Judgement Proof....m

[graciebeth]

I had posted a couple weeks ago bout my situation(can do a re-cap on that if needed) and someone mentioned perhaps claiming Judgement proof might be better for me than filing bankruptcy, or that it may be alternative for the time being. Ive read a bit about it online and still have a couple questions(yes I know I need to contact a bk lawyer and do a consult, just havent yet)..

Basically all I have right now for income is the SS that the kids and I get since my husband died in '03. He and I filed Chapter 7 in 2001 before his cancer diagnosis, and therefore I cannot re-file til 2009. I have tons of medical bills and credit card debt and now Im unemployed(medical reasons and if I go back to work I will loose my TNCare health coverage, had open heart surgery in '06 and no coverage makes me nervous--i was working until Feb tho and had to go in hospital and racked up the medical bills)..

Anyway, Im not certain how much longer I can pay the min payments on the CCs, after I pay bills I only have $250 left for the month and thats hard considering that right now thats for groceries too--I have a foodstamp application going but its still pending-- even wtihout buying groceries its hard to get thru on so little. Im thinking that since so much has happened to me in the past few years that filing BK and starting over is my best bet, and maybe even take some classes BUT in the meantime Im just not sure.. Im nervous about simply not sending in the payment to the CCs,but not sure that I CAN keep sending it, would be so much easier if it werent doing it alone.. what will they do if I just dont sent a payment? I know the bill will rack up with late fees/over the limit fees/etc but then what? Will they just turn it over to collections? If/when that happens do I need to try to send them in something every month,even tho it would be a lower payment than the min that I pay the CC company?..

Right now Im just not sure I can afford to even file, how much is that usually? is there a way to get that done cheaper,but still done right? course if I stop paying the CCs then I can put some back and once I can file,2009, I may have it back in savings, or would that be bad, to have money stuck back instead of paying it to them?.

Plus I do have a checking acct, if I just stop paying them leaning on the judgement proof for the time being is there anything I need to do wtih the checking? The SS checks are automatically deposited and there are a few things that come out automatically like the car insurance etc, would I need to start withdrawing as much as possible leaving only the bare minimum in the acct? Id hate for them to somehow get ahold of what little I have ya know?..

any information is appreciated. I know they cant DO anything to me really, they cant rip me away from my kids and put me in a work camp or anything,but its a scary thought still to know that you arent paying a bill, or better yet that you CANT pay it..

thanks,
Grace

[lrprn]

Welcome back, Gracie!

By law your Social Security income cannot be garnished by creditors. However, often that means nothing to the bank when they receive the court order - they just comply as they are required to do and force you to sort out the mess

Did a quick search and found this post online that gives some good advice on how to avoid having your Social Security or any other disability income at risk when you can't pay your creditors - http://www.bankrate.com/yho/news/ban...ishment_a1.asp

1. You are responsible to properly notify the court and sheriff that any levied funds in your checking account are Social Security funds and thus exempt. That means that you MUST attend the court hearing or send copies in writing to the court that your funds are exempt from seizure.

2. Contact the Social Security Administration to have your check mailed directly to you and not automatically deposited into your bank account.

3. For $50 per month, you might be able to hire a law firm to protect your money. Some firms have addressed this issue by having their clients deposit funds into a local, small bank affiliated with the law firm. All funds deposited into this bank are exempt from creditor claims.

Given your financial and poor health status, you are the perfect candidate for help from Legal Aid. If you live in a town or city with this service, please make an appointment with them to see if they can help you.

My heart breaks that you have shouldered so many personal burdens over the last few years. I hope you can find some peace of mind going forward. Keep posting here - we'll help you as much as we can, and we're good listeners too.

[graciebeth]

Its really unreal what all has happened to us in the past 7years, hopefully my luck is about to change tho. My biggest and most pressing concern right now is what can happen if/when I stop paying the credit cards? ooh it just makes me nervous to just STOP ya know? part of me feels like I should still send in half payment or something but I know in all reality to the CC companies half wouldnt be any better than nothing.

Sounds like my best thing would be to close my checking acct and go strickly to cash, I hate to do that tho because like I said i have some things that come out automatically, but I could probably still keep the acct open and deposit into it the $ to cover those couple of things? least then if they went for the checking they wouldnt be able to get much at once.. but then again its only the car insurance and the direct tv(no tv reception out here in the boonies and no cable available so I have the bare basics) and I COULD start paying the insurance in person monthly and the direct tv by money orders,Id prefer to keep the acct tho for future use..

How would I find out about the availability of Legal aid here and how much assistance would they be able to offer me? could I go thru them for the future filing process?

-Grace

[ssdsco]

My biggest and most pressing concern right now is what can happen if/when I stop paying the credit cards? ooh it just makes me nervous to just STOP ya know? part of me feels like I should still send in half payment or something but I know in all reality to the CC companies half wouldnt be any better than nothing.

Sounds like my best thing would be to close my checking acct and go strickly to cash, I hate to do that tho because like I said i have some things that come out automatically, but I could probably still keep the acct open and deposit into it the $ to cover those couple of things?

If you have no assets or income other than SS and you know BK is in the future I'd recommend you stop paying all CC companies now and use the money for a BK attorney or basic living expenses.

There's some excellent info in the Collection forum including the stickies on dealing with original creditors and collection agencies.

As long as your creditors have your correct address for a summons that will be the first indication of a judgment. You'd have a month plus from when the summons is delivered to clean out your checking account before a creditor gets a judgment. Even that won't be a problem if you follow Irprn's advice, which is always excellent.

[jp2861]

I was in the same boat with my VA payments. They too are exempt from garnishment. That leaves alot to question though. SS will not honor a levy if presented with one, so you're safe there. When the law says the funds are exempt it stops right there at the SSA level. There are no laws on the books that dictate what happens to the money in your account when the bank is presented with a levy. In the eyes of the bank, it's not their responsibility to decide if the funds are exempt. So, they just give away your money. So you can't rely on all this talk of your funds being exempt once they leave SSA. Sure, if the bank gives away your money you can jump through a dozen hoops, and wait months to get it back. But that doesn't put food on the table right now. The exempt law was enacted to protect certain folks quality of life, but, in my opinion, does a piss poor job at protecting you. Recent talks about the subject, and the banks responsibility, have yielded no additional protection, so you're pretty much on your own to protect yourself. The law is really a half baked attempt at accomplishing anything protective in todays world of managing your money online.

Best thing to do is stop your direct deposit and have them start sending a check. Hopefully, they won't come up with some stupid rule saying direct deposit is mandatory. My only suggestion would be to budget from the 5th to the 5th of each month. Reason being is that the mail won't guarantee your check being there on the 1st.

I'm not sure if the SSA has any options for alottments. That may be something to look in to. If possible, you may be able to have your regular monthly bills paid via alottment. The VA did it but I'm not sure about SSA.

I suppose if enough people wrote their Congress person and complained something may get done someday. But I wouldn't hold my breath waiting.

[Bandit]

Its really unreal what all has happened to us in the past 7years, hopefully my luck is about to change tho. My biggest and most pressing concern right now is what can happen if/when I stop paying the credit cards? ooh it just makes me nervous to just STOP ya know? part of me feels like I should still send in half payment or something but I know in all reality to the CC companies half wouldnt be any better than nothing.



-Grace

You are right about that in a sense but they will still take half or even 10.00. iT is not like they will say we cant take this but you still get reported as late. I forgot to put .11 cents (eleven) on a check last month so it went in 11 cents short. They charged me 39.00 late fee woo hoo!- but took it off when I called.

I am nervous to just stop too but I think after the first time it will be easy to just throw it all to the wind & start moving forward. I kind of want to call & explain what is happening but I doubt at this point they will give a care.

I feel most people are the same & deep inside they really wish they could pay it all in full.

[WhatMoney]

When the law says the funds are exempt it stops right there at the SSA level. There are no laws on the books that dictate what happens to the money in your account when the bank is presented with a levy.

The Federal law actually says your exempt SSA funds remain exempt when deposited into your bank account. However there is no law that says the banks have to determine the exempt status of the funds, and so of course they do not. Therefore the banks will freeze your funds and leave it up to you to prove otherwise, through your court challenge to the garnishment, quoting the Federal and State laws exempting the funds, to remove the garnishment. It's not fair of course to put this burden on the poor, disabled, and retirees, but the banks don't care!

The Banks really like the $100+ legal fee they also charge against your account to respond to the levy order, and those $35 NSF fees for each bounced check, debit card charge, and automated payments. Mmmm... yummee, that's how we make our money the banks reason. Why should we obey the Federal law and lose this extra fee income?

If you want to use a checking account for your SSA income, at least make that a "SSA deposit account only". That means NO other deposits of any kind including interest and rewards. If you use the SSA direct deposit, which is tagged as such on your statements, then there can be no question that all the funds in your account are exempt. This will at least make it more difficult for the slimeball creditor attorney from objecting to the fact of all exempt funds. And under NO condition should you co-mingle any funds. Start your new account with a zero balance, or write a check to bring it to zero before your first SSA check is deposited. That way there is no way a slimeball attorney can claim you have "residual" funds in your account that are not exempt. Remember, a slimeball attorney will try any trick, no matter how obscene, to confuse the judge and steal your money, so be prepared.

If you decide to go back to a paper check for your SSA, you can avoid this hassle, but will need to be all cash, money orders, etc. One compromise is to deposit your SSA check in your exempt account, and then withdrawl immediately what you need for any money orders etc - some banks have free cashier checks and money orders if you maintain a checking account. Online Bill Pay from your checking account also debits your bank account the next day, if you don't want to be all cash. That way you reduce your risk of losing money to a levy to only 2 days/month, and still have the convenience of Bill Pay.

Since your deposited funds remain exempt, you can always get them back, but there is usually a legal process involved that if nothing else delays your access to your money. And then you have to deal with the banks keeping their $100 legal fee and NSF fees they charged you for the privilege of freezing your account and bouncing your checks. They of course think they deserve every penny of it. You don't want to deal with this.

[jp2861]

If you decide to go back to a paper check for your SSA, you can avoid this hassle, but will need to be all cash, money orders, etc. One compromise is to deposit your SSA check in your exempt account, and then withdrawl immediately what you need for any money orders etc - some banks have free cashier checks and money orders if you maintain a checking account. Online Bill Pay from your checking account also debits your bank account the next day, if you don't want to be all cash. That way you reduce your risk of losing money to a levy to only 2 days/month, and still have the convenience of Bill Pay.

Once the account is frozen it's too late. Bills won't be paid from a frozen account. Better to go all cash.

[WhatMoney]

Once the account is frozen it's too late. Bills won't be paid from a frozen account. Better to go all cash.

Sure, close your account and go to all cash if you want to be 100% safe. However some of us find it a bit inconvenient to live like an illegal resident fugitive without a banking account - using check cashing stores, reloadable money cards, money orders, and a wad of $20's to do all our business. This is a costly way to survive - even the gas money for all the trips to pay the bills is money lost.

Obviously you don't deposit any checks into a checking account that is already frozen. So how do you know if your checking account is frozen? Remember that the bank gives you no warning when they put a levy on your account - and the garnishment letter you get from the sheriff or the bank arrives 3-5 days later in the mail and may be too late.

The surest way is to fill out a withdrawl slip for $1 or $5 cash as your first teller transaction before you do any other business. If the teller refuses to let you withdraw any money your account is frozen. If you do get your cash your account is not frozen, so proceed on to deposit the SSA check, then immediately withdraw most of the money you just deposited in cashier checks or money orders for rent and other bills. You are at risk only if your account is frozen while you while you are still at the teller window. The risk of this happening? A little more than getting struck by lightening on a sunny day.

Note: If you are going to deposit your SSA check, deposit all of it. This establishes that the deposit is an exempt SSA deposit. You will need to keep good records to prove this in court - photocopies of the SSA check and deposit slip, and the government documention of your benefit will be needed. Deposit only part of the check, and you've just lost the easy traceability of the deposit. (SSA Direct Deposit makes the proof of exemption obvious, but also greatly increases your time risk of getting those funds frozen.)

Leave just enough in for Bill Pay accounts or same day debit card transactions, which should be debited the same or next day, if you want the convenience of electronic payment. Your at-risk time is the time between Bill Pay debit and the deposit of your SSA check - less than 2 days. And if you initiate the Bill Pay transaction and the account is frozen, there is no overdraft fee. You just have to pay another way if you are so unlucky as to have your account frozen right after you put the money in for Bill Pay transactions. Note there is more risk timewise (up to 5 business days) if you use an ACH transfer of funds to pay your bills, so don't do it that way.

If you still don't like the risk of an extremely untimely levy coming through in a 5 minute window - then just cash the SSA check at the bank where you have an account (take it in hundred dollar bills) - and do not deposit any of it. Take the cash and then use it to buy cashier checks and money orders to pay your bills before you leave the teller window. There is nothing the bank can do about an all cash transaction, and at least at my bank, there are no fees for any of these money conversion transactions, including free travelers checks.

[graciebeth]

ayy yiaa yia what a lot to think about..m

I dont even know what a cashier check is but Im assuming its similiar to a money order.

Boy I have a lot to think about, right now Im thinking it would just be best to get the SS checks totally thru the mail and not deposit them at all..Course someone said to deposit all the SS check so that it shows up on the record, so would it work if I only deposited ONE of the checks? I get a toal of 4 because me and the 3 kids each get one, so I could just deposit one check to cover the automatic stuff and then withdraw the excess right? and get the other checks cashed right?

I sit here and think about not really much using the checking and it just seem so foreign, course once this is all settled I can go back to having it there but wow, what a thought. I could easily pay the rent with cash, and get money order for the van payment and the electric bill so its totally do-able.. I could start paying the automatic stuff with money order and it wouldnt be a problem so really wouldnt have to deposit anything in the accout except maybe a little here and there to keep it moving and open and just not keep more than $20 in there or something..

Definately a lot to think about.

--Grace