Am I Judgment Proof? – Larry

“Dear Steve,

I am on Soc Sec Disability (SSDI). I have over $10K in credit card debt. I have no other debts, loans, no student loans, no child support and no taxes due.

I have 3 cars which I owe no money on (two 1999 models and a 1991 model) that may come to a grand total of $4K in value. I own these free and clear. I own 2/3 of my parents’ home in which I reside in. My brother owns 1/3 of the home, but lives well in his own home elsewhere and just a note that my sister gave me her 1/3 of the home just this past Fall 2009.

There is no mortgage on the house or property nor any liens whatsoever. I receive $1,400 monthly SSDI. I divorced in 1999 where my ex wife got the marital home in the divorce then foreclosed on it the same year, so I should be clear from that on my credit file by now.

I remarried in 2008. My current wife owns a very small business which typically she earns approx. $6K yearly, but has made as much as $12K.

I receive only $75 monthly in food stamps and that is what we live off of and pay bills with. Due to my disability, I lived off of my credit cards and paid bills with them until 2009. I know….bad call.

I have a worker’s comp claim filed but from what my attorney says, I have less than a 50% chance of getting anything because the statute of limitations had run due to my former employer stringing me along telling me they’d pay me…..and I believed them.

So, I do not forsee me getting any money from that. We look for the case to be thrown out. Creditors are calling daily from 8 a.m. until 9 p.m. I do not even use an alarm clock anymore when I have them to call me at the time I need to get up everyday…..even Sundays and Holidays.

Also, I got a lump sum od $19K in disability back pay that could have easily paid off these debts, but my home was in such ill repair that I had to invest it all into it to save it from going down and so that we’d have a roof over our head. The house is valued at approx. $75K (rememeber I own 2/3). The house was built before codes were enacted in the early 60’s so there was no insulation whatsoever in the house (walls had to be torn out, insulation put in, walls replaced) this cost us $2,000 only because we had a friend to do the labor for way less than 1/2 cost; no ac/heat unit (had to get one installed and duct work) we used space heaters and window ac units before and spent $4,000 on the unit and duct work; then roof was old, badly damaged and leaky (replaced roof)we spent $6,400 ($4,000 was paid by insurance); windows were old aluminum windows that sweated so we could not have that with new sheet rock so we spent $6,800 of that to replace windows. All of that money was eat up for the desperately needed repairs and there is still more that we are gonna just have to pray that we do get something from the worker’s comp suit to cover the rest of our home repairs. It needs a paint job deperately, but will have to hold off until something comes along. Anyway. You get the idea. We live in Alabama if that helps you any.

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Am I considered judgment proof on these debts? Secondly, can the creditors sue me and get a lien against my home or cars? Since I am on disability, it is the only income I have, can they raid my bank accounts and get mine and my wife’s meager earnings, money and savings? Can they collect against any lump sum disability payments I may get? Should I file for bankrupcy?

Larry”

Dear Larry,

I’m glad to here you’ve made some basic improvements to the home. They sounded very needed.

The “judgment proof” question is one I hear people saying a lot, and getting it wrong almost every time. Being judgment proof does not mean you are lawsuit proof. Even if a creditor might not be able to attach public benefits in a post-lawsuit judgment, they can and will still sue you.

You unfortunately appear to be anything but judgment proof with some real equity and assets.

Quite frankly, If the collection calls are too much to take and you want to close the door on the old debt the only way to do it and have rights and protections under the law would be through bankruptcy.

I know that $10,000 to some people would not sound like a lot of money but that’s not the measure if bankruptcy is necessary or not. In your case the collection activity is stressful and there is no reasonable expectation you will be able to repay the money using future income. Any awards you are expecting are for the work comp issue and are meant to compensate you for that event.

I think you should click here to find a local bankruptcy attorney. The appointment won’t cost you anything and you can get a local legal opinion and see if the bankruptcy agrees with me on this.

What do you think, does this seem to e a logical way to proceed?

Sincerly,


You are not alone. I'm here to help. There is no need to suffer in silence. We can get through this. Tomorrow can be better than today. Don't give up.
Damon Day - Pro Debt Coach

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Steve Rhode

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