Help!! Another Old Judgement Question

[trich701]

My husband and I received a judgment against us in 2003. We were experiencing difficult times with a new baby, hospital bills, etc. When the case was filed, we sent in an answer basically stating what I just said in a nutshell. The judgment was entered against us for $11,000 (for a car that we gave back). About two years ago, we contemplated filing for bankruptcy, and actually consulted an attorney, and gave a retainer. We believe he sent a letter to the original attorney handling this case because all letters and correspondence ceased until recently. Now the balance is $16K, the case has been transferred to a firm based in AR, and they are wanting us to make payment arrangements. With all of our current debt, we cannot afford to pay another car note, and would be good to make $50.00 per month, but no more. We do own our house which is our only true asset. We also reside in Texas. Should we call and offer to make a $50.00 per month payment? Would that do anything? Any advice on how to proceed would be helpful. We really want to pay all of our bills and not file for bankruptcy.

[fordyce]

What is the name of the firm in Ar. that is after you?

[LUEser]

Well, the usual time to collect on a judgment is 10 years, not sure if that's the same in TX.

I would try to work with the court house and see if you can set up a monthly payment plan there.

Not sure if Texas has a similar program, but in TN you can file a motion for slowpay which stays any form of garnishment or lien.

I'd definitely check with the court clerks to see if that's an option before trying to deal with the collector directly.

[trich701]

Thanks so much for the response! I will check into it.

[merrybucks]

You probably will not see the principal reduced with a $50 a month payment. The amount you owe will probably continue to grow. What is the amount of interest being charged on this judgment?

[trich701]

I have no idea. I am going to write a letter asking for a breakdown of everything. If I had the money to pay at the time, I would not have given the car back in the first place. My situation has changed since then, but I do not have extra income to pay off this debt. I came here seaking some expert advice on the topic. I just would like someone to let me know the best way to proceed. This is the main reason why we considered BK in the past because of this issue. I do not know what to do.

[Debt Guy]

A domestic judgment in TX is good for 10 years and is renewable.

TX does not allow a wage garnishment.

TX has very generous exemption for one automobile -- $50k in equity I think.

The judgment creditor can wipe out your bank account. You need to give some thought to this problem.

TX is weird about property liens. Technically, TX does not allow the lien to attach to your homestead. But, since homestead is not a public record and more of a state of mind, the judgment "clouds the title to your home". That means no title company would issue a title policy to anyone else if you tried to sell the home -- effectively that means you are landlocked.

Now, 16K is a lot of money. Unfortunately, they are not likely to accept $50 per month. You could probably settle the judgment if you had the ability to raise a lump sum of cash.

If you cannot, my advice would be to revisit with the bankruptcy attorney to see if you qualify today. I am sure the rules are different since you looked into this last time.

If you don't qualify or you are dead set against bankruptcy -- and you have no plans to sell your home, the major problem to worry about is the creditor wiping out your bank account -- and when that happens inevitably you will have a bunch of checks outstanding and they all go bouncy bounce and you run up a bunch of NSF fees and have a lot of unpaid bills to your creditors.

There are ways to live without a bank account -- it is not convenient.

Questions?

[flacorps]

Recently I read in Florida Attorney Jonathan Alper's blog that he was told that Delaware bank accounts are statutorily immune from being attached by a creditor. He didn't believe it, so he checked it out and the statute and case law seems to confirm that fact. Not being a Delaware attorney, he is unwilling to opine that such is actually the case and that there's no gotcha lurking anywhere.

Not having even read the statute or case law, that would go double for me.

And of course, you need to make sure you pick a bank that doesn't have any presence in any other state (especially Texas), but I would try for a Delaware-only bank because sometimes third states that are basically strangers to the situation can be used by a creditor to do something that couldn't otherwise be done (garnishment, account seizure or what-have-you), provided the business that holds the asset or employs you has a presence in that third state.

The fdic.gov website will tell you what the banks in Delaware are. Opening an account over the internet is possible with many banks. Others will let you do it by mail. I don't know what the situation is vis-a-vis any banks in Delaware.

YMMV

[flacorps]

I have no idea. I am going to write a letter asking for a breakdown of everything. If I had the money to pay at the time, I would not have given the car back in the first place. My situation has changed since then, but I do not have extra income to pay off this debt. I came here seaking some expert advice on the topic. I just would like someone to let me know the best way to proceed. This is the main reason why we considered BK in the past because of this issue. I do not know what to do.

If you lack the money to pay, you don't want to BK (and the amount seems too small to do so over), and the account has moved to an out-of-state owner, it may be best to kick the can down the road.

Potentially you want to:

1. Avoid engaging with them in any voluntary way,

2. Use whatever laws (FDCPA or TX laws) are at your disposal to minimize harassment (potentially engaging with them only to tell them not to call), and

3. Accumulate some savings in an out of the way place with the thought that you can settle at some point down the road for 30-50% of what's owed in lieu of you filing BK and wiping them out completely.

If you have other mishaps down the road, BK will still be available to you if you refrain from filing over this issue.

If the creditor takes any steps that become really distressing then you may want to reconsider whether to BK at that point. Right now, calls and letters don't really qualify as the kinds of things that would mandate BK.

Creditors have a way of slinking back into the woodwork when a flurry of activity on their part doesn't produce the desired effect. You might test whether that's the case on this one. It likely won't cost you anything.

P.S. - Keep your use of credit, applications for credit, etc. to an absolute minimum (if not zero) unless and until that judgment expires and is not renewed. In many cases creditors don't throw good money after bad to get that done. Yes, you have quite a while to wait it out, but you could save a lot of money that way.

[trich701]

Thanks for all of the responses. My question is this, if my bank account only consists of monies from my employment, and wages are 100% exempt from garnishment in Texas, can they still clean out my account?

[flacorps]

Thanks for all of the responses. My question is this, if my bank account only consists of monies from my employment, and wages are 100% exempt from garnishment in Texas, can they still clean out my account?

Not being a TX lawyer I can't answer yes or no. But I can say that others on the boards from TX seem to have had it done to them.

So do you really want to test that by keeping a TX bank account?

[flacorps]

How a bank account gets discovered:

http://www.ckfraud.org/banksearch.html

If you can avoid all those ways, it's pretty safe...

[Debt Guy]

I'm not a Texican but I've seen plenty of bank accounts in TX garnished.

Yes, wages are exempt. The thinking is that once money is in the bank account, it is no longer wages -- it is just money. It works that way in most states -- I cannot think of any state that prohibits the practice but that does not mean one does not exist.

There is a similar but different parallel with social security funds. SS (and certain other types of government funds and distributions from a qualified ERISA plan -- as best I recall) cannot be garnished. SS funds in a bank account are exempt from garnishment. That applies in TX as well as all states since it is an exemption that derives from a federal statute. Issues regarding a bank account garnishment of non-government funds are governed by state statutes.

You are at a point where your options are limited. You can try to negotiate a settlement. You can file bankruptcy. You can hunker down and try to stay off the radar scope.

If you go the latter direction and are still worried about the bank account, I guess you could try the DE thing -- just make sure they don't have any branches or operations in TX -- and even then it is still just a theory that the DE bank would refuse a garnishment order. Writing checks would probably be easy. Unless you are in payroll deposit, getting money into the account will require some thinking.

Another idea would be to manage your bank account strategically. That means move your account to a small bank somewhere in a strip mall. It also means try not to write a lot of checks and don't write any checks to a company or organization that does not have a customer privacy policy (some companies sell data). It would be, I think, a good idea to do as much of your business as you could with a credit card and then write one check to the credit card company each month. Alternatively, you could use a debit card.

[flacorps]

It works that way in most states -- I cannot think of any state that prohibits the practice but that does not mean one does not exist.

For Floridians, up to six months of wages in a bank account are exempt from the claims of creditors.

[trich701]

Thanks again for everyone's help!