Legal Question in Credit and Debt Law in Georgia

They can garnishee present and future paychecks and bank accounts, put a lien on your home (and potentially sell it), grab your car, etc. And if you do settle for less than a dollar on the dollar you can owe money to the IRS too. It would be a very good idea to see an attorney well before the 30 day deadline for an answer to determine your best course of action.

Oh no not just a lien. If you are a W-2 employee, the creditor can garnish up to 25% of your disposable pay (pay after taxes - here is a link to a federal Dept. of Labor site which provides useful information: http://www.dol.gov/whd/regs/compliance/whdfs30.pdf; GA follows the feds for garnishment).

The creditor can seize any assets that are owned free and clear and titled solely in your name. The creditor can also levy on your bank account.

GA only allows you to exempt up to $21,500 equity in a primary residence (assuming you own a house) and $5,000 in personal property (car or a bank account typically). Other exemptions may apply but generally only for bankruptcy purposes.

I would echo Attorney Ashman here. You need to see an attorney but it depends on your assets and debts and overall situation as to what kind of an attorney you need. If you have at least $10,000 in dischargeable debt and can file, maybe bankruptcy is the best option if you can file a chapter 7 bankruptcy. Consult with a bankruptcy attorney if this is an option for you.

If you can't file a chapter 7 or don't want or need to file bankruptcy, then it may or may not make sense to litigate. If you have no real assets that can be seized and you are self-employed or receive SS/SSDI, maybe it makes sense to do nothing. If you have a lot of assets and debts, maybe it would be wise to negotiate a payment plan with the creditor to prevent them from being to garnish your wages or levy on your assets.

What Attorney Ashman says is true about possible tax liability if you settle a debt. What he does not tell you is that taxes are paid only on the forgiven amount but depending on what other assets and debts you have, you may also be able to exclude the forgiven sum in whole or in part from your income at all by using IRS Form 982. If and when you settled and if you received a 1099, that is when you would talk to a CPA or attorney about that and not before. However, paying taxes on the forgiven sum and settling still puts you ahead financially than if you paid back every penny of the debt.

You may also have defenses to the complaint although it sounds like you are being sued by the original creditor, American Express. Who is their attorney? Frederick J. Hanna? Zwicker? Zakheim & LaVrar? Someone else? These factors might also dictate what you do. Depending on what your defenses are and where you have been sued (most cases are in magistrate's court) you may be able to save yourself some legal fees and file an answer on your own with some help.

I give free consults purely by email. I charge $50 for review of a complaint and $50 for a 30-minute phone consult. I can also help resolve debts for a reasonable fee. Do you have $4500-$5000? It may be possible to resolve your debt if you have the funds (like if you are anticipating a tax refund). Please contact me at [email protected] if interested.