Exemptions & Collections in Debt Judgments
You may consider yourself unique, one-of-a-kind, invaluable—your credit card company may consider you an asset waiting to happen. So your credit card company sued you in small claims court. A debt judgment is just a piece of paper; they may as well print it on two-ply for all it is good for if you have no money. If there is nothing for them to collect from you, then there is nothing for them to collect. Either you are collectible or you are not, EXCEPT the creditor is going to watch your accounts for the next 20 YEARS. You may not always be broke. So you filled out your Fact Information Sheet—how much money you do NOT make, how many cars you do NOT own, and the Renoir you do NOT have in your basement. The creditor will go after cash first. They do not have to liquidate cash—it is liquid. If you have no cash, then they will look at other assets. If you have no other assets, then they will wait, and they will wait and wait, and watch your bank account to see if anything changes. The difference between exemptions and collections is about twenty years. You only have a [...] Read More
Estate Planning as a Matter of Life & Death
So you are being sued for credit card debt in small claims court, do you move everything into your wife’s name? This is where I like to encourage estate planning, not just to have your affairs in order at death, but also to be financially ready to deal with debt collection prior to assuming room temperature. Use the power of AND in your married relationship to spread risk to as many people as you can—like an insurance policy. You are joined by AND (not OR), and that is important. The Unity of Marriage subscribes to the legal fiction that husband and wife are one entity. If you get divorced later, you can divide the assets then, but while you are married, use the power of AND as Tenants by Entirety to secure your financial life. Read More
Confessions in Small Claims Court
Small claims court handles matters of $5,000 or less, often dealing with credit card debt. Debtors sit in the judge’s chambers and the creditors’ attorneys appear by phone to hear debt confessions and negotiate repayment plans. Debtors are required to confess their assets on a Fact Information Sheet. In the US, we do not have debtors’ prison, but you could go to jail if you do not fill out your Fact Information Sheet. You have to confess your cars, properties, bank accounts, employment, and that Renoir you have in your basement. If you are being sued in Small Claims Court and you have nothing, get that Fact Information Sheet in to let them know that they have nothing to come after you for. And seek legal advice to find out about exemptions. If you are head of household at a certain income level, living off Social Security benefits, or a pension or disability, you may have an exemption to collection judgments; however, just because you are eligible for an exemption does not mean you automatically get one. The key to an exemption is that you have to claim it. Seek competent legal guidance before you commit an exempt income to [...] Read More
Small Claims Court is NOT After Your Social Security
The Social Security Act of 1935 began financial assistance for the elderly, the blind, the disabled, and the unemployed. Since the first Social Security payments in 1937, $11.3 trillion has been paid out in benefits through 2009…none of that was meant for credit card debt settlement in Small Claims Court. Everyone should pay their bills, but you have to be able to stay in your home, feed yourself, and put gas in your car. Therefore do not promise your Social Security income to cover a collection judgment; claim an exemption instead. If you are living off Social Security, you may be able to claim those benefits as exempt from a debt collection judgment. The key to that exemption is that you have to claim it. Just because you are eligible does not mean you automatically get it. Seek competent legal advice to learn more about exemptions from judgment. (You do not need an appointment to pick up a pamphlet at Legal Aid about collection exemptions and how to claim them.) Small Claims Court is not necessarily easy, but good legal advice may give you a better outcome. Read More
Who? – A Good Question in Small Claims Court
‘Who?’ can be a bigger question than it should be in Small Claims Court. Debt buyers purchase debt from credit card companies for pennies on the dollar, then try to collect the full amount. With such large growth in the debt collection industry of recent years, often the paper is not in order. A debt buyer may sue you in Small Claims Court faster than they have the authority to do so. This is especially troubling if the company that actually owns the debt comes along later and sues you for the same amount. In order to get a debt judgment against you, the Plaintiff should be able to prove they own the debt, you are responsible for the debt (your promise to pay in writing), and the exact amount you owe. The plaintiff must use proper legal proof, as through business records—not the hearsay of an affidavit they sign that says you owe. If you are not familiar with the name of the company suing you, “Who?” is a good question to ask to make sure they have proper authority over the debt to bring the lawsuit. For other good questions and answers in Small Claims Court, go to [...] Read More
Hearsay About Small Claims Court
Small Claims Court is NOT Judge Judy. The pre-trial hearing is your chance to ‘admit’ or ‘deny’ a debt. It is also your opportunity to question or disagree about the debt amount or whether the company suing you has the right to collect that debt. The problem with Small Claims Court cases is… The company suing you (the Plaintiff) may not be the company you owe. The amount they are suing you for may be incorrect. And often the company suing you lacks proper documentation to prove their case. The gap between what is evidentiary and what is hearsay could be your downfall…especially if you do not question it. A Business Record (like a document kept in the course of a company’s regularly conducted business, recording transactions at or near the time of the transactions and not for the sole purpose of litigation) qualifies as admissible evidence. However, an Affidavit signed off by the Plaintiff, of the Plaintiff, and for the Plaintiff is hearsay. We cannot cross-examine an Affidavit…even if it is notarized by Judge Wapner. Contact your attorney or your local Legal Aid office for more information about your rights as a Defendant, the lawsuit filed against you, the [...] Read More
‘Testiliars’ in Small Claims Court
Great Britain hosts a competition every year to crown the World’s Biggest Liar. The winner has to fabricate the biggest fib and make it convincing. We have the same thing in this country in Small Claims Court. Small Claims Court deals with matters of $5,000 or less, usually in credit card debts. The problem is the credit card company often sues faster than they put the case together. The credit card company will send a ‘testiliar.’ Those can be fun to mess with because they appear by phone ready to negotiate a repayment plan–they are NOT prepared to answer questions about the debt, like verification of the amount or terms. They are unprepared to deal with a legal defense from the debtor (and they may not have a legitimate case). Even in a Small Claims case, a little legal advice could make a big difference. You may have defenses available and / or you may be eligible for exemptions from a debt judgment. Seek competent legal counsel before you write checks to somebody who has been racing snails with Prince Charles. Read More
Studying for Small Claims Court
Small Claims Court is NOT the Spanish Inquisition. You should NOT expect the unexpected. Study your debt so you know what to expect. On a spelling test, you know every word that will be on the test, and you are given all the answers ahead of time so you can study. In Small Claims Court, you should be asked to pay the amount owed—NOT a higher amount. And you should be asked to pay the party you owe—NOT a debt buyer who lacks proper documentation to show that he has the authority to collect the debt. Do your homework to know how much you owe and who you owe it to. Overpayment to an unauthorized collector is not going to reduce your debt or repair your credit…and you could be in double trouble if the legitimate creditor comes along asking for the correct amount you owe. Furthermore, you could be eligible for an exemption from debt judgment. If you are head of household at a certain low level, living off Social Security benefits, or a pension or disability, you may have an exemption to collection judgments. The key to an exemption is that you have to claim it. Just because [...] Read More
Credit Card Shoppers in Small Claims Court
If you are a Neiman Marcus shopper, you are no doubt aware of this year’s hundred-grand His and Her watches that come with a trip to Paris and Geneva. Or—for that somebody who has everything—a half million dollar closet remodel (with silk-lined drawers, fur coat cabinet, walk-in cigar humidor, and wine fridge) may be the only gift option. Most defendants in small claims court do not fit that tax bracket. Many small claims defendants are caught in the spin cycle of revolving credit: they spend what they do not have on items they cannot afford, so they charge purchases on a credit card, where the debt racks up large interest fees, and eventually the matter winds up in small claims court. Yes, you should pay your debts. And yes, you have to have a place to live. You have to eat, wear clothes, and put gas in your car to go to work. If you are the head of household at or below a certain income level, you may be exempt from a small claims judgment. Before you sign over your wages, your pension, Social Security benefits, or disability income to a creditor, you might want to find out if [...] Read More
When Opportunity Knocks…After Judgment
The best way to avoid a judgment in Small Claims Court is to PAY YOUR BILLS. Pay your bills on time every time and usually you can avoid Small Claims Court altogether. For some people, though, “Pay your bills” is easier said than paid. Situations happen. Medical hardships, job loss, divorce, and loss of income not only disrupt lives, they can affect good bill-paying practices and damage credit. Regardless of how you get to Small Claims Court, once there, you will probably be better off to avoid a collection judgment against you. Even if you do not have the money to pay right away, you are not “safe” in your poverty. You may count your misfortune as fortunate for the time being, but a judgment could hamper your recovery in the future. A judgment is a lien, good for twenty years and which can collect interest. If opportunity knocks five or ten years after the judgment, you are still responsible to pay that judgment collection. Debt collectors know this. They know they cannot collect on all judgments when they happen, but they also know that they have twenty years to wait for that money to come in. Debt collectors monitor [...] Read More