Judgements and collecting

[brian1958]

What is the name of your state? Tn.

Hi all. I have a question regarding a friend who has several judgements against him.He is 55 years old and has not been working for almost two years due to severe depression and dementia. He has yet to file for dissability,has no family willing to help. I am trying to help him as much as possible.

He had a business for 30 years that went under due to his dissability. This is where most of the debt was from,trying to keep the doors open. From what I can tell he has about 200k in debts both personal and business. He was sole prop. of the bus.

He moved from Michigan to Tn. about a year ago. He rents, has an old boat, an old camper trailer and a 10 year old truck. These are his only assetts that I know of. He inherited stock that pays about 12% in dividends and this is what he has been living off of.
So far the creditors have not found him. My question is can they somehow get this stock? And how would they go about it. I know bank accounts can be seized,and liens can be placed on assetts, but never heard anything about stocks. Thanks for any help you can give.

[debtcollector`]

There are too many variables to give you a correct answer. Was the business incorporated? Did the owner sign personal gaurantees? Did he file bankruptcy on the business or personal?

[brian1958]

He was sole prop of the business. And I'm pretty sure he signed pg's. He has mixed the bus. and personal together. Looks like he was robbing peter to pay paul for a long time. He has never filed bk.

[brian1958]

Anybody have knowledge or advice on this? Thanks

You have to tell us how the business was set-up. Was it combined with his name, meaning he was the business or did he file it as an LLC or Corporation? This is important as he is better off with an LLC/Corp because his personal assets remain untouched from the business.

I will assume, however, that the business was combined under his name. If so, the stock and bank account will be the first thing they will come after. You need to check the courts in your city/area under his name for any pending and past lawsuits. The court clerk will help you there.

If you do find a default judgment (meaning he was a no show on a case and the judge ruled in favor of the creditor), the creditor will be back in court to ask the court to seize his assets, bank accounts, stocks, etc. A lawyer can fight this and that would be my recommendation.

If his income were something else, I would say file for bankruptcy, but normally the courts seize the stocks and any activity showing you cashed them out before filing bankruptcy will nullify the bankruptcy. However, being his only source of income, you can at least ask a lawyer if the courts would forgive this, not sure. Bankruptcy would protect him.

You can do your own bankruptcy for $300... NOLA publishes some excellent books on the matter. Find them at your library or bookstore.

[debtcollector`]

Originally Posted by brian1958

He was sole prop of the business. And I'm pretty sure he signed pg's. He has mixed the bus. and personal together. Looks like he was robbing peter to pay paul for a long time. He has never filed bk.

Ignore Kanman -- he obviously doesn't know what he talking about. Look, the only thing you can do as a friend is try to help your friend make some decisions. He is going to need to file disability -- perhaps you can help with that. Other than that, it doesn't sound like he has any assets so BK may be an option.

But he is also basically judgment proof. Help him with the medical issue -- then worry about bills.

DC

Originally Posted by debtcollector`

Ignore Kanman -- he obviously doesn't know what he talking about.

But he is also basically judgment proof. Help him with the medical issue -- then worry about bills.

DC

You say he is "basically judgment proof", that is like saying "sort of..kinda ...maybe." Which is it?

1. never take advice from any debt collector or anyone called such...they are trained to lie.
2. He is not judgement proof. If he does not show up for court dates, whether on disability or not, they can still win a judgement against him just for no show, which is what they are hoping for because in most cases, they don't have to prove a thing. They win by default, assumed guilt from the defendant lack of appearance in court.
3. You can use disability as your defense, but that still requires some sort of legal representation to defend, which is going to cost you unless you do it pro se which means you better start hitting the law books.

BK will protect him from any judgements pre and post, and that includes garnished bank accts and/or wages. However, like I stated, YOU need to check for you friend with a bk lawyer or para legal regarding his income from stocks and whether that is protected, or not. This may be a gray matter left to the court appointed official who oversees the BK.

[brian1958]

Yes his name was with the business, he was sole prop. not llc or inc.
I agree he needs to get with ss to start the dissability process. I will try and help with this as much as possible.I know this can take a long time and will probably require hiring an attorney.
I dissagree with him being judgement proof, he does own the vehichles not worth much but over the bk exemptions. He also owns the stock, not sure of the value but I'm thinking it's around 50k.
He's in the earlier stages of dementia, very forgetful and extremely paronoid. He's afraid to give poa as he thinks he will be put in a nursing home. He's not ready for that.
Can you tell me how far back they will look if I can talk him into selling the stock and maybe file bk? If he loses the stock he will have no income or money to live on. He gets a check from the dividends every quarter and he pays three months rent with that and has some left for groceries. I also found out that he had an auction of the business inventory and equipment, he showed me the reciept where he only got 4,500.00 and he says he paid the minimums on the cc's till it was gone. Thanks again for your replies.

What a sad situation Brian. I do not know what the best approach would be in your/his situation. I would assume the best thing would be to get him on disability, then find a lawyer who will use that in front of a judge to overturn any judgments. However, you stated that this will take a longtime and he may not have that long if they freeze his brokerage account.

You can rule out Chapter 13 (which is basically repayment of debts in a payment plan) and Chapter 11 (for LLC and corps) bankruptcy. I do not think they apply to his case. He has no monthly income or very little from the stocks to repay anything.

Chapter 7 will normally offer full protection and his low monthly income will most likely meet the formula need to determine eligibility. It would have been a smarter move on his part to have put that money in a retirement plan or IRA, as these are protected under bankruptcy. Stocks however are not and although I could not find how far back they go to check the records, you do have to submit tax returns from 4 or 5 years back, and they would have to list any sales of stock. I guess that is your answer.

Your best option again, I believe, would be to find a bankruptcy lawyer and find out what they say. Again, it could be argued in his situation that since the stocks are the ONLY source of his income, they should not be subject sold and handed over to the trustee overseeing the bk case.

There are a lot of legal consumer advocacy lawyers working pro bono cases, especially in bigger cities. You need to start investigating. Also, start looking for lawyers under NACA and their website. Call and maybe get a recommendation from one in your area. You can do bankruptcy yourself for cheap ($300) and the NOLA books on Ch 7 are a great source of info...also their website, but your case needs legal help, so some sort of consulting is advised. Oh, and keep the receipts, as it will explain what happened to all the companies proceeds and prove he is not pocketing the money.

Good luck!