attempt to directly go for the non-exempt assets.

If her state of residence also allows written interrogatories such as debtor exams, you might also expect a written request for financial information.

[albacore44]

Thanks for the assistance team. i found the information below in the california exemption statutes, it does exempt SS, pension, and annuity income (I think). I am not an attorney, so i dont understand all the legal mumbo-jumbo, but I am certainly open to help with interpetations. I am most worried about them going after her annuities valued at $75K each.

b) The following exemptions may be elected as provided in
subdivision (a):
(1) The debtor's aggregate interest, not to exceed seventeen
thousand four hundred twenty-five dollars ($17,425) in value, in real
property or personal property that the debtor or a dependent of the
debtor uses as a residence, in a cooperative that owns property that
the debtor or a dependent of the debtor uses as a residence, or in a
burial plot for the debtor or a dependent of the debtor.
(2) The debtor's interest, not to exceed two thousand seven
hundred seventy-five dollars ($2,775) in value, in one motor vehicle.
(3) The debtor's interest, not to exceed four hundred fifty
dollars ($450) in value in any particular item, in household
furnishings, household goods, wearing apparel, appliances, books,
animals, crops, or musical instruments, that are held primarily for
the personal, family, or household use of the debtor or a dependent
of the debtor.
(4) The debtor's aggregate interest, not to exceed one thousand
one hundred fifty dollars ($1,150) in value, in jewelry held
primarily for the personal, family, or household use of the debtor or
a dependent of the debtor.
(5) The debtor's aggregate interest, not to exceed in value nine
hundred twenty-five dollars ($925) plus any unused amount of the
exemption provided under paragraph (1), in any property.
(6) The debtor's aggregate interest, not to exceed one thousand
seven hundred fifty dollars ($1,750) in value, in any implements,
professional books, or tools of the trade of the debtor or the trade
of a dependent of the debtor.
(7) Any unmatured life insurance contract owned by the debtor,
other than a credit life insurance contract.
(8) The debtor's aggregate interest, not to exceed in value nine
thousand three hundred dollars ($9,300), in any accrued dividend or
interest under, or loan value of, any unmatured life insurance
contract owned by the debtor under which the insured is the debtor or
an individual of whom the debtor is a dependent.
(9) Professionally prescribed health aids for the debtor or a
dependent of the debtor.
(10) The debtor's right to receive any of the following:
(A) A social security benefit, unemployment compensation, or a
local public assistance benefit.
(B) A veterans' benefit.
(C) A disability, illness, or unemployment benefit.
(D) Alimony, support, or separate maintenance, to the extent
reasonably necessary for the support of the debtor and any dependent
of the debtor.
(E) A payment under a stock bonus, pension, profit-sharing,
annuity, or similar plan or contract on account of illness,
disability, death, age, or length of service, to the extent
reasonably necessary for the support of the debtor and any dependent
of the debtor, unless all of the following apply:
(i) That plan or contract was established by or under the auspices
of an insider that employed the debtor at the time the debtor's
rights under the plan or contract arose. (ii) The payment is on account of age or length of service.
(iii) That plan or contract does not qualify under Section 401(a),
403(a), 403(b), 408, or 408A of the Internal Revenue Code of 1986.

[GoingDown]

Another thing to think about is her age.

I don't how to say this, but I'll just go ahead and say it. She has a lot of assets. When she passes away at some point in the future, and if you open probate, her debts will have to be paid before any inheritance can be distributed to the heirs.

You can avoid opening probate by getting her annuities and other accounts and assets in what they call "Transfer On Death" or "Beneficiary On Death" status. So when she passes away, you can simply collect those assets without opening probate. You would need what is called an "Affidavit For The Collection of Personal Property" or whatever they call it in your state.

If you decide to go this route, do NOT communicate in any way with her creditors. Do NOT give them any information. I would also use Google Voice to screen all calls from them. They huff, they puff, and they will bluff, but they will never open probate themselves. They will wait for you to do that and then swoop in to get the money.

[albacore44]

Another thing to think about is her age.

I don't how to say this, but I'll just go ahead and say it. She has a lot of assets. When she passes away at some point in the future, and if you open probate, her debts will have to be paid before any inheritance can be distributed to the heirs.

You can avoid opening probate by getting her annuities and other accounts and assets in what they call "Transfer On Death" or "Beneficiary On Death" status. So when she passes away, you can simply collect those assets without opening probate. You would need what is called an "Affidavit For The Collection of Personal Property" or whatever they call it in your state.

If you decide to go this route, do NOT communicate in any way with her creditors. Do NOT give them any information. I would also use Google Voice to screen all calls from them. They huff, they puff, and they will bluff, but they will never open probate themselves. They will wait for you to do that and then swoop in to get the money.

Thanks.

I do know that she has a living trust,and both annuities say POD (My Wfes Name) I have seen them come in the mail.My main question now is if the are protected based on the California statute I posted above. Another thought was transfering them into my wifes name as a gift to protect them. She is going to get some free legal advice at the senior center, so we shall see.

[GoingDown]

Another thought was transfering them into my wifes name as a gift to protect them.

There might be some tax issues, but this would be the best way to protect the money from a judgment. If I was going to do this, I would do it BEFORE they got a judgment.


And of course, do NOT tell them anything about this. Do NOT communicate with the creditors. There's a very good chance that they will never know anything about it.

One of my relatives died owing a huge amount of debt, and the creditors never figured out that he had all sorts of checking accounts, stocks, and even real estate. They called and called and called. And sent letters. We stopped talking to them. We never opened probate. They never opened probate. They never got a penny. They have now fallen silent.

They seem to rely on a passive service which monitors probate filings, and once someone opens probate, they are all set up to file claims and get paid. They are set up to rely on voluntary cooperation from debtor's families. When you don't do that, they don't seem to know how to handle it, and eventually, just give up.

[treehugger1]

You should also check how probate and debt works in your state. Just because one dies, this does not mean the exemptions die with them. As always, particular state laws may vary.

[albacore44]

well the MIL just got the bad news from her free legal consultation. since her 2 annuities are not pension derived but were originally cash she put into an annuity, they are not protected. The attorney suggested she try and settle with Curtis O Barnes for 50% or less. This sucks. now its up to me to negotiate and settle this for this poor old lady, and its not even her debt. Crap

[GoingDown]

That does suck.

It shows me once again, that in most cases, your money is safer stuffed under a mattress than it is in any kind of account once someone files a lawsuit against you.

This is just me thinking outside the box here.

My guess is that the creditor has no idea about the annuities.

And will probably never figure it out.

If I were in this situation, I would cash out the annuities and keep it as cash. There would be no further paper trail for them to follow, in the very unlikely event that they actually did find out about the money and come looking for it.

If they called her in for a debtor's exam-- once again, very unlikely-- she's in her 80s and maybe she has some memory problems at this age? How could they argue against that?

If I had not already experienced the creditors' complete lack of knowledge about a deceased relative's assets firsthand, I wouldn't be saying this. They didn't have a clue about the various checking accounts, stock accounts, real estate, etc. that was in his name at the time of his death. They were relying on us to voluntarily round up all the assets for them, tell them about them, and hand them over to them. When we stopped cooperating with them and stopped communicating with them, they threw up in their hands in disgust and gave up. They aren't set up to deal with that.

Way too many people think that creditors have some crystal ball to find out what you have, where it is, and how to get it. They are clueless and in the dark most of the time. They rely on us to make it easy for them. They do a huge amount of bluffing.

But maybe in this case, $10,000 (or whatever it gets settled for) is not worth all the trouble involved. Make sure you get the settlement agreement in writing and that it says "SETTLED IN FULL" before you send them a cashier's check or money order to pay it.

[DYLAN150]

GoingDown: You bring up a good point. Find out someone's assets. Here's are just a few things I can think of.

Credit report
FaceBook ( picture of you on your new motorcycle or boat)
Debtor Exam
credit applications
County assessor's records
State DMV
Bankruptcy records (pacer)
Divorce Decree (normally everything is listed on this)

[albacore44]

GoingDown: You bring up a good point. Find out someone's assets. Here's are just a few things I can think of.

Credit report
FaceBook ( picture of you on your new motorcycle or boat)
Debtor Exam
credit applications
County assessor's records
State DMV
Bankruptcy records (pacer)
Divorce Decree (normally everything is listed on this)

And she has nothing on that list. Goingdown has a point, unless she discloses them, they are likely not going to find them. and if she does, the judge makes the determination if they are the type of annuity that fits the exemption

[treehugger1]

Perhaps at this point wait-and-see is the best approach. Since the annuities are well, annuities, are these considered income for purposes of the 25% limit on wage garnishments?

Just thinking out loud.

If they find out about the annuities, I would not count on any "settlement." Then, what do I know? It is such a crap shoot.

[rta]

Just chiming in here. A JDB usually cannot provide all the necessary documentation for the debt that they buy, and the original creditor, having sold the debt for pennies on the dollar, will not be eager to provide paperwork. I'm currently defending a debt collection lawsuit by an OC and have been reading up and researching, and consulting free legal aid. You might want to fight the JDB instead of giving up without a fight.

The legal aid folks first told me that since I'm collection-proof, it doesn't matter if they get a judgment against me and I might as well let them, and then file a claim of exemption to defend against the judgment. But I refused, so here I am, doing my own defense without having gone to law school first. It's surprising what the options are for debtors.

Anyway, I have gotten a lot of information from creditinfocenter.com and from debtorboards.com. The free legal aid where I live also has provided me with consultation and feedback on my attempts at writing a motion to compel for a bill of particulars. Since I am 63, subsisting on social security, with nothing to lose and with some time to spare, I'm not letting them run over me with a bulldozer. The plaintiff may be an OC, but they can't seem to produce any evidence. Makes me wonder. And the legal aid lady thought they did sloppy work, too!

Anyway, I just thought I'd put in my two bits. Good luck!