Can I be forced to sell vacation home?

[Rebecca56]

What is the name of your state? New York
My husband is a self employed remodeler. He presently has a 35,000 business credit card judgment against him for defaulting on payments last year due to a costly job debacle, where the sub walked out before the job was completed and put a lien on the customer's property. No bank draws, putting up money to release lien, more expensive subcontractors, no monetary compensation for the work the sub didnt finish...well, you get the idea. Talk about cash flow problems!
The bank received a judgment July, 2006 and had a levy put on our checking accounts in September. We never received the judgment papers- the first we knew there was a judgment was when we received a copy of the levy papers they had sent to the bank. We have since been depositing customer checks in a checking account I have at another bank, in my name only.
We have been trying to refinance our vacation home for about a year so that we can pay this judgment. We have recently made progress in this regard, but today we received an information subpeona and restraining order from the Creditor demanding we reveal all our assets. We do not have too many left to reveal but we are quite worried that we will end up losing the cottage. It is located in a different county than our residence and thus far it does not appear that they have filed lien papers in that county. Then again, I have read that a judgment is an automatic lien on real property, so not sure how that works.
My questions are as follows: In regards to the checking accounts- does the current levy on our checking accounts expire a year from the date the levy began? Can they put a levy on the account that is in my name only because his checks are deposited in it? Is it likely they would easily find that out? How can we cash his customer checks and still protect the money?
Concerning the cottage- I know they can put a lien on the property, but can they force us to sell it? One lawyer has told me yes, another has told me no, if the debt is unrelated to the property. Does this restraining order mean we cannot refinance? I am unsure as to how forthright I should be with the bank and the attorney in regards to this transaction. We recently refinanced our residence and the judgment was never an issue- I do not believe the lender was aware it existed. If the lending bank knew there was a judgment and the credit card bank knew about the cottage, is it at all likely that they would mutually agree that the refinance could go through and the equity be used to pay the debt?
In regards to the creditor- We have every intention of paying this debt, but previously the Creditor had indicated that they would only accept one lump sum, so we did not try to negotiate monthly payments. Now, on the info subpoena, they are asking how much a month we can offer to pay and date the payments will commence. I find it hard to believe they will accept any amount I throw out there, but if they do accept a payment arrangement, can I stop worrying that they will not pursue other means to collect, as long as I keep up the payments? I am sure I know the answer to this, but if I make payment arrangements with them in the next few days, is there any chance they will deem it unnecessary for us to complete the subpoena?
Oh, and can someone tell me why they are asking if we transferred any interest in real estate in the last SIX years?? We did indeed sell a rental property a few years ago, well before the judgment was awarded, but even if we had made a large profit, which we didn't, how can they get anything out of a transaction that occurred that long ago?
Also, they are still charging 9% interest on top of the judgment amount...they are the only creditor we have dealt with who have done this. I didn't even realize they COULD do this. Does the interest accrue until the balance is paid off or only until a payment arrangement is agreed upon? I would really like to be armed with some useful knowledge before I call the Creditor's attorney and talk about payment arrangements.
Again, my main concern right now is to what degree the cottage is at risk and how/if I should proceed with this refinance under these conditions. I appreciate any and all insights!

[debtcollector`]

Originally Posted by Rebecca56

We have since been depositing customer checks in a checking account I have at another bank, in my name only.

You realize, I hope, that will not hold up under examination.

Originally Posted by Rebecca56

My questions are as follows: In regards to the checking accounts- does the current levy on our checking accounts expire a year from the date the levy began? Can they put a levy on the account that is in my name only because his checks are deposited in it? Is it likely they would easily find that out? How can we cash his customer checks and still protect the money?

1. You are exposing yourselves to potential fraud claims. If you needed to attempt BK as the result of this, you may well find this debt non-dischargeable as a result. As for how you can cash his custoner checks and protect the money -- you can't -- not legally.

Originally Posted by Rebecca56

Concerning the cottage- I know they can put a lien on the property, but can they force us to sell it?

No they won't force you to sell it. They will take it and auction it off themselves.

Originally Posted by Rebecca56

Does this restraining order mean we cannot refinance?

It isn't a restraining order -- it is a lien on your property and few banks would refi it without requiring that the lien be paid.

Originally Posted by Rebecca56

I am unsure as to how forthright I should be with the bank and the attorney in regards to this transaction. We recently refinanced our residence and the judgment was never an issue- I do not believe the lender was aware it existed. If the lending bank knew there was a judgment and the credit card bank knew about the cottage, is it at all likely that they would mutually agree that the refinance could go through and the equity be used to pay the debt?

Not sure what you are asking. The lender would (usually) require that the lien be paid before releasing any funds to you.

Originally Posted by Rebecca56

I am sure I know the answer to this, but if I make payment arrangements with them in the next few days, is there any chance they will deem it unnecessary for us to complete the subpoena?

There is always a chance -- but I'd the preverbial snowball has better odds.

Originally Posted by Rebecca56

Oh, and can someone tell me why they are asking if we transferred any interest in real estate in the last SIX years?? We did indeed sell a rental property a few years ago, well before the judgment was awarded, but even if we had made a large profit, which we didn't, how can they get anything out of a transaction that occurred that long ago?

They want to know and you have to answer. Does it really matter why?

Originally Posted by Rebecca56

Also, they are still charging 9% interest on top of the judgment amount...they are the only creditor we have dealt with who have done this. I didn't even realize they COULD do this. Does the interest accrue until the balance is paid off or only until a payment arrangement is agreed upon? I would really like to be armed with some useful knowledge before I call the Creditor's attorney and talk about payment arrangements.

Interest is charged daily until the judgment is satisfied.

Originally Posted by Rebecca56

Again, my main concern right now is to what degree the cottage is at risk and how/if I should proceed with this refinance under these conditions. I appreciate any and all insights!

You are going to lose the cottage, unless you can refi it quickly to pay the judgment.

DC

Consider chapter 13, at least read up on it. It is basically a repayment to the creditors while protecting your assets. Chapter 7 is full protection and pretty much wiping the slate clean, but it also means giving up any assets...like the cottage, plus your income must be in the lower range to qualify.

Ch 13 info can be found in the NOLO books on doing it yourself, a wealth of info, and check out their website. [url]www.nolo.com[/url]

[Rebecca56]

I thank Kanman for the suggestion- it is an avenue we have already pursued as a suggestion from our lawyer, who did not want to see us continually hammered with these debt problems. We saw a bankruptcy lawyer and after that meeting I resolved that we would go through bankrutpcy when pigs fly. Chapter 13 was what we had in mind, as income was too high for Chapter7 and, as you stated, we would lose the cottage for sure. Apparently we would lose it in Chapter 13 as well, since there would be no justification in the court's eyes to allow us to continue to make payments on the cottage when we have this other debt to pay off. This is what the attorney told us and I saw his point, but the cottage means enough to us to keep fighting, so that is what we are doing.

I appreciate Debtcollector's candor concerning the prognosis for the cottage, but I would like to clarify one thing...I would not intentionally do anything fraudulent, and my discourse about the checking accounts was not meant to imply that I am trying to 'hide' the money. We have to file income taxes and all income is stated. The subpeona asks to divulge the bank where we have accounts and I will do so. The checking account in my name is being used because that is the only checking account we have. I am not worried about anything 'holding up under examination'.

Having said that, I am still concerned that we will not be able to pay any bills or put food on the table if this account is also 'frozen'. To keep money for this purpose is what I meant by 'protecting' it. I realize we owe the Creditor money, and we have every intention of paying it back, but would any reasonable person expect that we sign every check over to the Creditor while we starve?

My question from a legal standpoint, which I do not think was answered, was, since the checking account is in my name only, and the judgment is not against me, can they put a levy on my account? I am assuming they can but I would like to hear a definitive answer.

In regards to my inquiry into how forthright I should be with everyone about the refi and judgment, I was trying to get an opinion on the direction that would give me the greatest chance for the refinance to go through. Perhaps Debtcollector has some experience in this regard- the process of debt collectors working with banks who are approving a refinance so the customer can pay off a judgment. Would a Creditor welcome the chance to get their money from a refinance rather than having to seize the property and putting it up for auction? I meet with a lender tomorrow and would appreciate any advice. Thanks!

[debtcollector`]

Originally Posted by Rebecca56

I appreciate Debtcollector's candor concerning the prognosis for the cottage, but I would like to clarify one thing...I would not intentionally do anything fraudulent, and my discourse about the checking accounts was not meant to imply that I am trying to 'hide' the money.

I understand, however, I think you misunderstood me. I'll clarify. The judgment is against your husband and you do not live in a community property state. Your husband is not on the account. The money in the account would be safe from attachment, except for the fact that the two of you are using it as his account with funds that are quite traceable. The account being solely yours will not hold up and that will open it to attachment.

Originally Posted by Rebecca56

Having said that, I am still concerned that we will not be able to pay any bills or put food on the table if this account is also 'frozen'. To keep money for this purpose is what I meant by 'protecting' it. I realize we owe the Creditor money, and we have every intention of paying it back, but would any reasonable person expect that we sign every check over to the Creditor while we starve?

Do you want the legal answer or moral answer -- they are quite different.

Originally Posted by Rebecca56

My question from a legal standpoint, which I do not think was answered, was, since the checking account is in my name only, and the judgment is not against me, can they put a levy on my account? I am assuming they can but I would like to hear a definitive answer.

That is exactly what I was addressing above. By using it as your husband's and as your husband's business account, you have endangered the account.

Originally Posted by Rebecca56

In regards to my inquiry into how forthright I should be with everyone about the refi and judgment, I was trying to get an opinion on the direction that would give me the greatest chance for the refinance to go through. Perhaps Debtcollector has some experience in this regard- the process of debt collectors working with banks who are approving a refinance so the customer can pay off a judgment. Would a Creditor welcome the chance to get their money from a refinance rather than having to seize the property and putting it up for auction? I meet with a lender tomorrow and would appreciate any advice. Thanks!

Frankly it depends on whether or not the judgment creditor wants to buy your house cheap at action. If so, he'll let it go to auction quietly and bid the minimum amount to get it. Then he will still come after your husband for the balance.

In collections, I work with people all the time that are doing refis. I have a number of mortgage brokers I work with get deals done so my client gets paid. However, you are dealing with judgment enforcement -- that is a different ball game. Trying never hurt anyone, though.

DC

[Rebecca56]

In collections, I work with people all the time that are doing refis. I have a number of mortgage brokers I work with get deals done so my client gets paid. However, you are dealing with judgment enforcement -- that is a different ball game. Trying never hurt anyone, though.

Thank you, debtcollector- this is what I wanted to find out, but would you be so kind as to elaborate slightly? In what way do you feel that this being a judgment situation might affect/change the rules of the game? Is it because I am dealing with an attorney's office instead of the Creditor (bank) directly? Do you have relationships with mortage brokers because you work in the collections department of a bank or could law offices also have established relationships with mortage brokers? I am trying to determine if who I am dealing with is as significant a variable in how this should be handled, as the variable of judgment enforcement vs. collections.

Thanks for sticking with me on this.

Rebecca, sorry to hear about your situation.

I hope you realize that the information debtcollector is giving you may not be accurate. Do you think a debt collector is actually going to give you unbiased opinions in this matter? Why would he or she?

My advise is to go seek real legal advice. Most lawyers offer free 30 minute consultations and many cities have legal clinics where you can talk to a lawyer for free. Check around, but view the information from debtcollector, or any other non-legal person, as suspect.

Good luck and keep us posted on your situation. You solutions could help others in need.

[debtcollector`]

Originally Posted by Rebecca56

Thank you, debtcollector- this is what I wanted to find out, but would you be so kind as to elaborate slightly? In what way do you feel that this being a judgment situation might affect/change the rules of the game?

The issue is the lien. Most collections is pre-judgment work. Before I refer someone to one of the mortgage brokers I work with, I ask about judgment liens. If there are judgment liens I may not suggest that route to the debtor because the liens take priority.

Originally Posted by Rebecca56

Is it because I am dealing with an attorney's office instead of the Creditor (bank) directly?

No, it is because the creditor has the power of the court behind them.

Originally Posted by Rebecca56

Do you have relationships with mortage brokers because you work in the collections department of a bank or could law offices also have established relationships with mortage brokers?

I built my network of people in collections and related industries through years of collections work. While I am relatively new to judgment enforcement, I can't imagine refusing to work with a mortgage broker as long as it doesn't turn into a delaying tactic.

Best advice I can give is be upfront with the mortgage people. And you are not going to get refinanced at a prime lender. Expect to pay more.

DC