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Bank Levy? This makes no sense to me

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  • #31
    Trevor,

    I have read all of your posts from this thread and the one you linked to. What I did not do was read the responses. I am sure that what I am about to write has already been mentioned in one way or the other.

    First and foremost you need to get the depression under control. While this is easy for me to say (write) and hard for many to understand, you are only dealing with money. Money comes and goes. Garbage happens, you deal with it, and then move on. You need to look at your situation in terms of making a business decision. Take the emotion out of it.

    Second, we do not live in a nation of debtor’s prisons (unless you owe back child support). You are not going to prison due to the failure to pay a creditor.

    Third, Arizona’s exemptions (outside of the bankruptcy context) will only protect 75% of your wages - before you receive them. As you know, 25% is subject to garnishment ONLY after a creditor sues you and gets a judgment. Prior to being garnished you will be given the opportunity to ask the judge to reduce the amount down to 15%. As to the funds in a bank, once you deposit the paycheck that is what they are (funds sitting in a bank account) and they are subject to a bank levy ($300 is protected). There is case law directly on this point.

    Fourth, you cannot hide assets. If a creditor obtains a judgment the creditor will require your attendance at a judgment debtor’s exam. The creditor, if smart, will ask the correct questions regarding what you did with the money you had in the bank and/or your paycheck (if you are working). You will be under oath and therefore cannot lie. The transfer of the funds from the bank to a pre paid card will come out and the pre paid card will be taken from you. Alternatively, you will have to get the funds from under your mattress.

    Fifth, if you file bk you want to do so before you get a good paying job. If you earn too much you may not qualify for a Chapter 7.

    This is very important - Please note that since you have not been living in Arizona for two full years you will not be using Arizona exemptions in the bankruptcy. You will either be using NY exemptions or Federal exemptions. You can only use NY exemptions if that state allows “extra territorial” use of its exemptions. I do not know if someone living outside of that State of NY can use that State’s exemptions. If you are unable to utilize NY exemptions you will be using Federal exemptions. You need to look into this because - the funds you have ($8,000.00) may very well be exempt for bankruptcy purposes only, either under NY law or under Federal law. NY has a cash exemption of at least $5,525 if you are not claiming a homestead. Federal has a wild card that could be as much as $13,000.00.

    Sixth, the bankruptcy trustee is not going to care what you put on the loan application for the vehicle unless that application lists some valuable asset like a Fabergé Egg (had that once in a case we were hired for damage control). The only one who will care is the lender and proving that the lender relied upon what you put in the application is next to impossible so the lender is most likely not going to raise an issue.

    Seventh, as to keeping the vehicles, my recommendation is to let the lease and truck go but keep the motorcycle since its payment is minimal. Personally I dislike motorcycles but, in your situation, it is a minimal payment and makes sense to keep for now.

    Your next step is to sit down with a local attny. Consultations are free. Make sure the attny knows about the $8k and the fact that Arizona exemptions will not apply.

    Hope this helps.

    Des.

    Comment


    • #32
      Originally posted by despritfreya View Post
      Trevor,

      I have read all of your posts from this thread and the one you linked to. What I did not do was read the responses. I am sure that what I am about to write has already been mentioned in one way or the other.

      First and foremost you need to get the depression under control. While this is easy for me to say (write) and hard for many to understand, you are only dealing with money. Money comes and goes. Garbage happens, you deal with it, and then move on. You need to look at your situation in terms of making a business decision. Take the emotion out of it.

      Second, we do not live in a nation of debtor’s prisons (unless you owe back child support). You are not going to prison due to the failure to pay a creditor.

      Third, Arizona’s exemptions (outside of the bankruptcy context) will only protect 75% of your wages - before you receive them. As you know, 25% is subject to garnishment ONLY after a creditor sues you and gets a judgment. Prior to being garnished you will be given the opportunity to ask the judge to reduce the amount down to 15%. As to the funds in a bank, once you deposit the paycheck that is what they are (funds sitting in a bank account) and they are subject to a bank levy ($300 is protected). There is case law directly on this point.

      Fourth, you cannot hide assets. If a creditor obtains a judgment the creditor will require your attendance at a judgment debtor’s exam. The creditor, if smart, will ask the correct questions regarding what you did with the money you had in the bank and/or your paycheck (if you are working). You will be under oath and therefore cannot lie. The transfer of the funds from the bank to a pre paid card will come out and the pre paid card will be taken from you. Alternatively, you will have to get the funds from under your mattress.

      Fifth, if you file bk you want to do so before you get a good paying job. If you earn too much you may not qualify for a Chapter 7.

      This is very important - Please note that since you have not been living in Arizona for two full years you will not be using Arizona exemptions in the bankruptcy. You will either be using NY exemptions or Federal exemptions. You can only use NY exemptions if that state allows “extra territorial” use of its exemptions. I do not know if someone living outside of that State of NY can use that State’s exemptions. If you are unable to utilize NY exemptions you will be using Federal exemptions. You need to look into this because - the funds you have ($8,000.00) may very well be exempt for bankruptcy purposes only, either under NY law or under Federal law. NY has a cash exemption of at least $5,525 if you are not claiming a homestead. Federal has a wild card that could be as much as $13,000.00.

      Sixth, the bankruptcy trustee is not going to care what you put on the loan application for the vehicle unless that application lists some valuable asset like a Fabergé Egg (had that once in a case we were hired for damage control). The only one who will care is the lender and proving that the lender relied upon what you put in the application is next to impossible so the lender is most likely not going to raise an issue.

      Seventh, as to keeping the vehicles, my recommendation is to let the lease and truck go but keep the motorcycle since its payment is minimal. Personally I dislike motorcycles but, in your situation, it is a minimal payment and makes sense to keep for now.

      Your next step is to sit down with a local attny. Consultations are free. Make sure the attny knows about the $8k and the fact that Arizona exemptions will not apply.

      Hope this helps.

      Des.
      Thank you very much for the details. The main reason I'm holding onto this cash I have is because soon I'm going to have to pay a 10% penalty for taking out my Pension early. It's basically 10% of $35,000 so $3,500. I know they can't discharge taxes, or IRS stuff, that's why I gotta pay that at tax time or when the IRS sends me a letter.

      Would it be better for me to just move back to NY in a few months then do all this Chapter 7 stuff there?

      Currently I'm waiting on AT&T for an interview, this job would pay a lot, and I would get a 2nd job and just pay off this debt by working my butt off. But if that falls through I'm screwed, and would have to take a crap job just to pay rent...or ask someone back home for a room for rent.

      All this legal stuff does have me depressed and a nervous wreck, I can't help it I drink at night to fall asleep.

      Comment


      • #33
        You know that you can pay "estimated" taxes by using the 1040-ES form? You can do that at anytime if you want to prepay the tax on the $35K early withdrawal.
        Chapter 7 (No Asset/Non-Consumer) Filed (Pro Se) 7/08 (converted from Chapter 13 - 2/10)
        Status: (Auto) Discharged and Closed! 5/10
        Visit My BKForum Blog: justbroke's Blog


        I am not an attorney. Any advice provided is not legal advice.

        Comment


        • #34
          Originally posted by justbroke View Post
          You know that you can pay "estimated" taxes by using the 1040-ES form? You can do that at anytime if you want to prepay the tax on the $35K early withdrawal.
          Yeah Fidelity already withheld 20% Federal taxes, but they said I "may" have to pay that 10% Penalty in 2018. The thing is, I'm not sure if the penalty is considered tax? I'm gonna go to an Accountant in 2018. Hell, I wonder if I'll actually get back some of that 20% tax they withheld to help me pay down some of this debt and put money towards a Lawyer when I'm ready to file Chapter 7. I'm researching and in Arizona it's around $2,000 total for the lawyer fee and filing fee's....if it goes smoothly.

          Comment


          • #35
            Originally posted by Trevor View Post
            Yeah Fidelity already withheld 20% Federal taxes, but they said I "may" have to pay that 10% Penalty in 2018.
            They say "may" because there are some exceptions to the 10% penalty tax on early withdrawals. One of the ways to escape the penalty is that you're over 59.5 years old or it was due to a divorce (there are other reasons as well). Taking out the money early because you left the employ of a company, without satisfying any of the exceptions, means that you 'will" have to pay the 10% penalty.

            Chapter 7 (No Asset/Non-Consumer) Filed (Pro Se) 7/08 (converted from Chapter 13 - 2/10)
            Status: (Auto) Discharged and Closed! 5/10
            Visit My BKForum Blog: justbroke's Blog


            I am not an attorney. Any advice provided is not legal advice.

            Comment


            • #36
              You asked about filing in NY. I see no need to wait if you want to get it over with. If you move back to NY you will have to wait 91 days before you can file since you have not been in that district for the better part of 180 days. I want you to talk to a bk attny now so that you get a comfort level. No reason not to since the consultation will be FREE.

              Des.

              Comment


              • #37
                Originally posted by despritfreya View Post
                You asked about filing in NY. I see no need to wait if you want to get it over with. If you move back to NY you will have to wait 91 days before you can file since you have not been in that district for the better part of 180 days. I want you to talk to a bk attny now so that you get a comfort level. No reason not to since the consultation will be FREE.

                Des.
                Yeah I was reading some reviews of attorneys near me, I have to talk to one. The only thing that's got me thinking is the money I have in my checking account, the $9,000...I'm pretty sure he/she would tell me I have to wait longer to file, but then again I'm unemployed, I don't know what would be the deal.

                The other PRESSING matter is that I haven't payed 3 months on my Ford Lease, it can get repo'd any day now. Should I pay the 3 months ($1,500) to get the lease Current? So it buys me more time that it won't get repo'd? Ford is leaving me voicemail's 3 times a day, it's a recorded message.

                Comment


                • #38
                  It will take Ford months before it sues you for the balance due under the contract and if and when it does you file an Answer and that delays the process even further. Why throw your money out?

                  As to the money in the bank, remember, if you file bk you will not be using Arizona exemptions. Make sure any attny in AZ you talk to understands that and advises you properly as it relates to whether or not all or a portion of the funds can be protected.

                  Des.

                  Comment


                  • #39
                    Originally posted by despritfreya View Post
                    It will take Ford months before it sues you for the balance due under the contract and if and when it does you file an Answer and that delays the process even further. Why throw your money out?

                    As to the money in the bank, remember, if you file bk you will not be using Arizona exemptions. Make sure any attny in AZ you talk to understands that and advises you properly as it relates to whether or not all or a portion of the funds can be protected.

                    Des.
                    Thanks, yeah I will definitely mention that about the exemptions. I tried to look up info on it, but couldn't find anything saying I can use NY exemptions, I probably didn't look hard enough. I trust you and thank you dearly. This is the first time I'm gonna be alone, nerves wrecked on New Years.

                    Happy New Year in advance!

                    Comment


                    • #40
                      Trevor, as Des has told you above -- it sounds like you will be able to hold on to *at least* $5,525 in cash. Attorney fees will cost you ~$2,000. You say you have $9,000. That only leaves about $1,500 that you would "need" to spend... and let's not forget that penalty which "may" eat up some of that. I spell all of this out to say: NO, don't give money to Ford if your intention is to file and let the vehicle go. That would just be money right down the toilet.

                      Enjoy your New Year's as best you can. Then, please, don't delay. Get in for some free consultations with attorneys right away. I know it feels like a big step -- but there is NO obligation, and you WILL feel better talking to someone, in person, who deals with bk every day of their lives. Then -- get your taxes done as soon as you can, so you know where you stand and what you owe. This will all come together, everything will fall into place, but you've got to get more information & guidance so you can best decide how to proceed.

                      Comment


                      • #41
                        Originally posted by Chrysalis View Post
                        Trevor, as Des has told you above -- it sounds like you will be able to hold on to *at least* $5,525 in cash. Attorney fees will cost you ~$2,000. You say you have $9,000. That only leaves about $1,500 that you would "need" to spend... and let's not forget that penalty which "may" eat up some of that. I spell all of this out to say: NO, don't give money to Ford if your intention is to file and let the vehicle go. That would just be money right down the toilet.

                        Enjoy your New Year's as best you can. Then, please, don't delay. Get in for some free consultations with attorneys right away. I know it feels like a big step -- but there is NO obligation, and you WILL feel better talking to someone, in person, who deals with bk every day of their lives. Then -- get your taxes done as soon as you can, so you know where you stand and what you owe. This will all come together, everything will fall into place, but you've got to get more information & guidance so you can best decide how to proceed.
                        Thanks for all of your advice. I definitely plan on speaking to attorneys this week, in fact I'm gonna map out and write down everything to get them up to speed. I will certainly make sure the attorney knows about that NY exemption, being that I've only been in Arizona less than a year. Happy New Year!

                        Comment


                        • #42
                          Originally posted by Trevor View Post
                          The other PRESSING matter is that I haven't payed 3 months on my Ford Lease, it can get repo'd any day now. Should I pay the 3 months ($1,500) to get the lease Current? So it buys me more time that it won't get repo'd? Ford is leaving me voicemail's 3 times a day, it's a recorded message.
                          No, you should not pay Ford Credit anything more toward this lease. You need that money to live on! Furthermore, you have already made the decision to let this car go, and you have already purchased a replacement vehicle. If you are no longer driving the car, you might as well cancel the insurance on it, unless the cost savings are minimal. (For example, I own two older cars, and insuring both of them together costs about $700 every 6 months; if I got rid of one, I'd be paying about $600 every 6 months.)

                          Once Ford Credit repossesses the car, which may take weeks or months to happen, they will have to store it for a certain amount of time, send it to an auctioneer, and have it sold. Then, they have to contact you for payment of the deficiency, which would typically be done by sending a demand letter, and having a debt collector call you. They would certainly wait some time after that in order to see if you are willing to pay or make payments on the debt. It is highly unlikely that they will sue anytime soon, especially since Arizona law gives them 6 years from the date of default to do so. (The only creditor which sued me--Discover Bank--waited 3 and a half years to do so, perhaps to allow the balance to grow with interest and fees; perhaps to allow time for my finances to improve so that I could pay a judgment.)

                          At this point, your focus should be on two things only--finding a job that pays enough to cover your living expenses, and finding ways to reduce monthly costs. Getting rid of unnecessary vehicles, and eliminating the loan payments and insurance costs should be your priority. I look on Craigslist all the time, and you would be amazed how many decent, running cars can be had for less than $3000, some for less than $2000. I have never bought a car with a loan, and almost always found the repair and maintenance costs on an old car to be FAR cheaper than the loan payments on a new(er) car.

                          Comment


                          • #43
                            bcohen, that's excellent advice and I couldn't have said it any better.
                            Chapter 7 (No Asset/Non-Consumer) Filed (Pro Se) 7/08 (converted from Chapter 13 - 2/10)
                            Status: (Auto) Discharged and Closed! 5/10
                            Visit My BKForum Blog: justbroke's Blog


                            I am not an attorney. Any advice provided is not legal advice.

                            Comment


                            • #44
                              Originally posted by bcohen View Post

                              No, you should not pay Ford Credit anything more toward this lease. You need that money to live on! Furthermore, you have already made the decision to let this car go, and you have already purchased a replacement vehicle. If you are no longer driving the car, you might as well cancel the insurance on it, unless the cost savings are minimal. (For example, I own two older cars, and insuring both of them together costs about $700 every 6 months; if I got rid of one, I'd be paying about $600 every 6 months.)

                              Once Ford Credit repossesses the car, which may take weeks or months to happen, they will have to store it for a certain amount of time, send it to an auctioneer, and have it sold. Then, they have to contact you for payment of the deficiency, which would typically be done by sending a demand letter, and having a debt collector call you. They would certainly wait some time after that in order to see if you are willing to pay or make payments on the debt. It is highly unlikely that they will sue anytime soon, especially since Arizona law gives them 6 years from the date of default to do so. (The only creditor which sued me--Discover Bank--waited 3 and a half years to do so, perhaps to allow the balance to grow with interest and fees; perhaps to allow time for my finances to improve so that I could pay a judgment.)

                              At this point, your focus should be on two things only--finding a job that pays enough to cover your living expenses, and finding ways to reduce monthly costs. Getting rid of unnecessary vehicles, and eliminating the loan payments and insurance costs should be your priority. I look on Craigslist all the time, and you would be amazed how many decent, running cars can be had for less than $3000, some for less than $2000. I have never bought a car with a loan, and almost always found the repair and maintenance costs on an old car to be FAR cheaper than the loan payments on a new(er) car.
                              That gives me a bit of relief, thank you, thanks to ALL of you guys here. As it stands right now, every credit card is current, so is my truck payment and motorcycle payment.....but I'm gonna stop payment pretty much in January, because I see Chapter 7 happening pretty soon. Gonna talk to some attorneys this week.

                              There's a bunch of walk-to jobs around me, paying min wage. Hell I'll take 2 jobs just to pay my rent and food. Realistically I would also want to get rid of my truck and motorcycle, I'm DONE with payments. I never want to finance or lease anything EVER AGAIN. All these years, leasing and financing cars, I could have driven a beater car and had $100,000 in the bank right now.

                              I can't wait to let the attorney face drop when I show him I have 3 vehicles with 3 loans and I'm out of work, he's probably gonna decline my case lol. But then again, through my research, my debt story is bad but there are others that had it MUCH worse.

                              Comment


                              • #45
                                Trust me, Trevor, when I say that the attorneys have seen and heard it all. I had over $1.3 million in property... so... not even the Trustee batted an eyelash as there are others in much worse financial condition that we mere mortals. Remember that many, millionaires, billionaires, States, large companies, and even luminaries have all filed bankruptcy; including some former presidents.
                                Chapter 7 (No Asset/Non-Consumer) Filed (Pro Se) 7/08 (converted from Chapter 13 - 2/10)
                                Status: (Auto) Discharged and Closed! 5/10
                                Visit My BKForum Blog: justbroke's Blog


                                I am not an attorney. Any advice provided is not legal advice.

                                Comment

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