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Garnishment of the Self Employed

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IL6088

Junior Member
What is the name of your state? Illinois

I currently have several judgments totaling $40,000 for past due child support which I am seeking to enforce. For the past 6 years, the father claims to be unemployed, yet has continued to support himself. Although he says he “has nothing”, late last year he purchased (deed and mortgage are in his name) an apartment building which is fully occupied. The rental income is paid to an LLC he created (I do not know if he is the single member or there are multiple). To collect my judgments I would like to do a wage withhold based on the income he/the LLC is receiving from the apartment rentals.

My questions are as follows:

• Is rent considered as “income” for the owner of an apartment building? If so, can I attach this income via a court ordered wage withhold?• Is there any way I can find out if he is the single member of the LLC (created to receive the rent), or if there are multiple?
• If he is the single member, should the wage withhold be issued in his name or the name of the LLC or both? Are there advantages to doing it one way over the other?
• If there are multiple members, (or I can’t determine ownership) should I then issue the wage withhold in his name only?
• Being the owner, he will be the one to personally issue the payments. Can this be enforced in any way? What is the penalty if does not?
• How is his disposable income calculated? Besides operating expenses and federal taxes, can anything else be deduced from the gross income he receives?
• Are mortgage payments deducted from the gross income? Will the fact that he has never paid a mortgage payment on the property make any difference?

Although the building is in foreclosure, I am desperately seeking any available enforcement options I have in the meantime. Any answers, advice you could provide would be greatly appreciated!

Thank You!!
 


nextwife

Senior Member
What is the name of your state? Illinois

I currently have several judgments totaling $40,000 for past due child support which I am seeking to enforce. For the past 6 years, the father claims to be unemployed, yet has continued to support himself. Although he says he “has nothing”, late last year he purchased (deed and mortgage are in his name) an apartment building which is fully occupied. The rental income is paid to an LLC he created (I do not know if he is the single member or there are multiple). To collect my judgments I would like to do a wage withhold based on the income he/the LLC is receiving from the apartment rentals.

My questions are as follows:

• Is rent considered as “income” for the owner of an apartment building? If so, can I attach this income via a court ordered wage withhold?• Is there any way I can find out if he is the single member of the LLC (created to receive the rent), or if there are multiple?
• If he is the single member, should the wage withhold be issued in his name or the name of the LLC or both? Are there advantages to doing it one way over the other?
• If there are multiple members, (or I can’t determine ownership) should I then issue the wage withhold in his name only?
• Being the owner, he will be the one to personally issue the payments. Can this be enforced in any way? What is the penalty if does not?
• How is his disposable income calculated? Besides operating expenses and federal taxes, can anything else be deduced from the gross income he receives?
• Are mortgage payments deducted from the gross income? Will the fact that he has never paid a mortgage payment on the property make any difference?

Although the building is in foreclosure, I am desperately seeking any available enforcement options I have in the meantime. Any answers, advice you could provide would be greatly appreciated!

Thank You!!
If it is in default, it is very likely that the Assignment of Rents, which would have been recorded when the mortgage was recorded has already kicked in. This assignment gives the lender current a sort of "first dibs" at the rental income.

You can obtain a copy of all recorded mortgages and assignments from the county RODs office.
 

IL6088

Junior Member
If there was an "Assignment of Rents" done how would it have been indicated in the ROD's records? Would it specifically state "Assignment of Rents"? Recently there was an "Assignment of Mortgage" from one lender to another (the foreclosing lender). Why is that done and what does it mean?

If an "Assignment of Rents" has not been done, then do I still have the option to do the wage withhold?

Thanks for your help!
 

nextwife

Senior Member
Have you READ the mortgage to determine if it is within the mortgage, or incorporated by reference? It could be seperately recorded, or referenced. The AOR is very standard practice for investment property. It kicks in once the place is in default. And if the loan has already been assigned, it's unlikely it is missing any of the standard secondary market elements.

http://www.mortgagefit.com/discuss/assignment-ofrent.html
 

LdiJ

Senior Member
Have you READ the mortgage to determine if it is within the mortgage, or incorporated by reference? It could be seperately recorded, or referenced. The AOR is very standard practice for investment property. It kicks in once the place is in default. And if the loan has already been assigned, it's unlikely it is missing any of the standard secondary market elements.

http://www.mortgagefit.com/discuss/assignment-ofrent.html
In other words, if its in foreclosure, the bank is way ahead of you in line.
 

IL6088

Junior Member
In other words, if its in foreclosure, the bank is way ahead of you in line.
The default hearing is scheduled for Sept 6th. Does it make a difference if I get a wage withhold done before then? Even with the bank first, does that preclude me from still attaching his income? After 6 years and an arrearage of $40,000 I would be happy to get anything at this point.

Curiously, how is an assignment of rents enforced? Are the tenants notified to start sending their rents to a third party? If so who notifies them to do so?

Thanks!!
 

nextwife

Senior Member
The default hearing is scheduled for Sept 6th. Does it make a difference if I get a wage withhold done before then? Even with the bank first, does that preclude me from still attaching his income? After 6 years and an arrearage of $40,000 I would be happy to get anything at this point.

Curiously, how is an assignment of rents enforced? Are the tenants notified to start sending their rents to a third party? If so who notifies them to do so?

Thanks!!

Yes. There is a provision in the mortgage that allows the lender to notify tenants, once a payment has defaulted, to pay their rents to the lender. Technically, the assignment makes the payments legally payable and due the lender if the borrower defaults.

Here is what you need to understand: Rents are NOT wages. They are not the actual "property" of your ex. They belong to the LLC, which may or may not have several members. While, if NOT in default, a court order MAY be possible that would give you some rights to a portion of the rents, a judgment alone does NOT. A judgement would be a type of lien against real estate, payable upon refi or transfer.

Today is already Sept 1. You cannot get an order that will allow you to legally collect Sept rents, even if he were NOT in default. The tenants will already have paid or be in process of paying Sept.

However, as there IS a default, the rents no longer are legally the property of the LLC. They BELONG to the default lender.
 

IL6088

Junior Member
Yes. There is a provision in the mortgage that allows the lender to notify tenants, once a payment has defaulted, to pay their rents to the lender. Technically, the assignment makes the payments legally payable and due the lender if the borrower defaults.

Here is what you need to understand: Rents are NOT wages. They are not the actual "property" of your ex. They belong to the LLC, which may or may not have several members. While, if NOT in default, a court order MAY be possible that would give you some rights to a portion of the rents, a judgment alone does NOT. A judgement would be a type of lien against real estate, payable upon refi or transfer.

Today is already Sept 1. You cannot get an order that will allow you to legally collect Sept rents, even if he were NOT in default. The tenants will already have paid or be in process of paying Sept.

However, as there IS a default, the rents no longer are legally the property of the LLC. They BELONG to the default lender.
Thank you for replying. It is very helpful as I am trying to understand all of my options and determine which one I would have the most success with in pursuing. While, I understand rents are not wages, aren't they ultimately considered income? For example (if he saves the property):

• Couldn't a Wage Withhold be issued to the LLC against the owner if he is the single member? Once all the operating expenses, etc. are paid wouldn't the rest be considered the owner's income?

• Do I have any methods in which to collect if there are multiple members? For example, once the LLC deducts the expenses, how would I attach the income that is distributed to the debtor?

• Instead of the above (as he would just ignore the order), as a creditor owed back child support do I have the ability to petition the court for an "Assignment of Rents"? If so, how would that work?

If I understand correctly, I really have no options if the property is in foreclosure as the lender will always precede me. But when does the “Assignment of Rents” actually begin, once he initially defaults on the loan or when a default judgment is issued in court?

Of course, I can always do a tax intercept or a bank seizure but I would like to receive something on a regular basis, as I’m sure he will soon lose it all.

Thanks for everyone’s help on this!
 

fedupinIL

Member
You can go to the Illinois Secretary of State website and do a Corporation/LLC search, that will give you some info on Owner/Secretary/Treasurer info.

Why not try to ask the courts to order him to tender his tax returns to you every year? Then you will see what income he has...personal, rental, business.

IMO, and I'm not saying this to be mean or anything like that but, you are not a creditor. You cannot report his arrearages on his credit report. My husband's ex tries calling herself a creditor and I laugh each and every time.

Here is the link for the sec of state website
http://www.cyberdriveillinois.com/
 

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