If I am Sued, Can a Creditor Seize My Husband’s Bank Account Even Though It Isn’t His Debt.

Posts Tagged ‘judgments’

If I am Sued, Can a Creditor Seize My Husband’s Bank Account Even Though It Isn’t His Debt.

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Q: I Live in Michigan and Lost My Job in May 2009. I have Quite a Bit of Credit Card Debt that is in My Name Only. My Only Income is Unemployment. I Do Not Have a Bank Account in My Name. My Unemployment is Deposited to My Husband’s Bank Account. If I am Sued, Can a Creditor Seize My Husband’s Account Even Though It Isn’t His Debt, since the Unemployment is Going Into His Account?

A: I’m sorry for your job loss and credit problems. While I’m not a lawyer, nor an expert on garnishment law in your state, I do not believe that a creditor would be able to seize the money in your husband’s bank account for several reasons.

First, you indicated that your debts are in your name alone. That means that you are the one legally responsible for those outstanding obligations; not your husband. Additionally, you stated that the account in question is your husband’s alone. As you are not an owner or co-owner of that bank account, I do not see how a creditor would be able to get a judgment or a garnishment order from a court to tap into an account that does not belong to you. Lastly, some types of assets are protected from seizure and garnishment. In certain states, unemployment checks fall into that category. I know you are cash strapped right now and likely can’t afford to pay big bucks to a lawyer. But at the very least, I would suggest that you reach out to a legal aid clinic or a low-cost attorney service for more insights into this matter.

The only tricky matter is whether or not the state of Michigan forces individuals to pay the credit card debts of spouses. I honestly do not think so; but I can not say with 100% certainty whether that is true when someone has been sued, or perhaps a judgment against an individual has been issued. A good consumer lawyer will be able to give you more definitive answers. Good luck!

Justice denied as debt seizures soar (startribune.com)
Can You be Sued for Credit Card Debts (socyberty.com)

A collection agency wants more money than I can afford to pay. What should I do?

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Author: The Money Coach

Q: I Owe Dell Computer About $3,000 Due to Lack of Payment. I Tried to Pay Them Monthly But They Won’t Accept That. They Want a Settlement of $1,800 or Payment of $450 a Month Which I Do Not Have. I Am Dealing With Their Collection Agency. How Do I Handle This?

A: Even though it’s stressful to deal with debt collectors, ironically, it’s when your account is past due that you are often in the best position of all to negotiate with bill collectors and collection agencies. You have something that bill collector wants – cash. They also have something you want – the power to update your credit report, and to go away. So your strategy, in a nutshell, should be to dangle the cash carrot before their eyes – whatever amount of cash you have. Read on for more tips about your options for dealing with debt collectors. This information is adapted from my book, Perfect Credit: 7 Strategies to a Great Credit Rating.

What To Ask For From the Collection Agency

Depending on the status of your account (open, closed, charged-off, etc.), and how far behind you are in your payments, your goal should be to bring your account current, to set up a payment plan, or to agree on a reduced amount that the company will accept in lieu of full payment. In all these cases, what you’re really doing is settling your account and/or restoring it to good standing. In exchange for doing that, you must insist on getting the bill collector’s agreement to delete negative information that was previously reported about you. At the very least, they should update their records to reflect a “paid” current status. But often collection agents will do this, and keep in your credit file such notations as “was 60 days late.” Therefore, in most cases, it’s best to firmly negotiate for the outright elimination of negative information in your credit report.

Avoid Sending Post-Dated Checks

When you reach an agreement, put it in writing and have both sides sign the pact before you pay a dime. This way you’re protecting yourself if the person you’re negotiating with reneges on your deal. Don’t ever agree to send a post-dated check or a blank check to a bill collector. First of all, you’re giving them too much of your personal information by supplying them with your checking account number and bank name. Additionally, too many consumers report having been burned by bill collectors who cashed checks for more than they should have or who deposited checks ahead of the agreed-upon date.

If you can’t pay a debt, creditors and bill collectors may be willing to settle out of court with you for a lump sum payment of less than the amount you owe, or a monthly payment plan, but they also will not hesitate to sue you for the full amount of the money you owe them – if they feel the debt is large enough to go through the hassle, time and expense of going to court. So what should you do if you receive a summons and complaint from a creditor? In a nutshell: Answer it.

What Happens If You Do Not Answer the Complaint?

If you choose not to answer the complaint, the Court will enter a judgment against you, determining that you owe the creditor or bill collector whatever amount they asked for. You may even be told to pay their attorney fees. The creditor or bill collector can then use that judgment to garnish your wages, take certain monies from non-exempt bank accounts or put a lien on your property.

If you answer the complaint (and you usually have about 20 days to respond to the plaintiff’s claims), you preserve your right to be able to argue your position in court. You also will be notified of any future court dates. You can use your time in court to state why you don’t owe the money they claim.

What If You Do Owe the Money they Claim?

Even if you do know for sure that you owe the exact amount the debtor claims, you can still use your time in court to state another amount that you can afford to pay. Although typically, if you admit you owe the alleged amount, a judgment against you for said amount will be rendered. Your real leverage comes simply by answering. The debtor does not want to appear in court any more than you do. They simply want to get paid. Once they see how time-consuming this may become for them since they are not receiving a default judgment, they may be more willing to enter a settlement agreement with you.

What If You Don’t Have the Money to Pay?

It doesn’t matter if you don’t have the money. The debtor can still sue and the Court can still enter a judgment against you. Being broke is not an excusable reason to back out of your financial responsibilities, as the debtor is willing to shake the money out of you if it could. The courts will likely require you to file a financial statement and affidavit concerning your case and your finances. If you can show how you don’t have the funds to pay, or that you lack a steady income, the creditor or collection agency may be more willing to negotiate with you for a settlement plan. Of course, they don’t have to enter into a payment plan with you. They can reject your offer and then sue you for the full amount. A creditor or collection agent is more likely to reject a payment plan if they believe you have the means to pay, if they know that you have wages they can garnish, or if they are aware of property they can attach a lien to, or a bank account they can raid. It is often, however, in the creditor’s financial interest if they reach a settlement plan with you if you don’t have the means to pay.

Once an account has been charged off or written off as uncollectable, you may be in a better position to negotiate a lump sum payment to settle your debt. In this instance, you might try offered 25% or so of the balance you owe. Be careful with offering a monthly payment plan. Because if you miss a payment, the clock can start all over again for the full amount of the debt you owe. And negative information could be on your credit report for another seven years.

What to Do When You Get a Summons Or Have to Go To Court

Creditors can sell your debt and when they do, collection agencies will often try to threaten you with court action in order to get you to pay an alleged debt. Technically, it is illegal for collectors or creditors to threaten court action if they do not intend to carry through with it. Taking you to court is time consuming and expensive for them, and there is no guarantee it will result in the outcome the creditor wants. So typically, a court action is a tactic to get you to fork over money, or to obtain a default judgment against you if you don’t respond to a summons and complaint. If you do get a complaint, follow steps:

1) Answer a summons and complaint. If a creditor serves you with a summons and complaint, not merely a letter saying you owe debt, then you must answer within a certain timeframe set by your state laws (perhaps 10, 20 or 30 days), in order to avoid a default judgment.

2) Know the statute of limitations. There is a time limit on how long creditors have in which to try to obtain a judgment against you for the money you may owe them. That “statute of limitations” varies by state and type of debt. Typically, it is anywhere from 3 years to 10 years. A creditor can use the limits in your state or the state where they are located. They will often use the state with the longest statute of limitations, because it is obviously beneficial for them. To check the statute of limitations on debts in your state, contact your State Attorney General’s Office or go to www.naag.org and click “The Attorneys General.”

3) Realize that credit bureaus limits are not the same as debt statute of limitations. Federal law typically requires credit bureaus to drop negative information after about seven years from the date of your first missed payment. (There are exceptions, such as bankruptcies can stay on for 10 years, and tax liens can stay on for longer). If you live in a state with a 3-year statute of limitations on legal collection of debt, it will still show up on your credit report. If live in a state that allows judgments to be entered for 10 years, it is possible the debt came off your credit report after 6 years. So do not use your credit report to help you determine if you owe debt. You can use it, however, to check to see when the creditor first considered you to be delinquent.

I Opened A Credit Card Back in College in the Year 2,000 and I Have Never Paid it Off. Should I Pay It or Not?

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Author: The Money Coach

Q: I Opened A Credit Card Back in College in the Year 2,000 and I Have Never Paid it Off. Should I Pay It or Not?

A: If the credit card is still open, then by all means pay if off if you can. But I think your question is referring to an account that you had a decade ago that went delinquent because you never paid it at all. If that’s the case, my advice to anyone in this situation is this: if you can afford to pay a debt, then go ahead and do it. That’s the right thing to do because you did, after all, go out and make the charges. No one forced you or put a gun to your head to make you spend on that credit card. Also, you will learn a good financial lesson in honoring your obligations. But in other instances, especially in this tough economy, certain old debts are best left in the past.

Some Old Debts Are Best Left in the Past

If you are cash strapped and really don’t have the money, or it would be a big financial burden to pay that old debt, then from a credit management standpoint, you should probably just let that old debt stay in the past. Negative information, such as a late payment or collection account, can stay on your credit report for seven years from the date of last activity. So if you last used or paid that card in, say, the year 2003, then in 2010 it will fall off of your credit report. Also, you should know the statute of limitations for credit card debts in your state. They can be anywhere from 3 to 10 years. Once the statute of limitations expires, a creditor can’t sue your, try to garnish wages or get a judgment against you for non-payment.

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Tags: Banks, Budgeting and Money-Management, collection account, credit, Credit and Debt, credit cards, credit reports, Credit Scores, debt, debt collectors, judgment, judgments, money management, old debts, Spending Money Wisely, statute of limitations |

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Can I Be Held Responsible for Medical Bills My Ex-Spouse Generated?

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Author: The Money Coach

Q: Can I Be Held Responsible for Medical Bills My Ex-Spouse Generated? She Was Covered on My Insurance Plan. We Just Signed Divorce Papers.

A: With medical collection activity on the rise, it is definitely possible that a hospital, clinic or healthcare provider could come after you to pay off healthcare bills incurred by your former spouse. In fact, in many states, healthcare providers use common law doctrines to force spouses of patients to pay outstanding medical debts. Even if you don’t live in a common law state, many states consider a wife or husband responsible for a spouse’s medical bills, provided the two were living together when the medical bills were generated. That’s the case in New Jersey, where I live. Here, the Supreme Court has ruled that both spouses are liable for the “necessary” expenses incurred by the other while living together; and medical services are considered “necessaries.”

Fortunately, there are some efforts underway to safeguard spouses (and ex-spouses) when a wife or husband has racked up big medical bills. For example, many consumer protection agencies advocate exempting spouses from medical debts altogether.

What Your Former Spouse Should Do

Meantime, to protect yourself, talk to your former wife (if that’s possible) and encourage her to set up a repayment plan for her medical debt. Suggest that she review her medical bills closely to make sure she wasn’t overcharged or double-billed for anything. And share with her the resources listed below. Ultimately, of course, what your ex-spouse does or does not do is out of your control. But here’s what you can control.

How to Protect Yourself

First off, keep close tabs on your own credit files. Signing up for a good credit monitoring service is a way to do this. (I use credit monitoring from FreeCreditReport.com and myFICO.com). Unpaid medical bills don’t usually appear in your credit reports. But if they go into collections, then those accounts will be listed in your Equifax, Experian and TransUnion credit files. So be especially watchful for any collection accounts that may pop up in the future that you might have to dispute. The Federal Reserve reports that more than 50% of collection records and 20% of lawsuits that appear on credit reports are due to medical debts.

Aside from monitoring your credit, you should contact your health insurance company to inquire about any medical invoices that they didn’t pay. Perhaps there was an oversight, a missing claims form, or simply some information that you can supply that would cause the insurer to cover some of the outstanding healthcare bills.

Know the Worst-Case Scenario

Also, examine any of her healthcare bills you may have copies of – to see if there were clauses or fine print that obligated you or her (or both of you) to pay whatever was not covered by insurance. Sometimes, healthcare providers will spell out what recourse they may pursue in the event of non-payment. Aside from damaging your credit will collections, judgments or lawsuits, healthcare providers may try to garnish wages, seize assets or put a lien against your home. These are extreme tactics, and will certainly not be used in every case. But you need to be aware of all possibilities. In the end, how aggressively a healthcare provider pursues a debt will largely depend on the laws in your state, the amount of debt owed, and the extent to which the provider thinks they can shake money out your or your ex spouse.

Resources for More Help

Lastly, if you do get socked with your former spouse’s medical bills in the future, reach out to a variety of consumer organizations that can help you with this issue. Some groups that have fought wrongful medical billing practices include:

Access Project http://www.accessproject.org

Bill Advocates http://www.billadvocates.com

Consumers Union http://www.consumersunion.org

Hospital Debt Justice http://www.hospitaldebtjustice.org

National Consumer Law Center http://www.consumerlaw.org

Ask The Money Coach

Posts Tagged ‘judgments’