lawsuits, judgments, and attorneys

[treehugger1]

I discovered at the courthouse yesterday that an in-state attorney has finally filed suit on behalf of cap1. The amount is approximately $3000.00. I think I have been defaulted on this loan for about 18 - 24 months. I can't remember exactly. Originally I sent a DV request and they supplied verification.

I have not been served yet, and will most likely not file an answer.

I think I now have 6 - 7 judgments on my credit reports. I am currently under 25% wage garnishment. I have wage garnishments backed up in the queue. The writs are valid for 90 days, so each creditor must take their best guess as to timing of serving writs on my employer. Case files at the courthouse show garnishee response forms and creditors can access the court files, but still it is a crap-shoot on their part.

It is clear that I am bankrupt. I spent 1 1/2 hours with a financial attorney the other day. My unsecured liabilities exceed my (exempt) assets by 3-to-1. The biggest issue is still the student loans. Since I have excellent income, the attorney suggested what others have suggested. Wait it out for a few more years. My state is very strict about garnishment of no more than 25% of disposable income. I can continue to push toward the maximum of contributions to exempt retirement funds and consider BK when my income has diminished. It is incredibly unlikely that the local trustee will allow 10% - 15% of my salary to be contributed to exempt retirement accounts. We put pencil to paper and weighed potential outcomes of a 5-year BK plan versus 25% wage garnishment and continued savings into exempt accounts. In order to benefit the greatest, i do need the department of education to garnish 15% of my wages. I have already mentioned to my loan servicer that they should garnish my wages. I'm beyond the 270 day default period, but they must think a miracle will occur, LOL. He suggested that my case is NOT unique these days. In particular, the student loans are a big elephant when it comes to BK 13 and five years of BK payments with little or nothing going to student loans and perhaps only a piddling amount allowed for contributions to retirement accounts.

I have not received any written judgment exams from judgment creditors. My sense from speaking with the attorney is that once the judgment occurs, I should send a declaration of exemptions to the attorney's office, return-receipt. I should also file this in my case file. And, I should update the declaration every now-and-then. The local clerks don't like this, but I can add anything to the file I wish to add. This also puts everyone on notice should they decide to attempt to seize any exempt funds. I will also send a copy to my bank's legal department. I think the point is to provide a verifiable record that I have stated my financial situation and clearly stated my exemptions under oath (notary.) In the event my bank account is attached, I have something in writing and copies of paystubs clearly showing the garnishment. It sounds as if the local judges can turn around an illegal seizure quite quickly if they have easy access to your information. In addition, I can submit the declaration as a response to a written exam. I am most likely to ignore written requests and require the judgment creditor to force me into a hearing. I have nothing to hide. If the judgment creditor wants to throw money down a rathole, that is his/her choice.

I'm also intending to visit with a CPA and get additional financial advice. How to proceed with 75% of disposable income.

I thought I would share this as an update, and perhaps others might gain who are in a similar situation. Cheers.

[optimistic1]

Great story.

[catleg]

I'm curious about how that 75/25 split is accomplished. I assume it's to your benefit to maximize your taxes paid out of each paycheck, leaving less for the garnishment to take away, then maybe you get that money back in a tax refund or something. Roth 401k/Roth IRA comes to mind also.

[treehugger1]

Currently, I am maximizing taxes taken out to pay off my IRS (Fed and State) tax debt. They get to keep my refunds. Once these are caught up, the refunds can go to the student loans.

Just about everyone (BK consults) all agree I would now be in a 90% - 95% payback BK 13 plan every dime going to unsecured and back taxes. This would take about 55% - 60% of my take-home pay. Under 25% garnishment, I have 30% - 35% to do with what I please. I make my tax payments, defer as much of this as possible into retirement funds. Outside of my pension plan, I can defer over $35000 per year using 403(b) and 457 if I choose to, not including catch-up. While this might seem insane to some, I could quit my employer 5 - 10 years from now and possibly file a BK7 (I don't have to take withdrawals from my retirement accounts until I'm ready.)

In addition, should my family need help with their medical situations, I am free to do so. I have a father in a secure wing of a nursing home which is costing the family,etc about $6500 per month. Where I choose to spend my exempt funds is noone's business.

I think the other side of this is that Oregon does not honor the federal BK exemptions. Our BK exemptions are identical to our general state exemptions. While there are some downsides to our exemptions, the laws here make it easier to recover assets/wages/bank accounts that are illegally seized.

Part of what makes the above somewhat user friendly, is anytime you receive a garnishment, you must also receive a challenge of garnishment. Failure to provide you with a challenge form is a big no-no. you don't need an attorney or some legal guru to help you get illegally seized assets back.

What do I gain with a BK 13? 1) Protected by the automatic stay. I've learned that I have nothing to fear from my creditors if I can tolerate wage garnishment. 2) A BK 13 would end it all in five years. I'll continue to re-evaluate a possible 13 plan now-and-then.

The other idea I discussed with legal counsel was that in a few years, wage garnishment might pay off enough of my unsecured debt to get my student loans included in a 13 payment plan.

If I were 30 or 40 years old, I'd be all over a BK 13, but I'm in my mid 50's with a shitload of student loans. I have no real assets to protect. What I do need is the ability to continue socking away additional retirement dollars.

[anykey]

per student loans- I thought they can garnish 15% of amounts OVER $750 a month.

[catleg]

Is the garnishment based on 25% of after tax income, or 25% of take home including retirement plan deductions?
I could see zeroing out income and living off 401k loans.

[treehugger1]

25% after taxes. I wish it were 25% after retirement contributions!

It is my understanding that student loan garnishment is 15% after taxes. Perhaps there are other rules if you have lower income.

http://www2.ed.gov/offices/OSFAP/DCS/awg.html

[jacko]

Welcome to the club. Crap one sued and got a judgement. I mailed the debtor exam back to them via snail mail, but not certified before I left the state to visit the folks for three months. While I am still away, have a weekly mail collector collecting all of my mail which is starting to pile high from the debt collectors.

My other creditors have sent out countless settlement offers while crap sued me. If they saw my credit report, they would of known that I am a BK candidate.

My mail collector found a letter packet summons mixed in with the other mail pile from the crap lawyer in mid January which was sent 10 days after I left(Dec 5) and a 20 day due response time. It was a letter indicating that my closed checking account will be garnished and that I need to respond to verify if the account was still open and indicate if any funds are exempt. Its quite obvious that they did not receive my debtor exam listing my current checking acct. I have photo copies with notary in case I am hauled to court to answer. Since I am currently out of state and the 20 day due date is up, I have not heard from them. However, my mail collector indicates that there is a register mail notice slip which I assume is from Crap. I did my part with complying the first time around and will ignore future correspondence with them until I am hauled into court. My state exemption values are updated in July which will further protect my exempt assets.

My debt collectors have been calling my folks, but they hang up when they hear a dial ringing.

My mom opened up a Wal-Mart debit account, the student edition if you know what I mean.







[QUOTE=treehugger1;377465]I discovered at the courthouse yesterday that an in-state attorney has finally filed suit on behalf of cap1. The amount is approximately $3000.00. I think I have been defaulted on this loan for about 18 - 24 months. I can't remember exactly. Originally I sent a DV request and they supplied verification
I have not been served yet, and will most likely not file an answer.

[catleg]

Has there been any thought or suggestions that maybe they'd be willing to settle any of these for less? Or is that just pointless by making room at the trough for another snout?

[treehugger1]

They probably did receive your completed debtor exam. And, then I would guess they sent some from letter that shows they never even bothered to read it. Some of these legal firms are like machines. Or, perhaps they did a search that revealed your old account but not your new. Try to be honest and look where it gets you!

What I find interesting in all of this is that I have several charged off C1 accounts. They range from $500.00 to $11000. The last I knew the in-state firm had two accounts, the one they sued for and one that was much larger. Why on earth would they sue on the smaller one? The costs are approximately the same. They have to go through the circuit court as here an attorney cannot sue you in small claims. The only thing I can think of is that the larger account may have been applied for over the phone or online years ago and there is no record of an original contract. The law firm's owner has been investigated a few times in my state, so they could be exercising caution.

I have not been served, but I'll go down to the courthouse today and get a copy of the complaint to study. A sort of spy-on-the-enemy approach.

I suppose I could file an answer. The case is already tagged as "arbitration eligible." The answer costs about $200.00, and then there is a long process where each party gets to eliminate potential arbitrators. Each party must pay toward arbitration costs. The cost to the plaintiff continues to rise. All this would mean is that my cost would also increase and the plaintiff waits longer to get in the garnishment queue.

As I did with chitibark, I'll sit on the sidelines and wait and see what happens.

They had every opportunity to settle this within 6 months after I first stopped making payments. They refused. They wouldn't work with me, so why should I contact the attorney and want to settle now?

[GoingDown]

"I have not received any written judgment exams from judgment creditors. My sense from speaking with the attorney is that once the judgment occurs, I should send a declaration of exemptions to the attorney's office, return-receipt. I should also file this in my case file."

Good advice.



If chapter 13 would make all the non-student loan debt go away in 5 years, it might be worth it.

Then if the max student loan garnishment is only 15% you would be down to that instead of 25%.