Stopping Wage Garnishment

[catleg]

Why doesn't she just file chapter 7 now and be done with it?

[jlmaca]

Ehhh, paying back 20 Grand still sucks if there is a way out.

It may suck but it is a "way out". The only other "way out" is to file for bankruptcy protection which is a constitutional privilege provided by the blood of our forefathers.

[samson420]

Ehhh, paying back 20 Grand still sucks if there is a way out.

[forgotten]

But, I don't know yet. . . . I mean a 20k debt is kinda payable. . . Specially with some of this debt being able to be settled on.

Then why are you worried about wage garnishment? Setup a payment plan or settle the debts and there won't be a wage garnishment.

[samson420]

My BK is really a long story and is different then most.


So, it is good to know that a Chapter 7 is not out of the question even with her current income.


But, I don't know yet. . . . I mean a 20k debt is kinda payable. . . Specially with some of this debt being able to be settled on.

[HHM]

True, the $56K is per household. There really is no "per person" amount. But you are right, the median for a household of 1 is around $42K. If you qualified for BK-7, then she can qualify for BK-7. Here debt to income seems high, so she really is very good candidate for BK if the goal is to move beyond this debt.

[samson420]

I thought the 56k was per household and was different then per person.

She makes roughly 40-45k per year. . . .

Her debt is 20k+(around 23 I would say).

[DebtHater]

I'm confused too.

In your first post you said the income is $2000 a month. Then in a more recent post you said she's making $44,000 a year. If she is making $44K then she should be taking home well over $2K a month.

If she does indeed make $44K a year with $20K in debt she should be able to pay it down with just adjusting her lifestyle.

[HHM]

Something is not adding up

First, the median income for a household of 2 in AZ is $56,894. If she really is over the median, then why is she having a problem paying down here debt. If she has $10K-12K to settle, why doesn't she just pay this debt down. I guess I am not understanding the pain here. What is, or is causing, financial distress. Granted, if she is earning around $40K gross, and has $20K in debt, that is a high ratio and she is probably a good BK candidate. I think she should speak to a lawyer, no offense samson, something is not adding up, and I am not sure you should be the one advising her.

[samson420]

As far as the BK route, there is also kind of an issue. She will need to drop her income for 6 months before she will be able to file.

In AZ if you make over 44k per married couple a BK is not going to happen unless you have special circumstances(I.E. Over median monthly debt to current income).

So in her case, she currently makes almost that alone.


I have considered this option for her advise: Drop the income for 6 months, file then move on.


But, 20k just seems like it is not worth it. She can settle on all of this for most likely around 15 or so k.

The BK alone will cost a bit to complete. . . . .

There is a total of 4 creditors involved in all of her debt.

[HHM]

Not sure I would agree. How many creditors are included in the 20k? How important is her credit going forward? How much time does she have to be dealing with the law suits, court appearances etc? Personally I think this is a nightmare waiting to happen. With a foreclosure her credit is already trashed so why not file BK and be done with it? What is the downside of a BK here? I'm not pro BK just wondering.

Good point, what exactly is the downside to filing BK. If she goes the SOL route, her credit is trashed for at least 6 years. If she goes the BK route, her credit will recover in about 2 years.

[jlmaca]

A BK with 20k is a joke to me.

Not sure I would agree. How many creditors are included in the 20k? How important is her credit going forward? How much time does she have to be dealing with the law suits, court appearances etc? Personally I think this is a nightmare waiting to happen. With a foreclosure her credit is already trashed so why not file BK and be done with it? What is the downside of a BK here? I'm not pro BK just wondering.

[forgotten]

Waiting out the SOL if always a dumb move. 1. it never works, 2. it doesn't stop collection efforts.

How true... I was still being passed around from collection agency to collection agency on a debt from 1995. Sure, I had an SOL affirmitive defence if anyone tried to sue me but they didn't stop them from trying collection and magically changing the date of last activity to put it back on my credit report.

I actually hadn't heard about it in about a year before I filed, I had forgotten about it so it obviously wasn't on my schedules. They managed to find out I filed and filed a claim with the court anyway.

So no, they don't ever truely go away.

[HHM]

Why doesn't she just file for BK. BK is NOT going to affect her ability to go to school or get school loans (although she should think twice about incurring such debt).

Waiting out the SOL is always a dumb move. 1. it never works, 2. it doesn't stop collection efforts.

I don't think you can rule out filing BK over $20K. Especially if she is going stop paying. You cannot say that a certain amount of debt is objectively too small to file BK over. A person earning only $40,000 gross per year with $20,000 in unsecured debt is a PRIME bankruptcy candidate. Reason being, that person is not earning enough to pay living expenses, service the debt, and achieve longer term financial goals like saving for retirement, so BK is the ONLY way to get out from under the debt.

As far as figuring out how little she can earn, here is the form for AZ for calculating exempt wages

http://www.superiorcourt.maricopa.gov/justiceCourts/docs/G-NonexemptEarnStatement.pdf

Essentially, she could earn no more than $217.50 per week to have 0% wages garnished.

[forgotten]

In AZ it is 6 years for them to collect on a debt.

They have 6 years to file suit on the debt and obtain a judgement (which they need before they can garnish anyway). The judgement is good for 5 years and can be renewed an unlimited amount of times.