Need advice quick

[AFreshStart]

I am in dire need of some advice. Currently, I'm in the process of having my TS clearance being renewed and the investigator is well investigating. I had my meeting and I have disclosed all of my financial problems to her. Not witholding any information I advised her that I have contemplated about BK and even went and saw a BK lawyer but never filed. Losing my clearance is gonna hurt but I think I can appeal the decision from the adjuicator if my clearance gets denied.

Anyway, I have a total of $35K in unsecured debt and I have not been able to pay it. I got a phone call from a law firm, specializing in collections, threating me they are going to garnish my paycheck unless I pay the full amount of two of the debts. They have even call my job asking for my HR and payroll department (lucky and embarrased a friend to me) I have taken swift action to send them a hardship letter detailing them that if my pay gets garnished, it will be difficult to support my family.

On one hand I want to file for BK and end this nightmare but on the other hand, I'm scared of losing my clearance. If I lose my clearance, I may lose my job. The next meeting I have with my security investigator I will tell her that I have file for BK and I unable to pay off my debts. All of this problem started when I lost my second job and I was living within my means but just couldn't make payments on the debt. Rent, auto and childcare expenses are too much of a burden as it is.

So should I file for BK and stop the threating garnishment or just wait until my security ruling comes back?

AFS

[lrprn]

Welcome back, AFS - we haven't seen you for a year. I'm assuming you decided not to file and tried to hang on a while longer?

Your situation is a tough one. It is possible that your clearance could be affected if you file bankruptcy. When are you supposed to find out about your security ruling?

Just because a creditor or collector threatens garnishment doesn't mean they can just do it. They have to go to court and get permission to start the garnishment. How much they can garnish depends on the state you live in. A few states (Texas for one) don't allow garnishment. Which state do you live in?

(By the way, AFS - I deleted the duplicate thread with the identical post that you put in the Ch 7 forum. Best to keep your responses together in one place.)

[AFreshStart]

Thanks for the feedback

Yes, I tried to hang on a little longer paying off the smaller debts that I owe. Since then my family and I move into a smaller place and the rent is within my budget. Since then I was able to save up an emergency fund ($5K in the fund) in case something disastrous would happen. My clearance is up for renewal every 5 years and something told me I should have file last year but I didn't follow through because of fear.

Now I'm getting to the point of just saying "f it", my clearance is screwed anyway because I haven't been making a payment almost a year and the adjuicator will most def deny my clearance.

The thing is that I wrote a hardship letter stating my financial difficulities and I'm not able to pay the entire amount up front. The creditor/law firm states garnishments is in process but I verbally and wrote to them that garnishment will affect my pay. (I live in CA) For instance, I bring home 2550/mo and they are planning on taking 675 off that pay. Deducting my rent (1300) auto (375) child care (500) I'm already in the negative. I counter-offer to may payments of 157.50 a month for a maxium 5 year period. The credit counselor I spoke to today say this is a good deal and they should be able to settle and not blow me off for me to suffer an already financial hardship, besides it isn't their money.

I will not know the final results of my clearance, it could take 4 months up to a year until I find out from my security officer. The only thing I can do is save up as much cash in my emergency fund and file for BK. If I lose my clearance, then my fam & I will leave CA for WA or AZ to start anew.

Sorry for my ranting but I'm in a panic mode and I'm stressing like crazy over here.

[CindyLou]

Hi Freshstart....
Just wanted to be sure that you aren't saving that money in a bank account that is in your or your wife's name. If you are in danger of garnishment or attacment it could be frozen or garnished. Also, if you are planning on filing bk be sure it is going to be safe with your state's exemption's. Hang around her for some support. We'd love to help!!

[AFreshStart]

Need Advice

Thanks Cindy , matter of fact I am saving up my emergency fund with my bank. I should make a huge withdrawal before I file for BK? I had no idea they can freeze my accounts which is my only life support.

[CindyLou]

I would certainly consider taking that money out of the bank and saving it in the form of travelers checks or money orders possibly...with the receipts saved in a seperate place in case of loss or theft. I chose the traveler check route and I kept the orginal stubs at my work and mailed my mother copies of the stubs. That way no matter what happened I was SAFE with that money. It as non traceable to the bill collectors and could be replaced in case of fire or theft. But at the same time it was there if I needed it for an emergency. The when it came time for my BK there was not huge bank account for me to explain why it had just been emptied. (didn't hide a large amount away, used most of it as needed) . Anyway, something to think about. I just don't think you money is very safe in a bank right now if you have outstanding debt. Hopefully others can chime in and give their opinion.

[treehugger1]

I'm assuming they will need a judgment prior to garnishing or attaching your wages or bank accounts. The bad thing about this is that many folks never see this coming until it is too late. In many states the writ of garnishment can be mailed to you after it has already been sent to your employer. The same goes with bank attachments. As suggested above, it might not be a bad idea to get your cash in some other instruments or in a "coffee can."

In many states the garnishment is prorated to when the employer receives the writ. If youa re paid once a month and the writ is received by your employer early in the month, there is agood chance you will see it coming. In addition, if the writ is served on the empoyer 1/2 way through the month, you will only see 1/2 the amount garnished. If you are paid weekly or bi-weekly, I doubt that you will receive a head's up. I'm not sure how the laws of various states work out so you might want to be as prepared as possible. Good luck to you!

[familyof7]

You could also open a savings account in your childs name you as guardian and bk nor garnishments can touch because technically it is you "minor childs money"