Beating the System

Individuals naturally want to beat the system. Inevitably, someone always asks a question in bankruptcy forums regarding how to beat the system.

This personal bankruptcy story was posted on the internet in May of 2011, “I’ve been an employee at a consulting company for 11 yrs. This company has some employees and contractors working for them. If I was self-employed instead of an employee, would 1099 earnings be subject to wage garnishments for unpaid credit card judgments?”

This debtor wants to know if he can “beat the system” by converting his employment status to self-employed. The company already hires contractual services for the same work. Assuming the exchange is doable, what types of legal challenges are involved?

First, if the debtor has no legal employer (except for himself) it will be difficult for a creditor, who has won a lawsuit, to garnish his wages. Why, because there are no wages to garnish. The former wages of the employee would have been converted to contractual income and attaching a levy on that type of income would be difficult.

However, a successful creditor may place a levy on any of the debtor’s accounts; if the creditor can find them. In addition, the creditor can ask the court (where the lawsuit was filed) to attach liens on the debtor’s assets. A lien could be collected with the interest accrued at the time of the sale of asset, especially if that asset has a title or deed. Creditors most likely would not be able to foreclose or repossess the assets without a court order.

Armed with judgments, collection agencies pose a problem for the debtor. Some aggressive collectors in non-garnishment states have attached liens on vehicles, seized the vehicles, and held them until their bills were paid. There may be legal ramifications for these actions, but possession seems to be nine-tenths of the law.

Trying to beat the system can be a costly and nerve-racking. Unless your telephone number is unlisted, expect your phone to ring. Harassment is common under these circumstances, and at some point, you may need to ask yourself if it is worth the effort to beat the system.

If you want to beat the system, then you should learn to use the system to your fullest advantage. Filing for bankruptcy is the ultimate weapon you have to prevent wage garnishments. Filing a bankruptcy will cause all collection actions to cease through an automatic stay. Automatic stays will automatically stop certain lawsuits, foreclosures, utility shut-offs, evictions, repossessions, garnishments, attachments, and debt collection harassment. Once a debt has been discharged through bankruptcy, the creditor can no longer legally seek payment for the debt.

If you are considering filing for bankruptcy, you may need help from a bankruptcy lawyer. If you need relief from the stress of debt and you live in or around the metropolitan areas of Little Rock or North Little Rock, Arkansas, contact us at .We will help you find a bankruptcy attorney in your area who will answer your bankruptcy questions.

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