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Handling Defiency Judgement Auto repo from '09 Americredit/GM FinancialNewbie Questions


Rasheedab
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I had an auto repossed where I voluntarily submitted vehicle in '09 when I lived in Illinois and immediately moved out of state to Louisiana to remarry.  I never did anything about my credit as I believed it was beyond repair and was just careful not to let my husband inherit any of my old debts.  We are considering purchasing a house soon and when we started the process in 2012 we considered just applying for a mortgage in his name only since only he had documented income.  Now we live in Texas, a community property state, and leaving my name off is not an option but most of my old negative credit has aged off of my credit report.  I have a few old collection accounts which I intend to handle with DV or PFD and the Judgement left to deal with.  While I had considered trying to settle i wonder now if I have grounds to vacate.

 

I was never served as I immediately moved out of state and IL process service requirements require that I was1) personally served 2) Someone in my household served with summons addressed to me following.  My mother owned the house and never mentioned that she was personally served on my behalf so I assume there was no personal service though there could have been mail.  Not having notice of Summons for the Judgement I also received no notice of intent to sale the vehicle so that means I had no opportunity to redeem it. I have no idea what they sold the car for but with a Judgement of $5434.50 at the time of filing I have to assume the sale was not reasonable as they didn't get fair market value for the vehicle.  Am I understanding correctly that if the sale was not reasonable they are not allowed to come after me for the defiency amount? 

 

I have been pretty much judgement proof as I haven't work outside the home and kept no money in bank accounts.  Until recently, we had no joint accounts. It has been 5 years and they have not renewed the judgement but I don't want to wait another 5yrs for this to age itself off my credit report and I don't want to be barred from qualifying for a mortgage until then.  What is the best way to handle this?  How hard do you think my case would be to prove? Has anyone had success with Americredit (now GM Financial) with vacating or negoiating a settlement after so long a dead account?

 

Thanks

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I had an auto repossed where I voluntarily submitted vehicle in '09 when I lived in Illinois and immediately moved out of state to Louisiana to remarry.  I never did anything about my credit as I believed it was beyond repair and was just careful not to let my husband inherit any of my old debts.  We are considering purchasing a house soon and when we started the process in 2012 we considered just applying for a mortgage in his name only since only he had documented income.  Now we live in Texas, a community property state, and leaving my name off is not an option but most of my old negative credit has aged off of my credit report.  I have a few old collection accounts which I intend to handle with DV or PFD and the Judgement left to deal with.  While I had considered trying to settle i wonder now if I have grounds to vacate.

 

I was never served as I immediately moved out of state and IL process service requirements require that I was1) personally served 2) Someone in my household served with summons addressed to me following.  My mother owned the house and never mentioned that she was personally served on my behalf so I assume there was no personal service though there could have been mail.  Not having notice of Summons for the Judgement I also received no notice of intent to sale the vehicle so that means I had no opportunity to redeem it. I have no idea what they sold the car for but with a Judgement of $5434.50 at the time of filing I have to assume the sale was not reasonable as they didn't get fair market value for the vehicle.  Am I understanding correctly that if the sale was not reasonable they are not allowed to come after me for the defiency amount? 

 

Did you update your new address w/ the finance company so they could send you the intent to sell?  If they sent it (and can prove it) and you didn't get it they fulfilled their portion of the law.  "The dog ate the mail" doesn't usually fly.  They're also not required to get "fair market value", they are required to sell it in a "commercially resonable manner" and pretty much any public or private auction qualifies, after that, it's in the hands of the autioneer.

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Reading over your post again, I'd like to clarify something:

 

Is the auto repo suing you or are they already past that & you have a Judgement against you for it? 

 

I only ask because if they've got a Judgement then the whole, "intent to sell" letter and "commercially reasonable manner" defenses are irrelevant.

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I can't really answer that, what's the expiration on judgements in IL & TX, I know you said it hasn't been renewed yet but is it renewable?  Do you plan on continuing to be judgement proof or if they take a peek at your credit are they going to see signs that you're planning on rejoining the grid?

 

With judgements, the creditor has the leverage.  If it's renewable and you plan on buying a house soon, then they have no incentive to take less.  If it's close to expiring and can't or probably won't be renewed then it might be more beneficial wait it out.

 

Only you can make that call though.

Edited by Rogue198
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yes they already have the judgement.  I guess then my only option is to try PFD?  What percentage would you offer for a 5yr old judgement when I've been judgement proof?

 

First:  you are not judgment proof because they have one.  That is an incorrect colloquialism for being COLLECTION proof.  While they may not have been able to collect up until now clearly you are solvent and able to pay if you are considering purchasing a home.  That greatly reduces your leverage.

 

The reason they have not renewed the judgment is because in IL judgments are good for 20 years.  They have 15 more years to collect on it before having to renew.  If they domesticate in Texas the IL SOL of 20 years still applies since that is the court that issued the judgment.  Adding to the insult of the judgment is the post judgment 8% interest that IL allows for which adds another $3,000 to the amount over five years which equates to that judgment now being worth about $7985.  

 

You can always make an offer but if it is not at least half I would expect them to reject it.  If you have already pre-applied for a mortgage your odds are almost zero that they settle for less than the full amount.  This is because creditors pay the bureaus to notify them when certain consumers who owe them money apply for new mortgages, car loans, or credit cards.  This lets them know when you are rebuilding and they can collect.  They are acutely aware that as long as their judgment reports you cannot get underwritten for a loan so therefore you have to pay.  

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Thanks to all who have replied.  @Rogue198 you are correct that my credit report may indicate I am planning on rejoining the grid. All my current credit cards are opened within the past 2 years though they are secured cards with the exception of 1 unsecured.  I don't plan on getting a "job"as my husband is the primary income earner in our household though I am self-employed.  I work part time from home and am paid through an LLC I created and I don't see that changing in the foreseeable future.  the creditor may have seen loan applications that have been denied.  I have applied for a debt consolidation loan roughly equal to the amount of the judgement in which I offered my vehicle I own free and clear as collateral.  I didn't realize I can't even be approved for secured loans through my credit union until my judgement is satisfied.  Of course, I could just ask my husband for the funds to settle the debt but I wanted to fix it on my own without taken funds out of my household to do it.  Though I have been collection proof in the past, after five years being remarried it is hard to keep completely separate finances from my husband and we now have one joint account that may not be collection proof.  I expect we will have more joint accounts in the very near future.  Future mortgage or not, I am concerned that they can just take the money the hard way and then the judgement still doesn't come off my credit report but remains there as paid.  @ Clydesmom I think I will offer them  a settlement of at least half.  Would you say that it is unlikely since I have recently applied for debt consolidation loans?  Has anyone had experience with getting Americredit (Now GM Financial) to agree to settle for less than full balance after a judgement?  Do I have to bite the bullet and pay it all at once or are they likely to take payments? Do I contact the lawyer who handled the judgement or the OC?  I seem to be in oover my head but I want to get this fixed as soon as possible.

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You're in Texas, which is a community property state. Your problems are now his problems unless yours happened prior to marrying him. That being the case, then you might have a way out with your husband buying the home in his name only, and having an attorney write it up to protect the property from the judgment. But, only if your problems were before this marriage. It might work.

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Future mortgage or not, I am concerned that they can just take the money the hard way and then the judgement still doesn't come off my credit report but remains there as paid.  

 

That could happen even if they agree to settle.  You cannot force a creditor to agree to PFD and many have a hard line policy against doing them.  

 

Would you say that it is unlikely since I have recently applied for debt consolidation loans? 

 

No it isn't unlikely.  Debt consolidation loans are not uncommon and being denied for one shifts the leverage slightly in your favor.

 

Do I have to bite the bullet and pay it all at once or are they likely to take payments? Do I contact the lawyer who handled the judgement or the OC? 

 

If you want to settle for less than owed you need the lump sum payment.  If you want to make payments then they will want the full amount due to the risk of another default.  

 

You would contact the lawyer who handled the judgment to start with.

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Speaking again from my collection experience, I will add this:  Remember whomever throws out the first number in any negotiation loses.  I.e. If you start @ 50%, you'll end up paying 60%+.  And frankly, with a judgement, they have no incentive to go lower to counter you.  You might also keep the source of funds disguised (i.e. borrowing from family rather than "my husband's paycheck").

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No bug, I wouldn't be here commenting if I found it bothersome. 

 

If by phone then record the conversations (and you have to let them know that you are) and get everything agreed to in writing BEFORE make/sending payment.  That would be the quickest way to resolve.  When you make your payment, I personally am not opposed to check by phone or debit card though some others here are fanatically opposed to it and would say only do money order or certified bank check.  Your call.

 

If you want to go by mail, make sure you do it certified mail return reciept (CMRR) & keep in mind that will take way more time & will give said attorney a good address to (if negotiations fall through) domesticate to.

Edited by Rogue198
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Thank you!  Just curious based on your last comment can someone serve a PO box?? I live in a rural area where there is no mail delivery direct to the home so on the CMRR's I sent DV letters yesterday my return was my PO Box.  They could probably just pull my actual physical addy from my credit report anyways though.

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Thank you!  Just curious based on your last comment can someone serve a PO box?? I live in a rural area where there is no mail delivery direct to the home so on the CMRR's I sent DV letters yesterday my return was my PO Box.  They could probably just pull my actual physical addy from my credit report anyways though.

 

I forgot they already got a judgement, it will give them your current state of residence to domesticate the judgement to.  (which I edited to, sorry)

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SO confused!  I must admit the more I learn/read the more confused I get.  When you say a new address to domestic to, does that mean I could end up with 2 judgements or my CR for the same debt????  Also I am reading that the first one who offers a number loses in debt settlement because itis just the starting point for a negotiation and the creditor is always going to ask for more than that number.  So should I offer less than 50% knowing they are going to argue me up for more?  Should I even include an offer in my first letter or just word in vaguely to see if they are agreeable to settling?

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Oh, and one other point for your letter/call.

 

Don't put yourself over the barrel for them.  Don't say, "I want to settle this so I can get it off my credit & buy a house."  Play dumb, "I was unaware and only recently learned about this judgement, what would you accept in order to settle it?"

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If I remember right, they can not garnish your bank account in TX, but they can do other things. Texas has a lot of protection against the creditor. Look up and review the credit laws of TX also the TFC 392 might have some help, think you will need to look in to the other laws on the books too.

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If I remember right, they can not garnish your bank account in TX, but they can do other things. Texas has a lot of protection against the creditor. Look up and review the credit laws of TX also the TFC 392 might have some help, think you will need to look in to the other laws on the books too.

 

They can levy a bank account in Texas.  They cannot garnish wages.  

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I thought I recalled something about bank accounts being protected. Will have to go back into my records to see what it was.

 

OKAY, here is some info that may or may not help. What will hurt you is that Texas is a community property state. Did all this happen before you got married this time???

 

I did have it backwards. Here is the correct info:

 

Texas law limits the amount that a creditor can garnish (take) from your wages for repayment of debts. The Texas wage garnishment laws (also called wage attachments) are even stricter than federal wage garnishment laws. In Texas, your wages may not be garnished by creditors except for child support, alimony, taxes, and student loans.

Read on to learn about wage garnishment law in Texas.

What Is a Wage Garnishment?

 

A wage garnishment or wage attachment is an order from a court or a government agency that is sent to your employer. It requires your employer to withhold a certain amount of money from your paycheck and then send this money directly to your creditor.

Different garnishment rules apply to different types of debt -- and there are legal limits on how much of your paycheck can be garnished.

To learn more about how wage garnishments work, how to object to a wage garnishment, and more, see our Wage Garnishment and Attachment topic.

When Can a Creditor Garnish Your Wages in Texas?

Most creditors are not allowed to garnish your wages in Texas. However, there are a few exceptions to this rule. Your wages can be garnished for:
•unpaid income taxes
•court ordered alimony and child support, and
•defaulted student loans.

Limits on Wage Garnishment in Texas

 

There are limits to how much money can be garnished from your paycheck. The idea is that you should have enough left to pay for living expenses.

Federal law places limits on wage garnishment amounts. However, as discussed, Texas prohibits wage garnishment entirely for most debts. But your wages can still be garnished to satisfy debts for child support, alimony, taxes, and student loans. Also, keep in mind that creditors may still be able to levy or seize your other assets, such as bank accounts, even if they can’t garnish your wages.

 

Further, if you work for an out-of-state company or receive your wages from a source outside of Texas, a creditor may be able to domesticate its judgment in that state and still garnish your wages.

 

Special Limits for Child Support, Student Loans, and Unpaid Taxes

If you owe child support, student loans, or taxes, the government or creditor can garnish your wages without getting a court judgment. The amount that can be garnished is different too.

 

Child Support

 

Since 1988, all court orders for child support include an automatic income withholding order. The other parent can also get a wage garnishment order from the court if you get behind in child support payments. (To learn about income withholding orders and other ways child support can be collected, see Child Support Enforcement Obligations.)

 

In Texas, up to 50% of your disposable earnings may be garnished to pay domestic support obligations such as child support or alimony. (Learn more about wage garnishment for child support arrears.)

 

Under Texas law, “disposable earnings” are those wages left after your employer has made the deductions required by law (such as taxes) as well as for union dues, nondiscretionary retirement deductions, and medical, hospitalization, and disability insurance for you and your children.

Student Loans in Default

 

If you are in default on a federal student loan, the U.S. Department of Education or any entity collecting for this agency can garnish your wages without first getting a court judgment – this is called an administrative garnishment. The most that the Department of Education can garnish is 15% of your disposable income, but not more than 30 times the minimum wage. To learn more, see the articles in Student Loan Debt.

Unpaid Taxes

 

The federal government can garnish your wages if you owe back taxes, even without a court judgment. The amount it can garnish depends on how many dependents you have and your deduction rate.

 

States and local governments may also be able to garnish your wages to collect unpaid state and local taxes. Contact your state labor department to find out more. (You will find a link to your state labor department below.)

Total Amount of Garnishment

 

If you have more than one domestic support garnishment, the total amount that can be garnished is still limited to 50% of your disposable earnings.

Restrictions on Job Termination Due to Wage Garnishments

 

Complying with wage garnishment orders can be a hassle for your employer; some might be inclined to terminate your employment rather than comply with the order. State and federal law provides some protection for you in this situation.

 

According to federal law, your employer cannot discharge you if you have one wage garnishment. However, federal law won’t protect you if you have more than one wage garnishment order.

 

Some states offer more protection for debtors. In Texas, your employer cannot fire, discipline, or refuse to hire you because of your wage garnishment.

For More Information on Texas Wage Garnishment Laws

 

To find more information about wage garnishment limits in Texas, including the procedures that employers must follow in carrying out wage garnishment orders, check out the website of the Texas Workforce Commission at www.twc.state.tx.us or the Texas Attorney General at www.oag.state.tx.us.

 Under Tex. Civil Practice and Remedies Code 63.001 and Rule 657 T.R.C.P., a judgment-creditor can have a "writ of garnishment" issued as soon as they have a judgment against you (even earlier in limited circumstances) if they swear that you have no other property subject to execution (seizure) in the State of Texas.

Our exemptions in Texas are so liberal, many people have no non-exempt assets to speak of so you may meet this qualification. ------------------------------

No, you are not given notice that a writ of garnishment is being issued. The way it works is, suddenly you get notice from your bank that your account has been garnished, your checks bounce, you cannot get to your money, and it is a real mess.

 

Wages are exempt from garnishment in Texas, but once you put the money in the bank, it is not considered wages anymore and your money can be seized. Actually it is frozen pending a hearing, but the hearing is usually perfunctory; and the judgment-creditor and your bank are entitled to attorney fees for their trouble in dealing with the writ.

 

If you have a judgment against you, I don't suggest that you keep your money in a bank account, as it is subject to garnishment at anytime.

I recommend that you consult an attorney about your options, which include (1) living with the judgment; (2) paying off the judgment; (3) settling the judgment with a lump sum or payments; (4) bankruptcy. 

-------------------------------------------

Creditors have to wait until 30 days after the judgment to get a writ of execution at which point they will try and levy your bank account.

--------------------------------------------

 

 Here's Texas law straight from a Texas collection Attorney:

 "It's important to understand that once you deposit your paycheck into your bank, it's no longer considered wages. In fact, once it's in your bank, it's fair game and a judgment creditor can have a Writ of Garnishment issued from the Court, which freezes those funds. You have the right to a hearing, but normally the money ends up going to the creditor. If you have checks out on those funds, it's just too bad, the checks bounce. It's a mess.

Therefore, it's not a good idea to have money in a bank account if you have a judgment against you. It could be garnished."

=========================================================

This may be a double of what I have above:

PROPERTY CODE
 § 42.001. PERSONAL PROPERTY EXEMPTION. (a) Personal property, as described in Section 42.002, is exempt from garnishment, attachment, execution, or other seizure if:
 (1) the property is provided for a family and has an
 aggregate fair market value of not more than $60,000, exclusive of the amount of any liens, security interests, or other charges encumbering the property; or
 (2) the property is owned by a single adult, who is not a member of a family, and has an aggregate fair market value of not more than $30,000, exclusive of the amount of any liens, security interests, or other charges encumbering the property.
 (B) The following personal property is exempt from seizure and is not included in the aggregate limitations prescribed by Subsection (a):
 (1) current wages for personal services, except for the enforcement of court-ordered child support payments;
 (2) professionally prescribed health aids of a debtor or a dependent of a debtor; and
 (3) alimony, support, or separate maintenance received or to be received by the debtor for the support of the debtor or a dependent of the debtor.
 © This section does not prevent seizure by a secured creditor with a contractual landlord's lien or other security in the property to be seized.
 (d) Unpaid commissions for personal services not to exceed 25 percent of the aggregate limitations prescribed by Subsection (a) are exempt from seizure and are included in the aggregate.

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Did you update your new address w/ the finance company so they could send you the intent to sell?  If they sent it (and can prove it) and you didn't get it they fulfilled their portion of the law.  "The dog ate the mail" doesn't usually fly.  They're also not required to get "fair market value", they are required to sell it in a "commercially resonable manner" and pretty much any public or private auction qualifies, after that, it's in the hands of the autioneer.

Rogue, other people keep telling me the best way to handle my judgement is to file a motion to vacate.  I was rereading your post and you say if the creditor can prove they sent a summons the dog ate the mail doesn't fly.  IL statute requires me to have been served in person and I was not.  Alternately they can have served a person in my household so long as a certified return receipt summons addressed to me had followed.  Neither of these happened.  Does that change your opinion on whether or not a motion to vacate is a waste of time for me?  I mentioned previously about no notice/records of sale because this site says to include the defense you would have presented were you present for the judgement hearing. http://www.creditinfocenter.com/legal/VacatingJudgments.shtml Just to be clear, I am not hoping to get off from this debt free and clear but since they didn't follow the letter of the law and have no proof of service I am hoping that they will at least offer to settle with me and if so I can request them to dismiss the lawsuit themselves as condition of settlement.  I plan on paying my debt but a paid judgement still doesn't look great on a credit report; definitely not as good as no judgement at all.  Even if it's a long shot, isn't it worth a shot???

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Just my thought, but first step to me is to get the court file from Illinois court and review that information, to see what is in the file.

 

 

Then make decisions on how to proceed...

 

Being out of state, you might have to pay a couple hundred bucks to have an attorney's legal assistant pull and copy the file.  I doubt the court clerks provide this service, but you can certainly call and ask.  Or if you still have friends in the area, you could get one to go pull the file and copy and send to you...

 

I would want to be fully informed with as much information prior to making offers to settle or pay of the like..

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