If I have a auto repossession, what can the collection agency take in a lawsuit?

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If I have a auto repossession, what can the collection agency take in a lawsuit?

Back 2 years ago, I had an auto repossessed. Since that time I’ve had to go on Social Security Disability. When I called the collection agency to try to set up a payment arrangement, they told me it didn’t matter, they would sue me anyway. The amount owed is more then I get in a year from disability. They have now filed a suit against me. Can they garnish my disability check? The home I have with my husband has a mortgage on it. Will they just add a lien or is there another way they will try to get the money?

Asked on October 19, 2011 under Bankruptcy Law, Oklahoma

Answers:

M.D., Member, California and New York Bar / FreeAdvice Contributing Attorney

Answered 9 years ago | Contributor

First of all, nothing can happen to your assets until the collection agency obtains a judgment in court (i.e. they win the lawsuit). Assuming that happens, then at that point your non-exempt assets are at risk of garnishment (i.e. seizure). This means that the collection agency could place a lien against your home and other property. Accordingly, it could attempt to levy any money in your bank account. However SSD payments are "exempt" from garnishment. This means that, as a general rule, they cannot be levied against by a creditor.

In the past, a creditor could freeze a bank account in an attempt to get SS funds. If the debtor did not object within a specified timeframe, then the money would be paid over by their bank even though the funds were otherwise exempt. Fortunately this is no longer the case. If exempt funds are paid into an account via direct deposit, they cannot be taken (although other non-exempt money can be, such as other income that you have in the account or your husband's money if you have a joint account). So as long as SSD is directly deposited (i.e. not deposited by check) a creditor cannot garnish these payments.

Note: Only 2 months worth of benefits are protected. Further, don't transfer these benefits to another account since they will then lose their protection.


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