Here is a common fact pattern that happens almost every business day in America.
Creditor gets a default judgment against a debtor. The debtor has a car already subject to a lien and receives social security and some modest income from a part-time or temporary job. All of the debtor’s cash assets are in one account with a bank or credit union. The debtor has no other assets.
This common occurrence raises a series of often-asked questions:
- Will the creditor get a lien on the car and be able to repossess and sell the car to satisfy the debt? ANSWER: Because the car is already subject to a lien and due to the vagaries of the laws relating to creditor protection in this area, it is very unlikely that the creditor can get a valid lien on the car. In addition, because the car is already subject to a lien, it is extremely unlikely that there is any unencumbered value for the creditor with a judgment to latch onto.
- Can the debtor’s social security payments be garnished? ANSWER: Although social security payments may be withheld by the Department of the Treasury to enforce legal obligations (a) to pay child support, alimony and restitution; (b) overdue federal tax debts; and (c) certain delinquent non-tax debts owed to other federal agencies under the Debt Collection Improvement Act. the judgment creditor in our case cannot do so.
- Should social security benefits be placed in a separate account that contains only social security payments and no other cash assets of the account holder? ANSWER: Social security benefits that are commingled with other cash assets of the debtor may become subject to collection by a judgment creditor even if such benefits are otherwise not recoverable by a judgment creditor.
If a judgment has been entered against you and you have questions about what can happen next, and how to protect yourself, drop me a line at email@example.com
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