Info re: Judgment-Proof

[CAB in CA]

What is the name of your state? CA
In advance--sorry for the length. At this point, I am trying to avoid filing bankrupcy, until laws change or until I see if I will incur medical bills when I have no insurance.

I owe approx. $50,000. in credit card bills. I have been unable to work since 9-30-01 due to a disability. I have remained current on my bills until this month, my state disabilty benefits ran out. I do have several checks I have not yet deposited, in case I need them to pay an attorney. I do believe these funds are exempt from creditors--is this correct? If so, can I safely deposit them in a bank account that has no other money in it except for those funds?

I have filed for Social Security Disability, but I do not know if I will qualify. I am currently receiving two small ERISA pensions based on my deceased husband. I believe these funds are exempt from creditors--is this correct?

I have some vacation time remaining from my employer (I did not take vacation for 5 years) that I am drawing at 16 hrs. a week so I may keep my medical insurance. I have enough hours left to be paid through Jan. to Mar. next year. I clear $180+ a week, so I know $30-$50 could be garnished each week until my vacation time is used. Any ideas how long before bills would go to collections and a judgment lien would be secured? My employer is trying to sell his business and if that happens I will not be eligible for Cobra conversion for medical insurance.

I have a joint account with my mother, her social security number, both checking and savings. I have to manage her money as she is no longer able physically able to do those tasks. There are no co-mingled funds. Her checking account consists of monthly Social Security deposits and her County pension check. Her savings account consists of funds received from refinancing her home twice since 1989, along with her yearly Christmas Club proceeds. Is there going to be a problem with my remaining on her accounts? There is no one else to help her. I do not want her to lose her money if I end up with a judgment against me or if I end up filing bankrupcy.

I am going to write my creditors and teel them I am "judgment-proof" as my only permanent income consists of two ERISA based pensions; therefore, I no longer have the financial means to repay my debts. If I do qualify for Social Security disability, that amount plus the two pensions will be about one-half of what my income used to be, still leaving me without the resources to repay my debts. Has anyone ever done this and if so, what kind of reaction did you receive from your creditors?

I no longer own an auto as mine was stolen about a month before I had to quit working and I did not replace it. I do not own any real estate and my personal property does not have much value. I do have a small amount of cash value in a life insurance policy (that exceeds the allowable bankrupcy exemption) and a few shares of stock worth $20-$30 a share. Any suggestions on what I can legally do with these assets? Should I cash them in and live on the proceeds? If cashing them in is the best option, how long would I have to wait to file bankrupcy, if that is what I end up having to do?

At this point I am not physically or mentally up to talking to an attorney. So any suggestions anyone might have will be appreciated. Thank you.

 

[Ladynred]

Your disability, SS disability and the ERISA programs ARE exempt, no worries there.

As for garnishment, the usual is 25% of disposable earnings. You can file a petition for exemption from garnishment, if it happens:

"(c) The judgment debtor may be able to keep more or all of the judgment debtor's earnings if the judgment debtor proves that the additional earnings are necessary for the support of the judgment
debtor or the judgment debtor's family supported in whole or in part by the judgment debtor.
(d) If the judgment debtor wishes a court hearing to prove that amounts should not be withheld from the judgment debtor's earnings because they are necessary for the support of the judgment debtor or
the judgment debtor's family supported in whole or in part by the judgment debtor, the judgment debtor shall file with the levying officer an original and one copy of the "judgment debtor's claim of exemption" and an original and one copy of the "judgment debtor's
financial statement." The notice shall also advise the judgment debtor that the claim of exemption form and the financial statement form may be obtained without charge at the office of the levying officer."

At 180 a week net, that's not much so you might be able to win that one !

As for your name on your mothers accounts, they ARE vulnerable, BUT as long as you can prove that ALL the funds in them are your mother's and not yours, then they can't touch them either.

Bills go to collections at about 3-4 months past due, usually in-house collections, and are given over almost entirely to collection agencies after charge-off, which they MUST do at 180 days of non-payment. Some companies charge-off at 120 days. There's no way to tell how long it would take before you were sued, or if you'd be sued at all. Once they see that you have no assets they can attach, they probably wouldn't bother.

You can write to tell your creditors you can't pay and are judgment-proof, but I don't know what good it would really do. If you do write them with this, send them certified, RRR, so you have a paper trail and verifiable dates. They won't like it no matter what.. all they want is their money. It probably won't stop them from bothering you with collection phone calls, but who knows.

I don't know about your stocks, a lot depends in how much you're talking about. You could live off of them and exhaust them, but you may also be able to roll them into a qualified exempt retirement plan. Perhaps one of the other members knows for sure on this point.

As for bankruptcy, it sounds like you really are pretty close to judgment-proof already, so why worry about bankruptcy if they can't sue you and win ? Unless you want to clear your credit report if charge-offs, which stay on your CR for 7 years, but BK will stay on for 10. Either way, your credit will be trashed. You can actually recover from a BK a lot faster than you can charge-offs when it comes to rebuilding credit.