Well, while I wouldn't do it, I still don't see how it's legally questionable since, wages aren't garnished in SC, the employer will never be served with a writ of garnishment.
Also, nowhere in the post did anyone mention that applicable payroll taxes wouldn't be withheld nor a W2 not issued.
That’s just my point. You wouldn’t advise it and I wouldn’t advise it – maybe for different reasons – mine being that, at some point, records can’t match or affirm. (While they can’t legally garnish, they can certainly conduct an asset exam on her and require that she produce relevant documents.)
But let’s agree on one point: for whatever reason, it doesn’t sound like a good idea. She needs a better job and/or a source of more money, and there is no guarantee that a prospective new employer will buy into this idea of cutting corners and operating on the fringe.
If the OP is correct, the friend is totally exempt anyway. Let’s hope that she doesn’t remain that way but, when the light shines at the end of the tunnel, the hard decisions also set in, the judgment is larger, and there are new bridges to cross.
My advice to the OP’s friend would be to just put it all up front. Let the creditor know that she’s “functionally judgment-proof” at the moment and, if necessary, voluntarily provide proof of exemption, redacted tax returns, whatever it takes.
If the creditor can’t do anything, it might as well know it from her, because they’ll keep trying until they convince themselves anyway, that costs money and the better, more honest and forthright she is in her relation with the creditor, the more likely it is that she may be cut some slack if/when a day of reckoning comes.
I’m speaking in generalities, and I hope I’m right about the creditor, but I’m certain I’m right about the creditor’s attitude and approach, if the friend attempts to duck and run, hide, skirt, evade and dissemble. She’ll live with the constant contacts and sooner or later, when it catches up (and it will), it won’t be nearly as pretty or friendly. That’s just my experience talking.
