Collection Laws & Exemptions

I can't give you legal advice, as only an attorney can properly do so, but I will share some thoughts with you.

Given the complex set of facts you presented, including that the judge ignored your arguments, I advise you to speak with a Nevada attorney experienced in civil litigation. He or she can advise you if there are any ground to challenge the existing judgment.

Regarding your other question, if the creditor moves to domesticate the judgment, I believe it will be successful. The North Carolina court is not likely to revisit the facts of the original case.

The answers to your questions are complex, and beyond the scope of what anyone can answer via e-mail or a Web posting. You're dealing with two state statutes of limitations, which are in conflict with each other, and a question about your residency in either Oregon or California. Also, it is unclear to me if the "summons" you received is valid or an attempt to frighten you into negotiating a settlement.

Regardless of where you happen to be at the moment, take all of the documents you have about this matter to a nearby lawyer who has consumer law or civil litigation experience. He or she will review the "summons" and tell you in a moment whether it's legitimate or fake. Then, he or she will analyze your residency issue, and which statute of limitations apply for this case.

Until there is a judgment against you, your bank account is not at risk. If you are worried that a judgment could come down on you without notice, keep funds in your account to a minimum.

I don't know if you can ensure that you receive notice of any suit against you, but here are two ideas:

1. Hire an attorney and have the attorney send a letter to the landlord, informing him that you want to work things out but, failing that, that all correspondence should be directed to the attorney.
2. If it does not make financial sense to engage an attorney, send a letter to the landlord via a means that gives you proof that you sent you the letter. Make it clear that you want to work things out and that you are providing your current address. Save a copy of the letter.

If it turns out that you are sued without notice, go back to the court and request an opportunity to present your side of the story and show them your letter as proof that process was not served properly.

Nebraska has a $2,500 wildcard exemption, which can be used to exempt funds in a financial account, personal property, and automobiles. The "auto" means this Nebraska exemption covers automobiles, too.

In Nebraska, if you had $1,000 in your checking account, and a vehicle with a fair market value of $1,500, both are exempted entirely. (Nebraska Revised Statute 25-1552)

You mentioned you reside in Texas. See the Bills.com resource Payday Loans & Hot Checks in Texas to learn more about your rights and liabilities as a Texas resident.

Your summary of the Social Security Garnishment Rules is correct. See the link just mentioned to learn more.

I assume your co-signer is still alive. If so, the creditor has no claim to your expected inheritance because the law does not allow claims against something so speculative. Why? The owner of the property could change his or her mind and rewrite the will so that you inherit nothing. Or, you could predecease this person and inherit nothing. Or, this person could spend all of their wealth on endless around-the-world cruises and die penniless with nothing in his or her estate but maxed-out credit card accounts.

You and your co-signer should focus on the here and now. See the Bills.com resource How to Settle a Private Student Loan and Private Student Loan Forgiveness and Discharge a Student Loan to learn if any of the solutions mentioned on these pages may provide relief to you.

I can't give you legal advice. Only an attorney can properly give legal advice. However, I will share a few thoughts with you.

While a credit card has a 3 year SOL in Alabama, a written contract has a SOL of at least 6 years.

When a repossession, voluntary or otherwise, results in a deficiency balance, the lender has the right to collect the deficiency balance from the borrower. When the borrower does not pay the deficiency balance, the lender has a cause of action (a legal reason to file a lawsuit) against the borrower for breach of contract. If the state's statute of limitations for breach of contract is X years, and the lawsuit is filed X+ years after the statute of limitations has run, then the borrower has a defense he or she can raise at trial. If the court believes the borrower's statute of limitations defense, then the court will dismiss the case. In all but two states, the passing of the statute of limitations does not prevent the lender from filing a lawsuit. Consult with a lawyer in your state who has civil litigation experience. He or she will research the judgment issue to learn if any judgments are filed against your fiancé.

You mentioned a judgment. Judgments sometimes appear on credit reports, but credit reports are not a perfect snapshot of a person's financial history. In other words, the fact that no judgment appears on a credit report does not mean no judgment exists. You mentioned not receiving a summons. Under state and federal rules of civil procedure, a defendant must receive notice of a lawsuit. This is drilled into the heads of law school students. However, if the experiences shared by Bills.com readers is any indication, lawyers seem to miss this critical step in practice. If a defendant does not receive notice of a lawsuit, he or she can file a motion to vacate a judgment based on the plaintiff (the lender) not following civil procedure rules.

A judgment-creditor must follow the judgment-debtor's state rules when collecting a judgment. Most states allow account levy, liens on property, and wage garnishment. Joint accounts are not immune from account levy. Generally, I discourage joint accounts because, as your situation illustrates, they create more problems than they solve. My advice? You should abandon the joint account and open your own separate account at the same bank or credit union.

A deed establishes ownership rights. As mentioned above, judgment-creditors have the right to place a lien on a debtor's property. Consult with a lawyer about filing a quit-claim deed to remove the debtor's name from the property, and to better understand your rights regarding the possible judgment.

You mentioned "levying equity" in property. Equity is, in the eyes of the law, a theory. It is not real until the property is sold and cash is sitting in a bank account. To answer your question directly, no, a court will not allow an "equity levy" because it is something that may or may not appear in the future. And, if the recent mortgage meltdown taught us anything, it is that equity can vanish in the blink of an eye.

You mentioned New Jersey, which is not a community property state. The general rule is judgment-creditors in common law states have no legal basis to use a judgment they obtain against Spouse A to garnish the wages, levy the accounts, or place liens on the property of Spouse B. Some narrow exceptions apply in medical debt situations, but that does not apply in the case you described.

Beware joint financial accounts and property titled in both of your names. If you and your spouse share, for example, a joint checking account, a judgment-creditor can levy the contents of the account. If your home is titled in both your name and your spouse's name, a judgment-creditor can place a lien on the property.

My advice? Consult with a New Jersey lawyer who has bankruptcy experience. I am not suggesting bankruptcy is the solution to your problem. A New Jersey bankruptcy lawyer will discuss your options for how to protect your spouse's assets should a judgment-creditor pursue you.