Topic: Making Yourself Judgment Proof

[Flyingifr]

THIS POST BANNED ON AoC

PROTECTING YOURSELF FROM CREDITORS AND OTHER PREDATORS
(the joys of being Judgement proof)
Protecting Yourself from Creditors

Your creditors want your money. They want it NOW    and they probably want it ALL. The fact that you have some of earmarked for such foolish expenses as food    clothing and shelter doesn’t matter to them. This section of our web site will give you some hints on making it difficult or impossible for a creditor of yours    even if armed with a Judgement    to take your assets.

The Creditor’s favorite target – your wages:

Your income is your creditors’ favorite target simply because    unlike a car or a bank account    wages can be attached time and time again until the debt is finally paid    or you leave that employer. Some states    like Pennsylvania and Texas    do not allow wage garnishments. Others    like Michigan    restrict each garnishment order to only one paycheck. After that paycheck has been garnished    the creditor has to file another garnishment order to collect again. Most states    however    allow a garnishment to remain on a paycheck until the debt is paid in full.

Garnishment is the legal term for the court-ordered requirement that your employer withhold a part of your earnings and send that money to your Judgement-Creditor. While the exact percentage can vary from state to state    a Garnishment cannot ever leave you with less than thirty-five (35) times the Federal minimum wage. At this time the Federal Minimum Wage is $5.15 per hour    so your NET paycheck can not be less than $180.25 per week.

Strategies to frustrate the garnishment:

There is not a lot you can do to avoid a garnishment if your creditor has a Judgement and knows where you are working. Obviously    if you can    changing employers will stop the Garnishment. A creditor can only garnish a paycheck they can find. If they don’t know where you are working    don’t tell them. Don’t apply for credit    and don’t answer any questions they may ask. Just because a creditor asks a question does not man you HAVE to answer it. The ONLY exception to this is an INFORMATION SUBPOENA (see the link)    which is a Court Ordered Questionnaire which you must answer under penalty of Contempt of Court. The good news is    in more than 30 years in this field    I have only found TWO collection attorneys smart enough to use an Information Subpoena.

Another way to frustrate a garnishment is to load your paycheck with other deductions that take priority over the Garnishment    and that you will either have to pay or will get back at some future time. If you owe Alimony or Child Support    get them BOTH onto Payroll Deduction. Increase your Federal and State tax withholding. Try to get your pre-garnishment take home pay below the $180.25 Federal Minimum. If you owe Federal or State taxes    the excess withholding will pay those debts off earlier. If you don’t then the excess withholding will be refunded to you next February when you file your tax returns. Creditors generally cannot attach your tax refund. I realize it may not be easy to live on 180.25 a week    but that’s what you will have to do to frustrate a garnishment.
A large garnishment can be your best friend in states where garnishments stay in place until paid. Let’s assume ABC Company sues you for $15   000 and gets a judgement. They file a garnishment order with your employer. You earn $400 per week. Here in Arizona    where the Garnishment rate is 10% of Gross Income    that is $40 per week. Not counting interest    it will take 375 weeks (over 7 years) for the next company to get paid. Factor in the interest at 9% and #2 may never get paid. That information may just be enough to get all other creditors to negotiate a great settlement deal (more on how to do that later in this section) just to get SOMETHING rather than still be standing on line the day you retire. Then    after all your creditors have settled except ABC    you change jobs and leave ABC as your only creditor    and they can’t find your job to garnish. Of course    if a company YOU happen to own also happens to be garnishing your salary for a large debt owed    then the others will just have to wait in line.

Strategies to frustrate Bank Account Attachment:

Armed with a judgement your creditors can take your entire bank account – if they can find it. Here are some ways to make as sure as possible that doesn’t happen.

When I was a bill collector one of my best routines was to send the debtor a check for $1.14. Accompanying the check was a letter saying we collected an illegal late charge. When the check came back in my bank statement I knew exactly where the debtor did his banking from the endorsement and stamps on the back. You can bet the next Friday that bank got a Seizure Order. For $1.14 (which I just added back onto the debtor’s account) I got several hundred dollars. The lesson is simple – don’t cash small checks your creditors send you. If you must    sign them over to a friend or relative and let THEM cash it (in a different bank where you bank    that topic is next).

Bill Collectors routinely contact banks near where you live or work to find out where you bank. Many larger banks have an “account locator service” that may or may not tell a bill collector if you have an account at that bank. If you live in a small town or small city where there are a limited number of banks    some bill collectors will just serve them all with a Seizure Order and see which one works. The solution is the Internet. I live in Tucson    Arizona and I do my banking in St Paul    Minnesota! The contents of that account is kept small    and most of my bank deposits are kept in a cyberspace bank. Let the bill collector find THAT. Do a search for "Internet banks" for a list of Internet banks you can use.

I do not recommend titling your accounts in your children’s names because if found out that could be construed as “in fraud of creditors”    which is illegal. Moving your banking to the other side of the world    in your own name    is perfectly legal.

Strategies to frustrate Car Repossession:

The rules here are different for the two types of repossessions. One type is when the Lienholder (the company on the title) repossesses the car and the other is when a Judgement Creditor repossesses.
Lienholders are much more prone to repossess than Judgement creditors for two reasons. The first is that the Lienholder only has to cover about $350 to 500 in repossession and sale expenses before realizing money towards the debt. A Judgement Creditor has those expenses PLUS the full balance left on all liens on the car. The economics of a Lienholder repossession are much more creditor-friendly than that of a Judgement Creditor. Second    in dealer-arranged financing it is possible that the lender and the dealer have a side arrangement wherein if the car is repossessed before a certain number of payments are made    or at all    the dealer will pay off the loan and take over the debt. This is called “Recourse” and you will not know if the loan is a recourse loan and what the recourse terms are. Judgement creditors have no recourse.

Making your car safe from the Lienholder merely means that the car note is one creditor you will have to pay. Making the car safe from other creditors means loading the car up with liens. I have a friend who actually put his dog    named Howard    on his car’s title as a lienholder. No sane judgement creditor will repossess a car with more than one lienholder on it. Considering that most people who owe money on their cars are “upside-down” (meaning they owe more than the car is worth) with ONE lien    two means you are not only upside down    but probably inside-out also. So…. Get a friend or relative to give you a loan    and secure it with a lien on your car.

Trusts – do they work?

Many people feel establishing a Trust is the way to make yourself “Judgement Proof”. A Trust is a legal entity that is established to perform certain specific functions. The most common purpose of a trust is to administer the assets of someone who died until they can be distributed to heirs. A Trust can either be revocable or irrevocable. I caution you to NEVER establish a Trust without the advice of a competent Attorney and Tax Advisor. My experience is that Trusts are an expensive and often unsuccessful tool for this purpose. The reason is because most trusts not administered by professional Trustees become so “transparent” that they cease to exist and a sharp lawyer can convince a judge that the Trust is “in fraud of creditors”. Let me define some terms:

“Judgement Proof” doesn’t mean you can’t be sued    and that a creditor cannot get a judgement against you. It only means that a judgement is useless against you because the judgement-creditor as no way to collect on the judgement. I like to compare a Judgement to a hunting license. Every year    millions of people buy hunting licenses. Not all of them are successful in the hunt. The license just gives them permission to look for a deer to shoot    it doesn’t guarantee a deer. Judgements are similar – gives a creditor the right to grab assets    if they can find assets. No assets    or assets out of reach of creditors is Judgement-Proof.

“Transparent Trust” means that the Trust has not been treated as a separate entity from its Grantor or Beneficiaries. As the Grantor (the person who set up the Trust) makes the wall between the Grantor’s affairs and the Trust’s affairs so thin that the wall eventually becomes transparent and nonexistent.

“In Fraud of Creditors” is a transaction that is entered into with the sole purpose of making creditors unable to collect    and usually has little if any other reason. Timing is a key element in this – something done before default is far less likely to be considered in fraud of creditors than something done after the judgement is rendered against you but before the Sheriff can grab the asset.

[phoenix2ny]

Another thing to remember is if you open new credit what you tell that creditor on the application in terms of your employment will show up on your credit report.  I always state that I am self-employed consultant on my new credit applications. The work phone number I list for employer is the same as my home number. A creditor generally views someone that is self-employed as a higher risk than someone who is salaried. Therefore it may grant someone who makes $50K self employed a lower credit limit than a $50K salaried person, but I will take the lower limit any day over revealing where I work to a creditor. In my mind anything I do on the side can render me self-employed. Consulting, contract work, selling on eBay are all included.

[foolsmission]

Good info on the employment.
Just worked for me.

[ilovemydogs]

FF
You say you were a bc. When was this and what made you change your profession and what do you do now, besides being a good guy to all of us.?
 : )
ilovemydogs

[Rottweiler]

Flying...

Ilovemydogs (including this one, I hope?    ) wants your life story.

I suppose it's time to tell it again...

[ilovemydogs]

Yes I would like to hear it, never have. It would be fun for everyone  to tell our own story, although not too much as we do not want *them* to know who we are. ; )

woofs
ilmd

[Rottweiler]

I would not worry about Flyingifr.  Everyone who wants to knows who he is, if they want to know; he's never hidden his identity.

If you want us to start a "My Story" thread, PM one of us, and we will consider that.

[RacieRacer]

If a JDB obtained a judgement against me in my maiden name, which was not my legal name at the time of the judgement, nor is it now, can they seize any bank accounts that are in my true, correct & legal name?

In the state of NC, & where I currently reside they cannot garnish.  So that is of no concern to me, especially since I'm not working right now, but even when I go back to work, they can't garnish here in NC.  (They will not even garnish here for out of state child support, DH assumed they would, wanted them to, they never did)

This JDB sued me in Ohio in 1999 and I recently received a letter from them at my address here, but still is addressed to my maiden name.

I was discussing the subject on this thead http://debtorboards.com/smf/index.php?topic=1176.0 but the answers I get seem to tell me that I'm S.O.L. (the other meaning of SOL, lol). I guess I have little or no defense to stop them from getting the 1999 Ohio Default Judgement entered here in NC.

So with that, I give up, let them get their 'd judgement.  I have no real estate, don't own a house, will close my bank accounts if need be.  Will put my cat as 1st leinholder and dog as 2nd on new vehicle if need be.

But again, my question here is can they seize my bank accounts if they get the judgement entered here in NC for 'Racie Maidenname' when the accounts are in the name of 'Racie Racer'

& can they attach a lein to the new vehicle we just purchased that is registered to DH and myself, with my correct and legal name on the title, not the maiden name?

Thanks in avance for any help/answers/suggestions 

[CCPenn]

If a JDB obtained a judgement against me in my maiden name, which was not my legal name at the time of the judgement, nor is it now, can they seize any bank accounts that are in my true, correct & legal name?


So with that, I give up, let them get their 'd judgement.  I have no real estate, don't own a house, will close my bank accounts if need be.  Will put my cat as 1st leinholder and dog as 2nd on new vehicle if need be.

But again, my question here is can they seize my bank accounts if they get the judgement entered here in NC for 'Racie Maidenname' when the accounts are in the name of 'Racie Racer'

& can they attach a lein to the new vehicle we just purchased that is registered to DH and myself, with my correct and legal name on the title, not the maiden name?

Good questions.
Also, how does one put a lien on a car. I own two cars outright and have never dealt with a lien. I could put a family member on as lienholders. How would I go about doing that?

Thanks for all the good info

[Rottweiler]

Easy, in theory...as long as you are not being sued right now ( the transaction would not be likely be declared in fraud of creditors):  Just take out a loan from them, using the car as collateral!  Then, record the lien.  The problem, of course, is that either the loan must be for a short term (and should be used to, let's say, pay off debt), since cars do depreciate.

This is assuming, of course, that you own the car outright.  If you still owe on it, the loan contract may very well prohibit putting on any addtional lienholders; if you try that, the car loan would likely go into immediate contractural default,  becoming immediately due and payable.  This is a result you do not want.

Also, if the debt that concerns you includes the car loan, then selling the thing to pay off the loan is not a good idea, either. Not that you'd get enough to pay off even that; most people are "upside-down" with car loans, and you would be on the hook for a deficiency judgment--more debt! 

If you don't own the car outright, the buyer could also risk getting in trouble, depending on the terms of the loan contract; the transfer could be decalerd fraudulent since it takes the collateral and puts it into other hands,  ones that were never a party to the loan agreement.  Look at the loan contract:  There may be a clause that prohibits this under pain of immediate default, too.

Also, who holds the title to the car?  The lenders often do until the loan is paid.
Therefore, if you try to sell the car without paying off the loan first, the buyer won't be able to register it (or insure it as the law no doubt requires), making the transaction useless.

[RacieRacer]

Easy, in theory...as long as you are not being sued right now ( the transaction would not be likely be declared in fraud of creditors):  Just take out a loan from them, using the car as collateral!  Then, record the lien.  The problem, of course, is that either the loan must be for a short term (and should be used to, let's say, pay off debt), since cars do depreciate.

This is assuming, of course, that you own the car outright.  If you still owe on it, the loan contract may very well prohibit putting on any addtional lienholders; if you try that, the car loan would likely go into immediate contractural default,  becoming immediately due and payable.  This is a result you do not want.

Also, if the debt that concerns you includes the car loan, then selling the thing to pay off the loan is not a good idea, either. Not that you'd get enough to pay off even that; most people are "upside-down" with car loans, and you would be on the hook for a deficiency judgment--more debt! 

If you don't own the car outright, the buyer could also risk getting in trouble, depending on the terms of the loan contract; the transfer could be decalerd fraudulent since it takes the collateral and puts it into other hands,  ones that were never a party to the loan agreement.  Look at the loan contract:  There may be a clause that prohibits this under pain of immediate default, too.

Also, who holds the title to the car?  The lenders often do until the loan is paid.
Therefore, if you try to sell the car without paying off the loan first, the buyer won't be able to register it (or insure it as the law no doubt requires), making the transaction useless.

Ok first of all I firmley believe the JDB's attorney is offering a line of scare tactic (as instructed by the JDB I'm sure).  Actually from the looks of the letter he didn't even know there ever even was an Ohio judgement, as he never referred to one, (then again maybe he did know, who knows?).

Let me clarify. 

- I was married in 1998

- Thoughout 1998 & 1999 (up until the judgement) I was hounded by JDB, JDB called asking for Racie Maidenname, I said there is no1 by that name at this #.  (which was the truth)

- Default Judgement for Bottom Feeder JDB in latter half of 1999

- 2006 Racie Racer (not Racie Maidenname) and DH purchased/financed a new sled.

Question:  Is that vehicle in jeopardy of having a lein attached to it from BottomFeeder's 1999 default judgement?

Default Judgement in Ohio, Racie Racer & her DH and their new sled are in North Carolina.  (again. new vehicle is in name of DH & Racie Racer, not DH & Racie Maidenname)

[Doctor Evil]

Did I used to have a post in this thread?

[Rottweiler]

Did I used to have a post in this thread?

I think you did, as a matter of fact.  I did not remove it.

I'll check, though...it might be in a similar thread.

Follow up:

It was not in THIS thread, but in the "Scaring Away Repossessors" thread:

http://debtorboards.com/smf/index.php?topic=15.0

[RacieRacer]

Where can I go to look to find out if a vehicle in NC is exempt from having a lein attached if said vehicle is used for business purposes?

[HeadsUp]

"Strategies to frustrate Car Repossession:

The rules here are different for the two types of repossessions. One type is when the Lienholder (the company on the title) repossesses the car and the other is when a Judgement Creditor repossesses.
Lienholders are much more prone to repossess than Judgement creditors for two reasons. The first is that the Lienholder only has to cover about $350 to 500 in repossession and sale expenses before realizing money towards the debt. A Judgement Creditor has those expenses PLUS the full balance left on all liens on the car. The economics of a Lienholder repossession are much more creditor-friendly than that of a Judgement Creditor. Second, in dealer-arranged financing it is possible that the lender and the dealer have a side arrangement wherein if the car is repossessed before a certain number of payments are made, or at all, the dealer will pay off the loan and take over the debt. This is called “Recourse” and you will not know if the loan is a recourse loan and what the recourse terms are. Judgement creditors have no recourse.

Making your car safe from the Lienholder merely means that the car note is one creditor you will have to pay. Making the car safe from other creditors means loading the car up with liens. I have a friend who actually put his dog, named Howard, on his car’s title as a lienholder. No sane judgement creditor will repossess a car with more than one lienholder on it. Considering that most people who owe money on their cars are “upside-down” (meaning they owe more than the car is worth) with ONE lien, two means you are not only upside down, but probably inside-out also. So…. Get a friend or relative to give you a loan, and secure it with a lien on your car."

What about the $5000 exemption for one vehicle in Arizona?  Wouldn't they have to pay off the lien and then pay me $5000 cash before they could get any money to pay the judgment from the sale of the vehicle?

I've been thinking about downsizing to a much cheaper and older vehicle-- one that is worth less than $5000.  What would happen in a case like this?  The judgment creditor wouldn't be able to touch it, right?  Because it is worth less than the $5000 exemption.