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  1. #1
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    Oct 2014
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    Default How to Know if You Are Judgment Proof

    My question involves collection proceedings in the State of: South Carolina

    I owe a few credit card companies between $750 and $10,000 each. (The $10,000 one is split up between two cards from the same company.)

    I own a house 50/50 with my husband as tenants-in-common. The house is worth $102,000, and we owe about $62,000 on the mortgage. So, as I understand it, we each have about $20,000 equity.

    All of my other assets are probably pretty worthless when depreciation is considered.

    My income consists of SSI, SSDI, monthly ACH deposits from a company for whom I work as an independent contractor, and sporadic payments via personal checks from people and companies I do projects for occasionally.

    Our budget is very tight, but I'm willing to bet a judge might deem some of our spending unnecessary.

    So, my main questions are:
    1) Can a creditor touch my house in any way? (If so, how?) Or does SC's homestead exemption laws protect it from my creditors?
    2) Can a creditor touch my bank account? (If so, which parts of my income can they take?)
    3) Can a creditor wait around for me to build more equity in the house and then take the house? If so, how long can they wait?

  2. #2
    Join Date
    Mar 2013
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    18,340

    Default Re: How to Know if You Are Judgment Proof

    The term "judgment proof" is a misnomer. Nobody is "judgment proof" in that a creditor can sue and get a judgment. What you might be is "collection proof."

    1) Can a creditor touch my house in any way? (If so, how?) Or does SC's homestead exemption laws protect it from my creditors?
    The SC homestead law exempts from judgment equity in a home up to $58,255 for a single owner, up to $116,510 so it looks like, for the moment, that your home cannot be attached to pay judgments.

    However, a judgment may be recorded so it becomes a lien on your home which could give you problems if you ever wanted to sell or refinance.

    2) Can a creditor touch my bank account? (If so, which parts of my income can they take?)
    There's two parts to that question.

    Bank accounts are fair game and can be levied (except for the SSDI and SSI) but not without a lawsuit and a judgment.

    Wages cannot be garnished for consumer debt in SC.

    3) Can a creditor wait around for me to build more equity in the house and then take the house? If so, how long can they wait?
    Three parts to that question.

    Yes, they can wait.

    No, they cannot take the house without a judgment and proper foreclosure procedures which are likely expensive and time consuming and isn't likely to happen.

    As to how long they can wait, in SC if they don't file a lawsuit within 3 years of your default, it will be time barred under the statute of limitations.

    In short, before a creditor can do anything to you, it would first have to sue and get a judgment and then it would appear that you are relatively collection proof although there may be other consequences to not paying your debts: trashed credit, higher insurance rates, reduced employment opportunities, and the nightmarish psychological strain that results from not paying your debts.

  3. #3
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    Nov 2013
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    Default Re: How to Know if You Are Judgment Proof

    When there is a judgment against one of the tenants in common, a sheriff sale can sell only a one half interest in property. It doesn't often happen but is possible.

  4. #4
    Join Date
    Oct 2014
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    114

    Default Re: How to Know if You Are Judgment Proof

    Thanks for the info.

    Quote Quoting adjusterjack
    View Post
    The SC homestead law exempts from judgment equity in a home up to $58,255 for a single owner, up to $116,510 so it looks like, for the moment, that your home cannot be attached to pay judgments.
    So, unless this law changes to reduce the amount or my house somehow suddenly increases in value from $102K to $116K, this can't be done? What do you mean by "attached"?

    However, a judgment may be recorded so it becomes a lien on your home which could give you problems if you ever wanted to sell or refinance.
    So, the Homestead Exemption does not apply to liens? How often does a creditor owed $5-10K put liens on people's houses?

    Bank accounts are fair game and can be levied (except for the SSDI and SSI) but not without a lawsuit and a judgment.
    So, a creditor could let my ACH paycheck get deposited and then take it (because, by then, it's part of a bank account, not a paycheck)?

    If a creditor sued me now and placed a lien, then I'd have to pay the whole debt in order to sell or refinance? Would that amount gain interest over time?

    although there may be other consequences to not paying your debts: trashed credit, higher insurance rates, reduced employment opportunities, and the nightmarish psychological strain that results from not paying your debts.
    This is what I am trying to alleviate now. Thanks again!

  5. #5
    Join Date
    Mar 2013
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    Default Re: How to Know if You Are Judgment Proof

    Quote Quoting ransomedbyfire
    View Post

    So, unless this law changes to reduce the amount or my house somehow suddenly increases in value from $102K to $116K, this can't be done?
    It's not the value of the home, it's the equity that counts. Your home can be worth $200,000. If your loan balance, for example, is $84,000 or more, your home is safe. Even if your loan balance is less, it would be an expensive proposition for a creditor to try to sell your home so it's unlikely to happen.

    Quote Quoting ransomedbyfire
    View Post

    What do you mean by "attached"?
    Similar to foreclosure.

    Quote Quoting ransomedbyfire
    View Post

    So, the Homestead Exemption does not apply to liens? How often does a creditor owed $5-10K put liens on people's houses?
    All the time. It's a simple matter to record a judgment for a few bucks recording fee. See the following search results for some resources that explain judgment liens:

    http://www.nolo.com/legal-encycloped...ina-46856.html

    https://www.avvo.com/legal-answers/i...en-594574.html

    Quote Quoting ransomedbyfire
    View Post

    So, a creditor could let my ACH paycheck get deposited and then take it (because, by then, it's part of a bank account, not a paycheck)?
    Here's information about exemptions on bank deposits:

    http://www.ehow.com/info_12013220_ca...-carolina.html

    If a judgment creditor files for a bank levy, the account is likely to be frozen but you would have the opportunity to go to court and seek the appropriate exemptions.

    With regard to Social Security deposits, there is automatic protection for direct deposits:

    http://www.nolo.com/legal-encycloped...-accounts.html



    Quote Quoting ransomedbyfire
    View Post

    If a creditor sued me now and placed a lien, then I'd have to pay the whole debt in order to sell or refinance? Would that amount gain interest over time?
    Judgment awards typically accrue interest on the unpaid balance.

    Whether you'd have to sell or not depends on the amount of the judgment and a lot of other factors that may become evident at the time. However, with a judgment on your credit and a recorded lien you are unlikely to be able to qualify for any loans.

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