Wife has lots of debts. Please help.

[Sebin]

What is the name of your state? North Carolina

Hello,

I have a few concerns regarding several debts my wife has, so I’ll post a few questions and if someone knows the answers for sure, I’ll be thankful for your replies.

1.In the state of North Carolina, do the wife assets become also property of the husband upon marriage, and those of the husband’s become the wife’s by law?


2.If my wife and I have a car in both our names, and they sue my wife for a debt, can they take the car away, even though it’s in my name too?


3.If a creditor, let’s say Capital One, with whom my wife has a debt (not me) sues her, how does that work? Do they go to a judge who authorizes Capital One to repossess the car before she even knows about it and the car is gone in a day, or is it a long process where we have time to find someone to put a lien on it so they can’t take the car away?


4.When collection agencies threaten to sue, do they usually do it if you don’t agree to payments? Is there something you can say that will deter them from suing you?


5.If they sue, can they forcefully take away a percentage of your paycheck by a court order?


6.If they sue, how does that work? Does my wife receive a letter in the mail telling her she has to be in court on a certain date?


7.If they sue her, but she can’t even afford a lawyer, does she get a free lawyer somehow?


8.Finally, if they sue her, is there a way to act promptly to avoid having to pay the fees of the creditor’s lawyers, like offering the creditor a settlement right away in exchange for waiving all attorney fees?

Thanks to anyone that can help me out with this. I really don't have any money to go see an attorney.

Sebastian Alvarez

 

[JETX]

In the state of North Carolina, do the wife assets become also property of the husband upon marriage, and those of the husband’s become the wife’s by law?

No. North Carolina is NOT a community property state.

If my wife and I have a car in both our names, and they sue my wife for a debt, can they take the car away, even though it’s in my name too?

Yes. They can take 'her' portion of the ownership. NC law exempts the first $1500 of equity in a car.

If a creditor, let’s say Capital One, with whom my wife has a debt (not me) sues her, how does that work? Do they go to a judge who authorizes Capital One to repossess the car before she even knows about it and the car is gone in a day, or is it a long process where we have time to find someone to put a lien on it so they can’t take the car away?

Nope. She will be 'noticed' of the lawsuit. If she loses, a judgment will be rendered against her. The judgment creditor can then pursue enforcement of the judgment against any of her non-exempt assets. The 'judgmnet creditor' then is allowed to garnish (wages, bank accounts, etc.) and seize or lien her property.
There is usually no 'warning' of their coming actions..... that would kind of defeat the process, wouldn't it??
Oh, and you said to "find someone to put a lien on it". That is called 'fraudulent conveyance' and won't work.

When collection agencies threaten to sue, do they usually do it if you don’t agree to payments?

Some creditors are aggressive, some not. There is no way to anticipate whether a suit would be filed or not.

Is there something you can say that will deter them from suing you?

Yep. You can pay them. I bet that would deter them!!

If they sue, can they forcefully take away a percentage of your paycheck by a court order?

Yep.

If they sue, how does that work? Does my wife receive a letter in the mail telling her she has to be in court on a certain date?

There are several ways that a party to a suit can be 'noticed'. Some are 'personal' (hand-delivered), some by mail, some by certified RRR, and even by 'publication' (in a local newspaper).

If they sue her, but she can’t even afford a lawyer, does she get a free lawyer somehow?

If you qualify, there are several legal aid services available.

Finally, if they sue her, is there a way to act promptly to avoid having to pay the fees of the creditor’s lawyers, like offering the creditor a settlement right away in exchange for waiving all attorney fees?

Offering a settlement doesn't stop the process..... unless they agree to it. The debtor can certainly attempt to negotiate a settlement of any or all claims at any time.

 

[Ladynred]

If they sue, can they forcefully take away a percentage of your paycheck by a court order?

Sorry JetX, little slip-up NC does NOT allow wage garnishment.

Can't touch wages, but if you and your wife have a joint bank account they CAN sieze the WHOLE thing.

As for taking the car, they CAN if they get a judgment and it can't be exempted, but its also less likely. They can't get much for cars at auctions, at least nowhere near what they are worth even as a trade-in. They would first have to payoff any loans against it, then pay your wife the exemption amount, and Crap1 would get anything that's left. Its a lot of trouble and may not be worth it to them, depends on the amount of the debt and the value of the car.

Crap1 DOES sue, but, again, a lot depends on how much your wife owes them and what she has for assets. If you own a home and her name is on the deed, they can place a lien on the home.

 

[Sebin]

Thank you both for your detailed replies. There a couple things I don't understand though, so let me ask you about them:

Oh, and you said to "find someone to put a lien on it". That is called 'fraudulent conveyance' and won't work.

Now, back in 2002 her grandfather put a lien on her car which is still active but he will take it off soon because we have to present the car as an assett for my immigration procedures and they won't allow it if it has a lien on it. After that, perhaps he can put it again, but when you say 'fraudulent conveyance', I suppose that is if she has somebody put a lien after she learns she is being sued, right? I mean, if her grandfather has a lien on it since before she gets sued, that is not 'fraudulent conveyance', right?

Another thing I'm just thinking of, is it legal for me to put a lien on a car that is in both our names?

Yep. You can pay them. I bet that would deter them!!

If I could pay them, I would. Even if I had to use my own money to pay my wife's old debts I would so I could be out of this nightmare and start fresh. The problem is precisely how to deal with this without having the money in the next few months because we can't starve to pay her debts. My wife was sick for about two years without being able to work and that is why she couldn't pay her credit cards and also hospital visits which is also a big part of her debt.

Can't touch wages, but if you and your wife have a joint bank account they CAN sieze the WHOLE thing.

I'm a bit confused on this...they can't touch wages, but they can seize our joint bank account where our paychecks are deposited? Wouldn't that be wage garnishment?

Crap1 DOES sue, but, again, a lot depends on how much your wife owes them and what she has for assets. If you own a home and her name is on the deed, they can place a lien on the home.

My wife has a 2001 Camry which was her grandfather's graduation gift, but it has a lien on put by him due to her irresponsability with credit cards. I have a 94 Buick which I paid $3000 for recently, and we had to put it in her name too because otherwise we would have to pay a substantial amount of money in insurance for it. Having the car also in her name allows us to put that car as a second car and the insurance cost is much lower. I have to drive 34 miles to work every day, and there's no public transportation here. My wife also has to drive to work in a totally different direction, and we have different hours, so we could never survive with only one car. Do you think a judge would allow for our cars to be seized, given that it's the only way for us to go to work?

Finally, the Capital One debt is about 1300 dollars. Do you think Capital One would sue for that amount?

Thanks,

Sebastian

 

[JETX]

Sorry JetX, little slip-up NC does NOT allow wage garnishment.

Actually, there appears to be some contradiction as to whether wages are exempt or not. Some of the websites out there show that wages earned within 60 days of notice are exempt. However, a cursory review of the ACTUAL NC general statutes doesn't seem to reflect that same opinion.

These sites seem to be relying on the following NC GS to support their claim of wage exemption:
§ 1‑362. Debtor's property ordered sold.
The court or judge may order any property, whether subject or not to be sold under execution (except the homestead and personal property exemptions of the judgment debtor), in the hands of the judgment debtor or of any other person, or due to the judgment debtor, to be applied towards the satisfaction of the judgment; except that the earnings of the debtor for his personal services, at any time within 60 days next preceding the order, cannot be so applied when it appears, by the debtor's affidavit or otherwise, that these earnings are necessary for the use of a family supported wholly or partly by his labor.

Clearly, the 'wage exemption' in NC is not universal....or clear. However, there is some case law on this subject.... where future earnings were excluded from the scope of execution inHarris v. Hinson, 87 N.C. App. 148,360 S.E.2d 118 (1987).

On the same subject, here is a link to the applicable NC GS on 'Enforcement of Judgments':
http://www.ncleg.net/EnactedLegislation/Statutes/HTML/ByArticle/Chapter_1C/Article_16.html

 

[Ladynred]

Interesting.. but I'll ask a NC lawyer that I know and see what he says about it

Sebastian,
If your wife's grandfather has had an existing lien on the vehicle, then no, that would not be a fraudulent conveyance. I'm assuming the lien is recorded against the title ??

Another thing I'm just thinking of, is it legal for me to put a lien on a car that is in both our names?

Putting a lien on your own car would look pretty fishy, and probably won't hold up.

I'm a bit confused on this...they can't touch wages, but they can seize our joint bank account where our paychecks are deposited? Wouldn't that be wage garnishment?

No, its not wage garnishment once the funds go into your bank account, at that point its just a bank levy. IF they can garnish wages (see JetX's reply above), your employer has to take the money out BEFORE you get paid and sends it to the court, you get what's left.

Do you think a judge would allow for our cars to be seized, given that it's the only way for us to go to work?

Actually, the JUDGE isn't going to care, its not his problem, its yours at that point. You might have PAID 3K for that car of yours, but I doubt its WORTH 3K as a trade-in. Regardless, if the 2 vehicles cannot be protected by the $1500 equity exemption, then one of them would be vulnerable to seizure and sale.

Finally, the Capital One debt is about 1300 dollars. Do you think Capital One would sue for that amount?

They might, I have heard of them suing for similar amounts. There's simply no way to tell what they will or will not do. Some people have far more owing and are never sued.

If your wife has a LOT of debt, especially high medical debt that she can't pay, then maybe she should consider bankruptcy.

 

[Sebin]

Sebastian,
If your wife's grandfather has had an existing lien on the vehicle, then no, that would not be a fraudulent conveyance. I'm assuming the lien is recorded against the title ??

Yes, for what he said to me, it does show on the title.

Putting a lien on your own car would look pretty fishy, and probably won't hold up.

What about if I just change the title of my car and put it only in my name as soon as she gets a notice that she's being sued? Would that be "fraudulent conveyance"? After all, it's really my car, her name there is only to lower the cost of the insurance, but I paid for it and I use it to go to work.

No, its not wage garnishment once the funds go into your bank account, at that point its just a bank levy. IF they can garnish wages (see JetX's reply above), your employer has to take the money out BEFORE you get paid and sends it to the court, you get what's left.

You mean basically that I'd better open up another bank account in just my name and have my paycheck deposited there because if they seize my current bank account my whole paycheck would be gone, right? And as for her, she should have her employer pay her in some other way that is not direct deposit because if they do the court can seize her paycheck the moment it goes into the bank account, is that right?

Actually, the JUDGE isn't going to care, its not his problem, its yours at that point. You might have PAID 3K for that car of yours, but I doubt its WORTH 3K as a trade-in. Regardless, if the 2 vehicles cannot be protected by the $1500 equity exemption, then one of them would be vulnerable to seizure and sale.

Let me see if I follow...you mean that they can seize my car, sell it and give me half of what they get for it?

Sorry if I seem a bit ignorant on this, not only I'm new in the US (only a year and a half so far), also I never dealt with any legal problems before.

Thanks,

Sebastian

 

[Ladynred]

What about if I just change the title of my car and put it only in my name as soon as she gets a notice that she's being sued? Would that be "fraudulent conveyance"?

It could still be seen as a fraudulent conveyance yes. Right now, its at least partly her asset. My taking her name OFF the title, you are attempting to move the asset out of the creditor's reach - which makes sense to you and me but if its found out, a judge could reverse your actions and you'd be back to square one again.

You mean basically that I'd better open up another bank account in just my name and have my paycheck deposited there because if they seize my current bank account my whole paycheck would be gone, right?

Right. If none of the money is HERS, and you could PROVE its ALL yours or what part is yours, then you would have a shot at getting some or all of it back, but they'll take it all first and make you fight for it later.

And as for her, she should have her employer pay her in some other way that is not direct deposit because if they do the court can seize her paycheck the moment it goes into the bank account, is that right?

That is correct.

you mean that they can seize my car, sell it and give me half of what they get for it?

You get $1500 TOTAL to exempt the EQUITY in BOTH cars. Just the fact that her car has a lien on it makes it unattractive to a judgment creditor because they'd have to pay the lienholder off first, then pay her the exemption, then they gets what's left. If she has NO equity, then the $1500 exemption can be applied to YOUR car. For a 3,000 used car, with a value probably around an actual 2K (if that), then they sell it for about $1k (or less), there wouldn't be enough left over for them to pay off the $1500 she owes (plus court costs, attorney's fees, auction fees, storage, etc.) Again, they would have to give her the $1500 exemption first. My guess is, unless she's got a LOT of equity in her car, Crap1 isn't going to bother with either of them.

You don't even know IF they're going to sue at all ? Has she been contacted by a LOCAL law firm ?? Or, is she just getting threatening calls from a collection agency ???

 

[Sebin]

It could still be seen as a fraudulent conveyance yes. Right now, its at least partly her asset. My taking her name OFF the title, you are attempting to move the asset out of the creditor's reach - which makes sense to you and me but if its found out, a judge could reverse your actions and you'd be back to square one again.

But if I change the title now to my name, before she gets sued, then it would be fair game, right?

You get $1500 TOTAL to exempt the EQUITY in BOTH cars. Just the fact that her car has a lien on it makes it unattractive to a judgment creditor because they'd have to pay the lienholder off first, then pay her the exemption, then they gets what's left. If she has NO equity, then the $1500 exemption can be applied to YOUR car. For a 3,000 used car, with a value probably around an actual 2K (if that), then they sell it for about $1k (or less), there wouldn't be enough left over for them to pay off the $1500 she owes (plus court costs, attorney's fees, auction fees, storage, etc.) Again, they would have to give her the $1500 exemption first. My guess is, unless she's got a LOT of equity in her car, Crap1 isn't going to bother with either of them.

I'm sorry, call me stupid but I'm confused on the equity thing. What is the equity exactly? You say that if she has no equity then the $1500 exemption would be applied to my car. How do I know if she has equity or not? The lien on her car is for $14000 (a 2001 Camry). Mine has no lien and for now is in both our names. I would happily change it to just me, but I don't know how could I afford the insurance since there would be no price cut for being a second car.

You don't even know IF they're going to sue at all ? Has she been contacted by a LOCAL law firm ?? Or, is she just getting threatening calls from a collection agency ???

Well, she has a debt with Crap1 of $1100, another financial company for almost 400 and then all medical debts because she has a very fragile health and that's mostly the reason she couldn't pay her credit cards, not being able to work due to her illnesses. She has other debts with financial companies, but the collection agencies called her to threaten her to sue her and she reluctantly agreed to that because for us getting sued means hell. We live paycheck to paycheck, if she gets sued we couldn't afford a lawyer and our lives would go to hell in a minute because we could lose the few things we have. So when these creeps from collection agencies called threatening to sue she had to cave, but now we reached the limit, because if she agrees to one more settlement we will pretty much have to starve. So far she hasn't been sued, nor contacted by a law firm, but Crap1 stopped sending her the statement months ago, which can't be good. She sent letters to them explaining her situation so they know she's not a criminal that buys things and then doesn't pay for them, she just had several medical problems that prevented her from paying her debts. That, and also being quite irresponsible with her finances, but that's another problem.

Thanks a lot for your replies, I really appreciatte that you take the time for this.

Sebastian

 

[Ladynred]

Ok. Equity. Take the VALUE of the car - that is NOT what she paid for it, but TRADE-IN value. You can get a good idea here: http://www.carquotes.com/blackbook.asp

From the value you get there, subtract the cost of any and all repairs it may need.

Then, subtract the amount of the lien on the car (the 14,000).

Say the car's value is 16,000 (which I seriously doubt). Subtract the 14,000 lien and that leaves $2,000 in EQUITY. The $1500 exemption would not be enough to fully protect the car, but for $500 its probably not going to be worth it to take the car.

Now, say the car's value is only $12,000 (more likely). Subtract the 14,000 lien and that leaves a -2,000 - you're now UPSIDE DOWN on the car by $2,000, which means NEGATIVE equity, don't need to use the exemption, there is no equity to protect.

 

[Sebin]

Ok. Equity. Take the VALUE of the car - that is NOT what she paid for it, but TRADE-IN value. You can get a good idea here: http://www.carquotes.com/blackbook.asp

From the value you get there, subtract the cost of any and all repairs it may need.

Then, subtract the amount of the lien on the car (the 14,000).

Say the car's value is 16,000 (which I seriously doubt). Subtract the 14,000 lien and that leaves $2,000 in EQUITY. The $1500 exemption would not be enough to fully protect the car, but for $500 its probably not going to be worth it to take the car.

Now, say the car's value is only $12,000 (more likely). Subtract the 14,000 lien and that leaves a -2,000 - you're now UPSIDE DOWN on the car by $2,000, which means NEGATIVE equity, don't need to use the exemption, there is no equity to protect.

Great, now I really understand this better. Actually her car would be in average condition (perfect mechanically, but with some scratches and minor dents) and the blackbook says it would be a little over $11,000. As for my Buick, it would be between 'average' and 'rough', which would put it at like $1500 or less, and it needs new paint and new A/C, and just the latter is $1100 . So I guess they wouldn't bother much with the cars, but still I'm freaked out by the possibility of them seizing our bank account. Where she works direct deposit is the only form of payment, and I don't think they would agree to deposit her paycheck to an account that is not in her name, but mine instead.

Anyway, thanks again for your advice.

Sebastian