Bridget Posted August 17, 2016 Report Share Posted August 17, 2016 I'll try to explain my situation without it getting too long. In 2012, my son and my husband started a business. My husband and I took out a $5,000 personal loan for it. Apparently you can only get a small business loan if you can prove you don't need it, but that's another issue. Anyhow, the business failed, my husband abandoned it. My son was supposed to make the payments on this loan, as he still had the business. It took my husband and I a long time to get back on our feet and we came close to losing our home. We are finally pretty much recovered, but have little "extra" money after bills and needs are met. Fast forward, it turns out there was a problem with this loan, son didn't keep up the payments. They took my husband's truck, since it was collateral. I hoped that would be the end of it, but no, they figure we still owe them money. They sued us and have begun garnishing my wages. Apparently, we owe $2,650 including court costs. My husband is appealing it, which not sure there is really any grounds, but at least it may give us a few more weeks to figure out what to do. I contacted a lawyer to ask if it was too late to try to settle this for less. First he said it was really too late, but then he backtracked and said maybe. I am thinking of filing bankruptcy. Besides this, which we don't have money to pay, there is another debt from the business that may potentially come back to haunt us too. Also I have $5,000 worth of medical bills which I am only barely chipping away at, and we owe taxes from last year as well. I don't take bankruptcy lightly and I know our debts aren't huge compared to some people's. But I feel like I just can't start over again. Also, the lawyer said this garnishment could go on and on because it requires 25% interest. If we did file bankruptcy, that would stop the garnishment, right? Any help or advice out there? Quote Link to comment Share on other sites More sharing options...
nobk4me Posted August 18, 2016 Report Share Posted August 18, 2016 Yes, filing for bankruptcy will stop the garnishment. I don't understand the comment about requiring 25% interest. There is usually a limit of 25% of each paycheck that can be garnished. Bankruptcy should not be taken lightly. You could lose your home or other assets, depending on your state's exemptions and the amount of equity you have. Hopefully others will chime in here; each person's situation is different. BK may be a good option for you, or it may be better to live with the garnishment. It depends on your state's exemptions, and your assets and income. If you have too much income, you will be pushed into a Chapter 13. Quote Link to comment Share on other sites More sharing options...
Bridget Posted August 18, 2016 Author Report Share Posted August 18, 2016 The attorney I consulted said they are charging 25% interest, according to the court papers, and he said if we don't make a full payment, I will be paying for the rest of my life. He said he's had clients call him who have been paying these garnishments for ten years and the balance is higher than when they started. Quote Link to comment Share on other sites More sharing options...
shellieh98 Posted August 19, 2016 Report Share Posted August 19, 2016 I would go to the court and get a copy of the judgement. It will tell you what the interest is. Iowa has a max. rate of 5% unless a higher rate is agreed upon in writing. You won't get anywhere with an appeal, only if you were never served, then you would file a petition to vacate judgement. They would have to prove their case from scratch. If they vacate and dismiss, your sol may be up, but most the time the court will vacate, and you have to fight the case from there. 1 Quote Link to comment Share on other sites More sharing options...
Bridget Posted August 21, 2016 Author Report Share Posted August 21, 2016 Thanks. Quote Link to comment Share on other sites More sharing options...
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