@Anonymous wrote:
Hello,
My mom bought a van and gave it to me saying she wanted me to have it. I immediately told her no I did not want it and couldn't afford it. She insisted as she had a great job but fast forward a year and she had to retire because of an injury she sustained at work which she is fighting worker's compensation over.
Due to divorce I filed bk ch7 oct 2019 and it was discharged 1/2020. I'm rebuilding my credit and she sends me the court notice with 2 days left to answer. Her retirement is not enough to live on and I believe she can be garnished so I told her I would make payment arrangements for the debt as she was going to just let them give her a judgement.
My question is has anyone had success in Settle for Delete with Ally once they've filed a lawsuit against someone. My goal is to settle the debt but ask that it be deleted from her credit report.
I should mention I turned the car in around January 2018 when I couldn't keep up the payments and she was out of a job because of her injury. They filed the case against her March 2020. I will submit her answer to the lawsuit tomorrow. I asked her to file bankruptcy because she has other debts in collection and charge off and no way to pay them. She said she can't or the Uncle Sam can come and get her under something called tolling. She is in an uncollectible status with them right now. She got in trouble with them because my dad screwed her over with his taxes for years and she hadn't a clue. I don't believe they can come back in her if she files bankruptcy but she says they can in light of not having anymore other debt.
These payments or settlement will be a hardship for me so I'm very much in a quandary over it.
Thank you for any assistance you can provide.
I read the other replies in this thread. You don't say what State you or mom are in, but in almost all States, retirement income is exempt from creditors, therefore her creditors cannot garnish either her retirement/disability at its source or when it's in the bank account (generally, as long as the balance in the bank is two months of benefits or less it will be safe). You mention that she has a Government pension and Social Security as her income. Both of them are totally exempt from ordinary creitor attachment, so Ally and the rest can sue her until the cows come home, they still won't collect a dime. The most the IRS can take is 15% of her Social Security but since she is already in CNC they can't even take that. That effectively takes care of all creditors. Dealing with the IRS is a specialty of mine - I have been in the tax business for almost 40 years and I am an IRS licensed Enrolled Agent. Before that I was a Bill Collector.
Your mom sounds like she is a candidate for one of the following: an Offer in Compromise, Currently Not Collectable (or CNC, called 53-ing after the IRS form a Revenue Officer would file, Form 53) or Innocent Spouse Relief. I suggest you and she do some research into those. Download IRS Form 433-A and fill it out using the IRS Collection Standards to see her collectability. Then I suggest you find an EA near you who knows about OIC's, 53's and Innocent Spouse rules and have a long talk. Tolling means the Collection Statute (also called the CSED, Or Collection Statute Expiration Date) is tolled, or stopped, for the time one is in Bankruptcy plus 6 months. If the CSED is close, then I would probably advise her to do nothing - her ordinary creditors cannot garnish her retirement income and if she is already in CNC then the IRS won't. What most people don't realize, is that unlike other liens, Federal Tax Liens have an expiration date. It is 10 years and one day from the Assessment Date (both dates will be found on the Notice of Federal Tax Lien filed with your County Recorder).
