defending exemptions

[junker]

a lot of posts and replys here refer to some things as exempt from garnishment or seizure, such as certain amounts of wages, social security income, certain values of cars. homes, etc but does that mean the creditor will not still try and get these things and force you to go to court and defend the item? say you have just social security or ssi deposited in a checking acct, nothing else.and you have a sizable balance, does that mean the creditor wont try and seize it.and make you go to court to defend it? or some states say head of household income is exempt from garnishment.or a certain amount of wages is exempt.some reference 40 times minimum wage as exempt. does that mean they wont try and garnish it? or will they garnish and make you defend it. it seems misleading to tell people that your wages or bank accts or other things like cars,and other property are exempt, if the creditor can still take it and force you to go through all the headaches and expense to get it back.

[WoodSprite]

a lot of posts and replys here refer to some things as exempt from garnishment or seizure, such as certain amounts of wages, social security income, certain values of cars. homes, etc but does that mean the creditor will not still try and get these things and force you to go to court and defend the item? say you have just social security or ssi deposited in a checking acct, nothing else.and you have a sizable balance, does that mean the creditor wont try and seize it.and make you go to court to defend it? or some states say head of household income is exempt from garnishment.or a certain amount of wages is exempt.some reference 40 times minimum wage as exempt. does that mean they wont try and garnish it? or will they garnish and make you defend it. it seems misleading to tell people that your wages or bank accts or other things like cars,and other property are exempt, if the creditor can still take it and force you to go through all the headaches and expense to get it back.

Hey, junker - sorry your post seems to have fallen through the cracks, so I'll bump this up and try to get some attention. Your best bet is to get your hands on a copy of the Nolo book: How to File for Chapter 7 Bankruptcy , which will explain the process very clearly.

It all has to do with timing, really. You're fair game up until the minute you file your paperwork. The day you officially file for bankruptcy, a "stay" is in place for the duration - until your case is either discharged or dismissed - which prevents your creditors from seizing, garnishing, attaching liens, or even sending bills or calling you.

A month or so after you file your paperwork, a "341 meeting of creditors" is scheduled, where the trustee assigned to your case will meet with you, review your paperwork, decide whether or not you have assets which could be liquidated and distributed to creditors, and hear any complaints from your creditors, if they appear.

The question of whether or not an asset is exempt is not up to the creditors but is part of the bankruptcy code, as interpreted by the trustee in your case. As you know, these exemptions vary considerably state-to-state.

Your creditors can technically dispute the trustee's judgment, but it's very rare that they even show up for the 341. After the 341, the creditors have 60 days to object to the exemptions the trustee has approved, and if they miss this deadline, they're out of luck. That's what the "60-day club" refers to; we're all counting the days after our 341 meetings.

I'm sure someone else will chime in and explain in more detail...

[AngelinaCatHub]

Hey, junker - sorry your post seems to have fallen through the cracks, so I'll bump this up and try to get some attention. Your best bet is to get your hands on a copy of the Nolo book: How to File for Chapter 7 Bankruptcy , which will explain the process very clearly.

It all has to do with timing, really. You're fair game up until the minute you file your paperwork. The day you officially file for bankruptcy, a "stay" is in place for the duration - until your case is either discharged or dismissed - which prevents your creditors from seizing, garnishing, attaching liens, or even sending bills or calling you.

A month or so after you file your paperwork, a "341 meeting of creditors" is scheduled, where the trustee assigned to your case will meet with you, review your paperwork, decide whether or not you have assets which could be liquidated and distributed to creditors, and hear any complaints from your creditors, if they appear.

The question of whether or not an asset is exempt is not up to the creditors but is part of the bankruptcy code, as interpreted by the trustee in your case. As you know, these exemptions vary considerably state-to-state.

Your creditors can technically dispute the trustee's judgment, but it's very rare that they even show up for the 341. After the 341, the creditors have 60 days to object to the exemptions the trustee has approved, and if they miss this deadline, they're out of luck. That's what the "60-day club" refers to; we're all counting the days after our 341 meetings.

I'm sure someone else will chime in and explain in more detail...

[WoodSprite]

Thanks, 'Hub. Actually, I may have been squandering time and pixels: it looks as if the OP has been around and around the block...he's been a member 3 years longer than I have, and seems to have more interest in statute of limitations issues and outlasting his creditors than in filing BK.

Oh, well...it may be helpful to someone out there.

[GoingDown]

That's not what the original poster was asking about.

He/she was asking about state exemptions without filing bankruptcy and whether or not the debtor would have to defend them in court.

For example, in Arizona, up to $5000 of a car's equity (the amount the car is worth minus what is owed on it) is exempt from creditors. The answer is unfortunately, yes, without filing bankruptcy. In bankruptcy the state exemptions are applied automatically, but if you don't file bk, then you have to claim the exemptions on your own.

So, let's say I'm driving a beat up old truck worth $4,950. Then, the creditor files a lawsuit against me and gets a judgment against me for $800 in small claims court because I didn't bother fighting it. The next step would be for the creditor to find out what assets I have. Let's say I make a mistake and voluntarily tell the creditor I have an old truck. Most likely, the creditor is not going to bother going after my old truck because it would cost them time, effort, and money, without any guarantee that they would see a dime of profit for all their efforts. But let's just say they are more aggressive than most debt collectors, and they want my beat up old truck. The next step would be to get a "writ of execution" on top of the judgment against me. This costs them more money. Next they pay the sheriff's deputy or constable to serve the writ. This costs them more money, and they have to put up a bond to protect the sheriff's office. Bonds aren't free either. So now the constable comes out to serve the writ and take my car. The documents he/she serves will have information about how to fight the action in small claims court. The constable has the discretion at this point to look at my old vehicle and decide that it's not worth the time and effort to seize it because it is not worth more than $5000. But let's just say the constable still wants to go ahead with it. So he/she calls a tow truck and has the vehicle towed away and stored and gives me notice that if the matter is uncontested, the vehicle will be sold at public auction. If I fight the matter in small claims court, I would win because the vehicle is worth less than the exemption amount, and I would get my vehicle back. The debt collector would be required to pay the sheriff's constable fees, the towing fees, and the storage and insurance fees because it is called "wrongful levy or execution" in Arizona, and is against the law. I could then file a lawsuit against the debt collector in small claims court for wrongful levy or execution and get back any money I was out because of their actions. So the debt collector ended up getting nothing out of it, and in fact, lost money over it.

For this reason, it is very rarely ever done in Arizona.

In most cases, judgment creditors go after checking accounts and wages and real estate. They are typically not interested in going after other personal items unless they already KNOW they are worth a lot of money.

In Arizona, 75% of your wages are exempt. Creditors have to first get a judgment, and then file the necessary garnishment orders with the court and have them served on your employer (they have to KNOW where you work to do this). There is an automatic mechanism that allows you to contest the matter in a court hearing. At that time, you can claim that it may be an undue hardship as head of the household, etc., and sometimes the judge will ratchet the garnishment down from 25% to something much lower. If you are only making minimum wage and working part-time, then you can tell the judge that according to Arizona law, your wages cannot be garnished at all, and the judge will then halt the garnishment of your wages.

And up to $150 of one checking account is exempt in Arizona. And if you are receiving government aid such as Social Security, teacher's pensions, etc., 100% of your income is exempt. But don't rely on this exemption. They can seize your checking account and tie it up while you fight it in court, and during that time you have no access to your money. So, if you are facing a judgment, get your money out of checking accounts, savings accounts, investment accounts, CDs, etc. Start using cash, money orders, and pre-paid Visa debit cards such as Wal-Mart's money card. They can't seize these if they don't know about them. Don't tell them about them.

[junker]

Thats exactly the point i was going after Goindown, even though something is said to be exempt, does not mean a creditor wont try and get it, yes much more unlikely for a car that is questionable, but even though you are getting exempt wages, such as social security or ssi, and have a bank acct, dont think they wont try to get it. they will. and cause much headache and some expense to get it back. same on wages as you mentioned. they will try to garnish and make you prove its exempt. if a creditor will sue you, knowing that you are well beyond the sol, they will surely try and take exempt money.
yes i have had many dealings with them over the years, in fact i got a letter today from jdb on a account almost 7 years old

[treehugger1]

Exemptions are great, but YOU are the one who must provide the proof of exemption. This could very well be after seizure. As SD stated, why even set yourself up for worrying about it; go cash, prepaid, debit, etc.

In my state, the auto exemption is $2150.00. If someone seized my vehicle ($0 equity, totally exempt,) that garnishor must first pay me the $2150.00 of claimed exemption, as I would certianly fill out the exemption form. I'd be all over this!!LOL