[akodo jaku]

Allright, last year I found out I had a 10 year old child I had no idea about. After the DNA tests, court, etc. I ended up paying just over $550 a month in child support. i have two other children with my wife, and this represents roughly 20% of my income.
Unfortunately, I had bought a brand new car about 3 months prior to this. It had a VERY high intrest rate, but they said after 6 months of payments they would lower it. I needed dependable transportaion for my commute, and at the time I could afford the payments.
But when the child support hit, that money had to come from somewhere. Now, in the state of Michigan, they GARNISH the payments from your check. Currently, this is the only garnishment I have.
I voluntarily repoed the car. It took 4 months to get them to come get it, then they sat on it for another 5 months before they sent it to auction. Of course, in 9 months a new car loses alot of value. They sold it at a DEALER ONLY auction, leaving me with a balance of just over $13,000. Talk about ouch!
Now they want to structure payments with me. But heres the catch. They still are charging me 18% intrest on the unpaid balance, which means my minimal payment, just to cover the intrest, would be about $250 per month. If I could afford that, I would have kept the car!

So here are my questions:

1. Can they levy an additional garnishment, if I already have a 20% one in place?

2. My credit report is already wrecked. Can I file bankruptcy on just this bill?

3. Is there a time limit before they have to send this bill to collections, or can they just let it grow indefinitely?

4. Can they get a judgement and freeze my accounts without notifying me?

5. If I file bankruptcy, will the interest stop accruing?

Thanks for your answers.

[Mr. Knowitall]

1. Can they levy an additional garnishment, if I already have a 20% one in place?

The maximum total garnishment amount varies by state. If the court issuing the new garnishment order is not aware of the other garnishment order, you may end up with a total garnishment in excess of the limit. So make sure that the court is aware.

2. My credit report is already wrecked. Can I file bankruptcy on just this bill?

You can file bankruptcy and limit it to a particular subset of your creditors; but generally speaking, if you are filing for bankruptcy you are best served to name most or all of your creditors. Also, if you end up in Chapter 11 proceedings, you may find little benefit from the bankruptcy process if you don't declare most or all of your other creditors.

3. Is there a time limit before they have to send this bill to collections, or can they just let it grow indefinitely?

The applicable statute of limitations would prevent it from being successfully collected by a collection agency, if raised as a defense. (Some collection agencies attempt to collect expired debts, in what I consider to be a very questionable and often unlawful practice.)

4. Can they get a judgement and freeze my accounts without notifying me?

You would normally get notice of court proceedings, but once they have a judgment it may be possible for them to get an order to garnish your bank accounts or other assets without giving you advance notice. Court procedures vary by state.

5. If I file bankruptcy, will the interest stop accruing?

No, but as the debt would likely be discharged in a Chapter 7 proceeding, or reduced as part of a Chapter 11 proceeding, it probably wouldn't matter.