Legal Question in Credit and Debt Law in Georgia

When something is repossessed, you still owe money, and you can expect to get sued, followed by a garnishment and lien on your home.

There are tax consequences that will make a settlement expensive even if you can do it, as you must pay income tax on any forgiven debt. So that is often a bad move. Don't consider it without seeing a lawyer.

The smart move is to get a lawyer. You may be able to discharge the repossession in bankruptcy and protect your wages and home, depending on the numbers. (There may be other options as well).

Call a lawyer in your area (if you're near metro Atlanta feel free to call me),

No one here knows your financial situation. Can you afford to pay some settlement? We don't know. Short of bankruptcy, you can hire a lawyer to help you get a settlement but remember that you then pay the settlement and the lawyer. If you were referring to hiring a lawyer to fight the case (if filed), then you are going to pay a lawyer more, plus still get a judgment if you owe the money.

What the other lawyers say is true. Even though the motorcycle was repossessed, you are still liable for the balance remaining after repossession and sale costs are added in and the proceeds of the sale are deducted.

The process is that you will be notified of the deficiency. After that, if nothing is done, the lender or the lender's assignee will sue you and/or your husband (depending on who the applicant was on the loan). Georgia has wage garnishment and a judgment will result in possible garnishment of your wages as well as a lien on your home. The creditor or collector is limited to 25% of the disposable pay (gross pay minus deductions for things like taxes). If you or your husband is self-employed, then you do not have to wroory about garnishment.

You do not indicate how much is still owed and what assets you own or if you owe other debts. Since you are on the hook for the loan, it may make sense to file bankruptcy or it might not. Go to www.legalconsumer.com or www.thebankruptcysite.org for a brief general overview of bankruptcy. I consider it to be akin to the "nuclear option" and only should be used as an absolute last resort. If you have already filed for bankruptcy in the past, this also may not be an option for you.

Assuming that you do not go the bankruptcy route, then debt settlement is the best choice. It is true that an IRS rule states that any amount over $600 that is forgiven will be attributed to and taxed to you as if it were income . Still, paying taxes on forgiven debt is a lot less than paying the entire amount of the debt. And you may not even have to pay taxes if your debts outweigh your assets by the amount forgiven. In such case, ask your accountant about Form 982 from the IRS. If your accountant does not know about it, then fire your accountant and find one that does.

If you are in a position to settle the debt at this time, then you can get a lawyer to negotiate a settlement for you. If not, don't panic. Start saving as much cash as you can. If and when a lawsuit arrives, then you can get a lawyer. Lump sum settlement is preferred and the creditor will want 50% or more of the debt (the exact amount will depend on the identity of the creditor). The more money that you can do in a llump sum payment, the lower the creditor is likely to go. The more you want to stretch it out, the more that the creditor will want the full amount.

If you want a settlement lower than 50%, you would have to settle as soon as you have enough saved to do a lump sum payment in an amount of at least 50% of the debt. If you don't have it, then start saving until you do and hope that they do not sue you before you can amass that much.

If you want to discuss your issue or if you would like my help in settling this debt, feel free to contact me. Most email and phone consults of 30 minutes are less are free and my hourly rates are reasonable.

Rachel Hunter

Attorney at Law

[email protected]

(678)-687-9693

Admitted in GA, PA & NC