Complicated situation, could really use some advice.

[trader19]

1. Already filed C7. 16 months until I can file again.

2. I have a $3,000,000 SEC judgement that has been passed over to the Treasury. This cannot be discharged and they have made one collection call recently. While they have not said they will garnish my wages, they said they can. This debt is a few years old and they haven't seemed to move too fast in collecting it.

3. I am a school teacher making about $80k a year, I will not be able to pay the $3M in this lifetime.

4. I have about $35k in unsecured debt and $100k in student loan debt. I also have $40k in combined unsecured debt with my wife. Half of the $35k is in a debt management plan $500/mth. The other half runs me about $500 more per month. The student loan debt is deferred for another year. I am currently on time with all my payments.

5. I have no assets, I lease my car and live with relatives. Also have two young kids.

6. I have no concern about my credit (it sucks anyway). I am going to rely on my wife's credit.

So, my questions are:

1. Should I just stop making my unsecured debt payments? Instead, use that money to pay down my combined debt with my wife. Essentially save her and fall on the sword myself? My concern is that I pay off the $35k and then they end up garnishing my wages for the $3M anyway. That would seem like a waste of payments only to have $3M tacked on after paying of $35k.

2. In 16 months, I can at least get rid of the $35K with a C7 if the $3M is never enforced. However, If the $3M is enforced via wage garnishment, my feeling is just never pay anything and let it all go to hell. They can all fight over the same 25% for the rest of my life. Is that logical thinking?

3. My concern is also that my ability to file for another C7 is still 16 months away. How long would it take for the unsecured debt (if I stop paying now) to sue me? Would my school district get embarrassing debt collection phone calls on my behalf?

I am strictly thinking about the best way to protect as much money as I can. I have a feeling that at some point, that $3M will be enforced via wage garnishment. Although, it hasn't happened yet. But if it does, then I feel all payments I'm making now are wasted. Might as well just tack it on to the ridiculous sum of $3M and instead focus all payments to my combined debt with my wife and get that knocked out.

Could really use some strategy advice from you!!!! Thanks in advance!!!!

[justbroke]

First, I'm sorry to read that it has come down to this. I mean, kick a person when they're down. (I don't know if the SEC behaves like the IRS, but the IRS can put things into uncollectible status when it would be a hardship to garnish.)

1. Should I just stop making my unsecured debt payments? Instead, use that money to pay down my combined debt with my wife. Essentially save her and fall on the sword myself? My concern is that I pay off the $35k and then they end up garnishing my wages for the $3M anyway. That would seem like a waste of payments only to have $3M tacked on after paying of $35k.

When I think about this in combination with Option #2 (below), a hybrid may be good. I would protect my spouse's credit, and since you have joint creditor, I might want to concentrate on those creditors. I'm not suggesting to not pay your sole creditors, but to... to borrow a bankruptcy term... prefer one over the other if you're actually doing snowball paydowns.

2. In 16 months, I can at least get rid of the $35K with a C7 if the $3M is never enforced. However, If the $3M is enforced via wage garnishment, my feeling is just never pay anything and let it all go to hell. They can all fight over the same 25% for the rest of my life. Is that logical thinking?

It's weird, but this sounds like the optimal plan. At least, it sounds like your "best" alternative to a negotiated agreement. Keep this in your back pocket!

3. My concern is also that my ability to file for another C7 is still 16 months away. How long would it take for the unsecured debt (if I stop paying now) to sue me? Would my school district get embarrassing debt collection phone calls on my behalf?

There is no way that anyone can tell you about how fast any creditor would sue you. The magic number is 180 days. It is usually at least 180 days before creditors take "serious" steps to enforce the agreement. So 16 months is a long time. No creditor should be calling your employer and you should tell your creditors to not call you at work. It's an actual violation of the FDCPA -- I think it's something like federal debt collections protection act, but I'm too lazy to look it up.

My hope is that the SEC realizes it's truly uncollectible and just holds it as a hammer in case you one day strike it rich (lottery).

In the interim, best wishes.

[Roadrash118]

Can you lawyer that you used for C7 guide you in the right direction on this? It seems their advice would be a better bet for the most part because of the complication of your wife and keeping her credit clean.
Good luck