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Thomas McJD
Thomas McJD, Lawyer
Category: Consumer Protection Law
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Experience:  Experienced in general consumer protection law
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I have a charged off debt from American Express that has been

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I have a charged off debt from American Express that has been placed with an attorney collection agency in Maryland. I have never lived in Maryland but used a debt settlement company in Maryland that had me change my mailing address to there address in Maryland. I have since terminated the debt consolidation companys service and have settled or have settlement arrangements on all my accounts except American Express. All debts were defaluted on due to divorce and retirement.

My question is should I contact and try to work with the Maryland attorney collection agency or since I am not a resident of Maryland should I disregard them? My income is from Military retirement pay, VA disability and some rental income from property in Oklahoma.

Hello and thank you for allowing me the opportunity to assist you.

Q: My question is should I contact and try to work with the Maryland attorney collection agency or since I am not a resident of Maryland should I disregard them?

A: I would contact them to work something out. The fact that you are not a resident of Maryland is irrelevant. The collection agency can easily retain an attorney where you are located and sue you. It happens all the time. It's probably rare when a collection agency is located in the same state as the consumer. If a judgment is obtained against you, then your income can be garnished.

Does that answer your question? Please let me know if you need clarification, as I am happy to continue helping you until you are satisfied. Also, your positive feedback is much appreciated. Thank you for using our service!

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Customer: replied 4 years ago.

My main income is Military retired pay and VA disability pay.


My understanding is that this income can not be garnished for non payment of consumer debts? My rental income should be the only income they can garnish up to 25%. Is this true? Plus I think they could try to place a lein on my property but I doubt they could force a sale.


Also, since this is an attorney collection agency would I be corrrect to assume they already plan to file suit against me and are not looking to make a settlement?


Thank you,

Customer: replied 4 years ago.
Relist: Other.
Still waiting on answers to follow up questions.
Hi, I will be happy to assist you, and it is my goal to make you a very satisfied customer! This may take a few minutes, so thanks for your patience.

Yes, the rental income is the only income that is subject to being taken (but not by garnishment -- by attachment and levy since it's not income from a job and paid by an employer). Thus, it's not limited to the 25%. They can take all the rental income. Of course, if you operate the rental through an LLC, they can't take any of the income unless the LLC actually distributes the income to you because they would be limited to a charging order for the LLC. If you don't already have an LLC, you can't form one now for asset protection as such would be a fraudulent transfer.

If a judgment were obtained against you, then it could be a lien on your property (unless owned by an LLC or other entity and not in your personal name). If in your personal name and a judgment is filed as a lien against the property, then they could foreclose on the property because you don't have a homestead protection on a non-primary residence property.

As far as their plan to just file suit -- not, they'll try to collect first, but if you don't pay, then they probably will file suit (otherwise it would have gone to a non-attorney collection agency).
Thomas McJD, Lawyer
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Experience: Experienced in general consumer protection law
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Customer: replied 4 years ago.

Dear Sir,


I have been researching your answer and would like to ask a follow up question.


1. Is it a fradulent transfer of my rental property to an LLC or such even though I have not been served and have no legal action pending at this time and do have other income (Military retirement & VA disability) that I can use to pay this debt.


If offered a reasonable settlement offer I plan to settle with the collection agency as I have with all my other creditors. But I am currently paying two other settlements and can't really afford to pay another at this time.


Thank you,

Keep in mind you don't have to actually be sued. It's enough if there is threat of suit. Here is the law on the matter:

A. A transfer made or obligation incurred by a debtor is fraudulent as to a creditor, whether the creditor's claim arose before or after the transfer was made or the obligation was incurred, if the debtor made the transfer or incurred the obligation:

1. With actual intent to hinder, delay, or defraud any creditor of the debtor; or

2. Without receiving a reasonably equivalent value in exchange for the transfer or obligation, and the debtor:

a. was engaged or was about to engage in a business or a transaction for which the remaining assets of the debtor were unreasonably small in relation to the business or transaction, or

b. intended to incur, or believed or reasonably should have believed that he would incur, debts beyond his ability to pay as they became due.

B. In determining actual intent pursuant to the provisions of paragraph 1 of subsection A of this section, consideration may be given, among other factors, to whether:

1. The transfer or obligation was to an insider;

2. The debtor retained possession or control of the property transferred after the transfer;

3. The transfer or obligation was disclosed or concealed;

4. Before the transfer was made or obligation was incurred, the debtor had been sued or threatened with suit;

5. The transfer was of substantially all the debtor's assets;

6. The debtor absconded;

7. The debtor removed or concealed assets;

8. The value of the consideration received by the debtor was reasonably equivalent to the value of the asset transferred or the amount of the obligation incurred;

9. The debtor was insolvent or became insolvent shortly after the transfer was made or the obligation was incurred;

10. The transfer occurred shortly before or shortly after a substantial debt was incurred; and

11. The debtor transferred the essential assets of the business to a lienor who transferred the assets to an insider of the debtor.

Yours is a close one. And also keep in mind it's not just the rental income that they'll count -- it's also the value of the property itself.

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