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VanDLaw
VanDLaw, Attorney
Category: Bankruptcy Law
Satisfied Customers: 833
Experience:  Chapter 7 & 13
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i am laid off. i have 45000 in credit card debt. i always ...

Customer Question

i am laid off. i have 45000 in credit card debt. i always thought that if need be i would get a home equity loan to consolodate my debt with 100000 dollars equity. i was turned down because i am laid off. the 45000 at 5% may soon be 20%. i am 61 years old. i may return to work in about 3 months. i have a ten acre homestead in Texas, with 850 dollars a month in rentals. i have an annuity of 80000 when i retire. if i go into default my debt of 45000 may turn into 60000. can they take my rental income,garnish my paychecks, garnish my social security, take my annuity, put a lien on my property?
Submitted: 5 years ago.
Category: Bankruptcy Law
Expert:  VanDLaw replied 5 years ago.

HelloCustomer

I will be happy to assist you. When you say "they" take I am assuming you mean the credit card companies. If you are sued and the creditor prevails, the court will issue a "judgment" against. This may be filed with the county clerk's office, and will become public record. A judgment stays "alive" for ten years, but may be renewed indefinitely.

Once the creditor has a judgment, he may take steps to try and enforce the judgment by taking some of your property to satisfy the judgment. Basically, the creditor may take what the law calls "non-exempt" property. Exempt property is property that the legislature has determined a debtor may keep, even if he is sued and loses.

As discussed above, once a creditor has a judgment he may take non-exempt property to satisfy it. By simply filing an "abstract of judgment," the creditor gets a lien on non-exempt real estate. Under Texas law, however, your homestead is "exempt." This means that a creditor may not force you to sell your home. The only exceptions to his rule are creditors who loan you money to buy, build or repair the home, creditors who make a "home equity loan," and certain government entities collecting taxes. Here is what the Texas Homestead Exemption law states:

§ 41.001. Interests in Land Exempt from Seizure

(a) A homestead and one or more lots used for a place of burial of the dead are exempt from seizure for the claims of creditors except for encumbrances properly fixed on homestead property.

(b) Encumbrances may be properly fixed on homestead property for:

(1) purchase money;

(2) taxes on the property;

(3) work and material used in constructing improvements on the property if contracted for in writing as provided by Sections 53.254 (a), (b),and (c);

(4) an owelty of partition imposed against the entirety of the property by a court order or by a written agreement of the parties to the partition, including a debt of one spouse in favor of the other spouse resulting from a division or an award of a family homestead in a divorce proceeding; or

(5) the refinance of a lien against a homestead, including a federal tax lien resulting from the tax debt of both spouses, if the homestead is a family homestead, or from the tax debt of the owner.

(c) The homestead claimant's proceeds of a sale of a homestead are not subject to seizure for a creditor's claim for six months after the date of sale.

Texas law also protects certain personal property, Under the law, some property is designated as "exempt." Exempt property may not be taken by your creditors, even if they sue you and win. here is the Texas Personal Property Exemption Statute.

42.001. Personal Property Exemption

(a) Personal property, as described in Section 42.002, is exempt from garnishment, attachment, execution, or other seizure if:

(1) the property is provided for a family and has an aggregate fair market value of not more than $ 60,000, exclusive of the amount of any liens, security interests, or other charges encumbering the property; or

(2) the property is owned by a single adult, who is not a member of a family, and has an aggregate fair market value of not more than $ 30,000, exclusive of the amount of any liens, security interests, or other charges encumbering the property.

(b) The following personal property is exempt from seizure and is not included in the aggregate limitations prescribed by Subsection (a):

(1) current wages for personal services, except for the enforcement of court-ordered child support payments;

(2) professionally prescribed health aids of a debtor or a dependent of a debtor; and

(3) alimony, support, or separate maintenance received or to be received by the debtor for the support of the debtor or a dependent of the debtor.

(c) This section does not prevent seizure by a secured creditor with a contractual landlord's lien or other security in the property to be seized.

(d) Unpaid commissions for personal services not to exceed 25 percent of the aggregate limitations prescribed by Subsection (a) are exempt from seizure and are included in the aggregate.

§ 42.002. Personal Property

(a) The following personal property is exempt under Section 42.001(a):

(1) home furnishings, including family heirlooms;

(2) provisions for consumption;

(3) farming or ranching vehicles and implements;

(4) tools, equipment, books, and apparatus, including boats and motor vehicles used in a trade or profession;

(5) wearing apparel;

(6) jewelry not to exceed 25 percent of the aggregate limitations prescribed by Section 42.001(a);

(7) two firearms;

(8) athletic and sporting equipment, including bicycles;

(9) a two-wheeled, three-wheeled, or four-wheeled motor vehicle for each member of a family or single adult who holds a driver's license or who does not hold a driver's license but who relies on another person to operate the vehicle for the benefit of the nonlicensed person;

(10) the following animals and forage on hand for their consumption:

(A) two horses, mules, or donkeys and a saddle, blanket, and bridle for each;

(B) 12 head of cattle;

(C) 60 head of other types of livestock; and

(D) 120 fowl; and

(11) household pets.

First, in most cases, a creditor can not get a writ of garnishment without first going to court and getting a judgment against you. Once a creditor has a judgment he may use what is called a writ of garnishment to get money or property that you are "owed" by another person. For example, when you put money in a bank account the bank has an obligation to return that money to you. In effect, they are a debtor and owe you the money. A creditor with a writ of garnishment may garnish these funds and take them to satisfy the judgment.

Similarly, when you are an employee, your employer owes you your wages. As a general rule, however, there is no wage garnishment in Texas. The Texas Constitution makes current wages "exempt" property. There are exceptions, however, for child support, student loans and certain taxes. In other words, the average creditor who sues you and gets a judgment may not garnish your wages. (I also should point out that a threat by a debt collector to garnish your wages, when he has no legal right to do so, probably violates the Federal Debt Collection Act.)

Finally, note that only "wages" are exempt. Many people are self employed and do not work for wages. For example, if you are a self employed repair person, the money you are owed by your customers is not wages. If the debtor sues you and gets a judgment, he may use what is called a writ of garnishment, to take the money you are owed by your clients.

As I noted above, without first suing you, a creditor generally may not just take any of your property. Even after you are sued, however, Texas law makes a qualified retirement plan "exempt" property. this means that a creditor may not take your IRA, even if he has successfully sued you.

Your rental payments that you deposit into your bank account and non-homestead property are subject to lien and garnishment. Your wages (as long as they are not self employment wages) and social security and annuities are not subject to seizure.

I know this is rather long, but wanted you to have the information.

VanDLaw, Attorney
Category: Bankruptcy Law
Satisfied Customers: 833
Experience: Chapter 7 & 13
VanDLaw and other Bankruptcy Law Specialists are ready to help you
Customer: replied 5 years ago.
thank you VanDLaw, your answews were concise
Expert:  VanDLaw replied 5 years ago.
You are welcome, good luck!

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