Their After Me!!! What do I do?

[ballsie]

They're After Me!!! What do I do?

My State is Texas.

Ok, Here is my problem. I had a business (sole proprietorship) that went under last October. I owe my distributor around $14k (The distributor is in Texas also.) I am broke and have been looking for a job for quite a while. I was served papers this morning and now I dont know what to do.
Im being sued for the 14k plus the distributors lawyer fees that are up to 4700.00. The papers say I have 20 days to reply or a default judgement may be taken against me. I have no idea what is going on. I know I owe this money, but the simple matter is that I dont have it. My wife is the only person making money right now. Here are my questions:

Can my wife be held responsible for any of this? The money was due last Oct-Dec-03 and I got married in May-04. Her name is NOT on anything. She had nothing to do with this company.

What should I do now? I have NO money and they are suing me.

What can happen to me?

What exactly is a "judgement" and what can it do to me?

Im sorry, but I know nothing about the situation Im in. I have always paid ALL of my debts. Any advice would be greatly appreciated.

Thanks!!!

PS- Never go into business with family.

 

[olgethorpe]

You're probably gonna need a lawyer...

but, before you panic too much, take a deep breath and read your contract with the distributor.

What happened to the products or whatever he supplied to you? If you've still got them, give them back...

What does the contract say about non-payment?

Was your business incorporated? If yes, then did you personally gurantee the transaction with the distributor? If you didn't, then the business owes the debt...not you. (I know you'll still want to pay it back, but its a different situation) If the business owes the debt, all they can do is take business assets...not yours personally. If the business wasn't incorporated, then you might have other problems. Ask a lawyer...but before you do...

Were you served with a court document, or was it just a letter from someone claiming to be an attorney who is actually a collection agent? If its a collection agent, don't trust anything he tells you. See a lawyer...

Its unlikely that your wife can be held responsible for this debt...but...it may affect her because....

In simple terms, a judgement is a court order that states that you do indeed owe the debt claimed and perhaps, also be responsible for their legal fees.

Once they get the judgement, they'll still have to have in enforced...perhaps by placing a lien against any real property you own, or garnishing (sp?) your wages.

You're not going to jail over this...and they can't come seize your wife or cars or anything like that.

 

[Ladynred]

Can't garnish wages in TX, and there is a 100% exemption for a homestead, so they may not be able to place any liens either. They CAN go after bank accouts and any non-exempt property, but in TX the exemption limits are pretty generous so the chances of you losing anything is slim.

Judgments stick around for a LONG time - 10 years or more, so even if you don't have anything today, you might later on and the judgment will still be there accruing interest.

Since this was a debt you incurred BEFORE you married, its not a 'community' debt so your wife should be safe.

 

[JETX]

The papers say I have 20 days to reply or a default judgement may be taken against me. I have no idea what is going on.

What is 'going on' is clear. You have been sued.

I know I owe this money, but the simple matter is that I dont have it. My wife is the only person making money right now.

Not relevant.

Can my wife be held responsible for any of this? The money was due last Oct-Dec-03 and I got married in May-04. Her name is NOT on anything. She had nothing to do with this company.

Yes, she can be indirectly affected by this debt. See, Texas is a community property state and that means that any debt (or asset) is common (on both spouses). There are some exceptions to this, but they can be complex. In this case, the judgment creditor (if a judgment is rendered against you) can use it to seize any non-exempt assets. If you believe the seized asset is yours only and not joint, then she will have to file an exemption challenge with the courts.

What should I do now? I have NO money and they are suing me.

The answer to that depends largely on whether you have a valid defense or not. If you don't and if the amounts claimed are correct, you can simply allow a default to be rendered. If you feel that you have a valid defense or if the amounts claimed are NOT correct, answer the suit and show up at the hearing that will be set.

What can happen to me?

The range of possible scenarios is varied.... anywhere from absolutely nothing, to a series of escalating judgment enforcement actions, bad credit report, etc.

What exactly is a "judgement" and what can it do to me?

A judgment is a final decision by a court in a lawsuit.
As for what can happen, see above.

 

[ballsie]

This was a Sole Proprietership, not a Corp. I was served a court document. I have no property, I am a renter. All I have is a couple of tv sets, some furniture and a truck. Everything went belly-up in this economy. The contract I signed stated that I would pay for legal fee's if I were to breech the contract. I have absolutely no defense, I am in the wrong and theyt are in the right. Like I said before, I know I owe this money, but you cant squeeze blood from a turnip. I just want to make sure that my wife is not affected by this situation. It happened long before we ever got married. I can deal with the bad credit, although I have always worked to have great credit. As long as my wifes credit isnt effected we should be ok.

 

[JETX]

This was a Sole Proprietership, not a Corp.

If the business was incorporated, you would have likely isolated your personal assets from liability. However, as a d/b/a, it is your personal debt.

I was served a court document.

*** Okay???? We already know that you have been sued.

I have no property, I am a renter. All I have is a couple of tv sets, some furniture and a truck. Everything went belly-up in this economy.

*** Then it certainly sounds like you might be judgment proof currently. However, since a judgment in Texas can last until you die (and then go after your estate)......

The contract I signed stated that I would pay for legal fee's if I were to breech the contract. I have absolutely no defense, I am in the wrong and theyt are in the right. Like I said before, I know I owe this money, but you cant squeeze blood from a turnip. I just want to make sure that my wife is not affected by this situation. It happened long before we ever got married.

*** Then she will get to prove that everytime that they come a knockin'.... or seize bank accounts.... etc.

 

[ballsie]

I was asked if the document that was given to me was a court document or if it was a bill collector. That is why I said it was a court document. Im sorry I dont know much about this situation, that is why I posted this thread.

Here is the deal - I have No money (saved, 401k, NOTHING...) I have no property. I have NOTHING. What will they do to me. Will they set me up on some kind of payment plan? Will they just screw my credit? Would I be better off filing bancruptcy?
That is what I need to know.

 

[JETX]

What will they do to me. Will they set me up on some kind of payment plan?

No. If that is what you want to do, you will have to negotiate that with the creditor(s).

Will they just screw my credit?

Clearly, no one here can answer what someone else WILL do. The creditor could simply realize that you are currently judgment proof and not do anything now. Just 'checks' on you every few months or so to see if you have anything worth going after. Remember, that Texas judgment is good for 10 years and renewable until either paid or you die. If you die, they can then go after your estate. And all the while, it still accrues interest.

Would I be better off filing bancruptcy?

Again, no one can answer that for you without a complete and comprehensive review of your financial condition. I suggest you set up a free or low cost consultation with a local bankruptcy attorney.


That is what I need to know.[/QUOTE]

 

[ballsie]

I just heard that if I make an offer or make payments to this company that they cant place a judgement on me. Does anyone know if that is true or not.

 

[JETX]

I just heard that if I make an offer or make payments to this company that they cant place a judgement on me. Does anyone know if that is true or not.

Yes, I know.... and no its not. The old wives tale of making payments prevents a creditor from further action is just that.... an old wives tale. No truth to it.

 

[skirklan]

nightmare in TX

Hello fellow entrepreneur. I was in your exact situation (in TX) and filed bankruptcy. When your company went under, the best thing to do for your own peace of mind and future peace is file bankruptcy. All you need up front is the $600 filing fee for the attorney. The rest of his fee is paid through the plan if you choose chapter 13 (the payback over 5 years kind)(which you probably don't qualify for since you're not making any money). If you choose chapter 7, even judgements with attorney's fees will be dismissed if your attorney makes a motion to do so. Why put yourself through this misery? Of all the things I learned when my business went under, it was that creditors will treat you as much like a cretin for $125 as for $20,000. Life is short. Close the doors on your past and start fresh. That's the true purpose of bankruptcy. Good luck.