Input on the legality of protecting my assets.

[Randall948]

Would like some legal feedback if possible as have not seen any definitive data on the subject.

First a little background:

Am about to start a do it yourself debt settlement process. 4 creditors (BoA, Wells, Cap 1, FNB: O)

I have no real property, live in a non wage garnishment state (S.C.) My state has fairly hefty liquid/property exemptions and Im fairly sure all my personal property will fall under the exemption umbrella. This leaves the only real thing my creditors can attack if they refuse to settle as a bank acct. Ive already opened a few new accts with local CUs to change my banking to for the short term as one of my creditors is also my bank and I dont want them to offset the money in the acct for the defaulted loan. My company will NOT provide me with a check to cash every week so I plan on going in every week and removing almost all my payroll deposit so there is little to nothing in the bank to levy if they choose to do so. I will then live off cash completely and pay bills with cashiers/MO's. Here is the meat of the question.

Since wage garnishment is illegal in my state and since the only thing that ever goes into my bank acct is my wage deposit am I not entitled to just pull that out as I see fit? The reason I ask is that ive seen some individuals on some boards I frequent claim that pulling your money out if its at risk of being levied is "defrauding" your creditors. It seems to me that since in my state my creditors have to RIGHT by state law to my wages that I can do with them as I see fit without fear of stepping over a very murkily explained "fraud" line.

After all If I could recieve a check I would just skip the step of the deposit and would cash it and they would have no recourse at all. I fail to see the difference.

Any real input? If your position is that this action would be "defrauding" my creditors please provide concrete info (case law, statutes, etc)

Thanks in advance.

[Denita]

JMO. This sounds like normal asset protection to me and not an attempt to defraud creditors. If you had assets that you transferred upon default/immediately prior to default that were in excess of your exemption amounts, then I suppose an arguement could be made that you attempted to defraud your creditors. But in your post you state you have no non exempt assets and it looks like you are undertandably seeking to protect your wages. I think you have a safe plan but check this link for asset strategies from an attorney that knows a whole lot more than I do! http://assetprotectionbook.com/

[Guest usctrojanalum]

I agree with Denita this is not defrauding creditors. The only time I have seen a defendant get hit with defrauding his creditors is while DURING litigation or right before a default the defendant transfered/moved/hid assets that might not be exempt.

Example: There was a case a few years ago where a defendant while in litigation transfered the deed to his house out of his name and into his spouses name solely.

Plaintiff's attorney said wait a minute you can't do that and got a court order to put the house back in his name so the plaintiff could have his lien.

THAT is an example of defrauding your creditors, taking your money out of your bank account each week would not be. I do the same thing you do and I do not even have any outstanding judgments against me right now. I deposit my check and when it fully clears I put all the money in my pocket.

[Guest usctrojanalum]

Oh and I also saw one time where a judgment debtor owned a legal 4 family house that he rented out to pay all his bills. However, he let his SSI benefits accrue in his bank account every month which are exempt. Judgment creditor froze bank account with like $25,000 in SSI. When the the debtor claimed his money was exempt judge basically said LOL no way you can't just let all that money accrue and not pay your debts.

[Randall948]

Interesting Trojoan because thats basically what I'm planning on doing, accruing a lot of money (for settlement) but then not paying my debts (what they claim I owe which will be much inflated at that point due to interest/fees.

I think what that judge did was illegal though. SSI money IS exempt by federal (and most state) laws whether that judge likes it or not. He cant (legally) just say you have no right to the money because I dont like you not paying your bills

So the situations on their face if I didnt take the money out every week are very similar. I would accrue a pile of money from a source that is 100% exempt (due to my state law) but by nature of it being in an acct its subject to levy. Theoretically if I showed the deposits were from wages I could get my money back but I'm sure they would throw up all kinds of hoops for me to jump through. Better in my mind to just keep it out at home as currency until settlement time.

On another board someone who supposedly is a lawyer basically told me that ANYTHING I did post judgment to not make it a walk in the park for my creditors would be considered fraud (closing a frozen acct, discontinuing using it withdrawing money). He basically said that once I had a judgment against me I had to just totally submit to my creditor like a good little boy.

In my state you cant be punished for not paying a judgment by the state according to my county magistrates court website.

[Denita]

Look up your state's statues though for how long the judgement can remain. Here in Fl the creditor can get a 10 yr judgment and then renew for another 10 yrs.

Also check your statues on what happens if you buy something, say property, when you have a judgement. Here you can do that, BUT the judgment will attach to the property and when you sell it the judgment creditor gets paid first. Make sure you are not setting yourself up for more hardship down the line is my only point.

[jq26]

Any real input?

I don't see any fraud created by reducing your savings in credit union or bank accounts, but a few quick things:

1) Cash is also an asset that can be levied. You may have to swear under oath as to the totality of your assets including any cash. If you have a few grand in cash, then you'd have to disclose or commit perjury if they question you post-judgment (if they sue). It is your call- just giving you a heads up.

2) Judgments in many states can be renewed indefinitely for a certain period of years. I don't know what South Carolina state law allows (usually you can look it up on state gov't website).

3) Just steer clear of UFTA. All states have some version of a Uniform Fraudulent Tranfer Act. Google it so you know what NOT to do. But since you have little assets right now, probably not a major issue.

If the bank is smart, they'll just settle with you and be done with it.

[Guest usctrojanalum]

I think what that judge did was illegal though. SSI money IS exempt by federal (and most state) laws whether that judge likes it or not. He cant (legally) just say you have no right to the money because I dont like you not paying your bills

Well no, the judge can do whatever he wants basically (lol you know that though) and whatever he thinks is in the best interest of justice.

This case was appealed to (I can't remember to which district) the apellate division of the State of New York and the judgment was confirmed on appeal. It did not go to the NYS Court of Appeals though (highest court in NYS).

And the reason why there are federal and state exemptions is to avoid putting people out on the street or ruining their lives with medical, consumer and other types of debt. Exemptions are not in place so people can just pile up a ton of money and avoid paying their just due debts.

[Randall948]

Thanks for all the input.

In S.C. Judgments are NOT renewable after their 10 year duration

In S.C. You can have up to 5000 in "liquid assets" exempt for BK exemptions and my understanding is that the exemptions are the same for a civil judgment. This is if you dont have a home to use homestead for (as in my case)

There is also a 4-5k (I cant remember which) "wild card" exemption and the way that works to my understanding is basically you can use that for anything else you wish to "save".

So basically Im fairly well under the umbrella of exemptions to my understanding.

If anyone knows anything different about S.C please chime in.

[Randall948]

"Well no, the judge can do whatever he wants basically (lol you know that though) and whatever he thinks is in the best interest of justice."

See heres where you lose me. I know in practice judges do cowboy things all the time but that doesnt make it illegal.

The SSI funds that were exempt are exempt explicitly by statute. There is nothing in there that says "but if you think its fair do whatever you want". If this was not a case where the funds were mixed with non exempt funds then what that judge did was clearly illegal and Im outraged that other courts upheld it.

This would be like in my state where there isnt garnishment except for child support/back taxes and some judge just signed a garnishment order against me anyway because he thought it was "fair".

There really should be some way to punish a judge for clearly going counter to what statute says in my opinion.

can you possibly give me the names of the litigants to that SSI case you mentioned so I could look it up? Thats just unreal.

[jq26]

In S.C. Judgments are NOT renewable after their 10 year duration

In S.C. You can have up to 5000 in "liquid assets" exempt for BK exemptions and my understanding is that the exemptions are the same for a civil judgment. This is if you dont have a home to use homestead for (as in my case)

There is also a 4-5k (I cant remember which) "wild card" exemption and the way that works to my understanding is basically you can use that for anything else you wish to "save".

So basically Im fairly well under the umbrella of exemptions to my understanding.

If anyone knows anything different about S.C please chime in.

This all sounds reasonable. If you've done your proper homework, then give it a shot.

Here in PA, we only have a $400 cash exemption (along with an exemption for a sewing machine, a bible, and tools of the trade). And judgments are good for 10 years, and renewable twice for a total of 30 years. So your situation would be totally different if you were up north.

[rippedoff]

I wouldn't leave any money in bank accounts. I wouldn't even have it direct deposited there because then they could just levy it everytime you get paid. You didn't say how much or if there was already a judgment. Check your specific rules. Some say that if the source is exempt, so is the account, if you can prove it. If it was me, I wouldn't take the chance that the judge will follow all the rules.

[Randall948]

"I wouldn't leave any money in bank accounts. I wouldn't even have it direct deposited there because then they could just levy it everytime you get paid. You didn't say how much or if there was already a judgment"

No no judgment yet as im 100% current....for now.

As to no DD I cant. My company categorically refuses to do checks for money saving reasons so I have to at least have it deposited until I can get it out.

As for levying every time I get pain I cant find anyone that knows for certain here how that works. Some magistrates ive talked to say they have to get a separate levy order for each event. Some say they can freeze it and get the money as it comes in.

In short, no one knows. Everyone THINKs they know but no one really knows how any of this works in practice. Ive talked to multiple judges and consumer lawyers and you get a different story every time

[Guest usctrojanalum]

The SSI funds that were exempt are exempt explicitly by statute. There is nothing in there that says "but if you think its fair do whatever you want". If this was not a case where the funds were mixed with non exempt funds then what that judge did was clearly illegal and Im outraged that other courts upheld it.

This would be like in my state where there isnt garnishment except for child support/back taxes and some judge just signed a garnishment order against me anyway because he thought it was "fair".

There really should be some way to punish a judge for clearly going counter to what statute says in my opinion.

Google "judicial discretion"