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I had arbritration today regarding a credit card debt. My only source of income is Social Security disability. I own my home.

Albuquerque, NM |
Attorney answers 3

Posted

First, if the arbitration was through National Arbitration Forum (NAF), they have suspended consumer arbitrations. I believe that JAMS and AAA have also suspended consumer arbitration has being unfair. You should consult with a consumer lawyer in your area to explore your options. If possible, it may be that because of the problems that have occurred with consumer arbitrations, a court may not confirm the arbitration award if properly presented to the court.

If the arbitration stands or, if not, and the credit card company sues you, it is possible that the creditor can levy on your home and seize it and sell it. This is potentially a problem. However, you are generally allowed to exempt a certain amount of equity in real estate used as your home.

Generally, Social Security benefits are exempt from execution which means that creditors are not supposed to take it.

By answering this question, general information is provided and no attorney-client relationship is established. For specific inquiries, you should consult with experienced counsel in your area.

Asker

Posted

For New Mexico, the homestead exemption is limited to $30,000 in value per person. The exemption does not apply against taxes, garnishments, recorded liens for purchase or improvement of the homestead, and recorded liens of lessors and mortgagees. If a husband and wife own a homestead, the law usually requires that both of them sign a conveyance or mortgage regarding the real estate for it to be applicable or enforceable against both spouses. For New Mexico, a designation or plat of a homestead does not need to be filed. New Mexico Code §42-10-9 through 13.

Posted

Ordinarily, when a judgment is entered against you on a credit card debt, you become subject to a wage garnishment and a lien can be filed against any property you own. If the property is eligible for a homestead or other exemption under state law, the creditor may not be able to seize it & take it from you right away, but could expect to get paid when the property is sold or refinanced.

Your social security disability is protected from any judgment, as long as you don't co-mingle it, or mix it with money from any other source.

To protect your house, check out the homestead laws in your state, usually posted on the state's webpage. If your house is fully protected for now, you may wish to make an offer to settle with the creditor for pennies on the dollar, otherwise, the creditor may wait for years before they get paid.

I urge you to consult with a consumer attorney about this matter. If the amount of the judgment is substatial, you may have to consider if bankruptcy is an option to protect your home.

Hope this perspective helps!

Asker

Posted

The amount of the debt is $11,000.00, will that make a difference?

Posted

When you file Bankruptcy you create a financial estate. That estate is “administered” by a Trustee. There are very different paths to the same outcome if you file a Chapter “7” or a Chapter “13” Bankruptcy, but the result is the same: you get rid of “unsecured” and maybe other kinds of debt.
Bankruptcy is filed by creating and filing a Petition. In the Petition you list all of your assets and income for the household; and all of the debts and obligations for that property or person who is filing.
After everything is listed your attorney applies “exemptions” to the property. Exemptions are creatures of State or Federal law in New York. Quite simply, they are the “things you get to keep” as defined by specific statues and laws.
EXEMPTIONS
There are many exemptions. It does not matter if a person files a Chapter 7 or a Chapter 13 Bankruptcy. These exemptions apply to all cases:
Homestead exemption: This is where the homeowner who is on the Deed and living in the property gets to protect $75,000.00 (in New York…other States Vary!!!)each (up to two) of equity in the property. So, if one person is on the Deed and they live in the house and the home is worth $75,000.00 and is paid off, they get to keep the home and no one can try and take it if they file Bankruptcy. If two people are on the Deed and reside in the home the house can be paid off and worth $150,000.00 and nothing will happen to it if they file a Bankruptcy.
Personal property: The vast majority of people do not have to worry about losing property when they file Bankruptcy. However, it is your obligation to report all property. Most people’s furniture, bedroom sets, dining room sets, clothes, etc. are normal consumer items that we list, but since the PERSONAL PROPERTY EXEMPTION IN NEW YORK IS $10,000.00 DOLLARS (In New York…check your State) we have found that it is not worth the trouble by the Trustee appointed to oversee your Bankruptcy to take and sell the property.
DON’T:
Take out a second mortgage to pay credit cards;
Transfer property to family members or friends to “protect it”;
Take money out of your retirement account to pay credit cards.
Good Luck!

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Disclaimer: This answer does not constitute legal advice. I am admitted in the States of New York, New Jersey and Massachusetts only and make no attempt to opine on matters of law that are not relevant to those three States. This advice is based on general principles of law that may or may not relate to your specific situation. Facts and laws change and these possible changes will affect the advice provided here. Consult an attorney in your locale before you act on any of this advice. You should not rely on this advice alone and nothing in these communications creates an attorney client relationship.

Asker

Posted

Thumbs up! Very valuable. I'm doing everthing in my power not to file bankrupsy New Mexico law is: For New Mexico, the homestead exemption is limited to $30,000 in value per person. The exemption does not apply against taxes, garnishments, recorded liens for purchase or improvement of the homestead, and recorded liens of lessors and mortgagees. If a husband and wife own a homestead, the law usually requires that both of them sign a conveyance or mortgage regarding the real estate for it to be applicable or enforceable against both spouses. For New Mexico, a designation or plat of a homestead does not need to be filed. New Mexico Code §42-10-9 through 13.

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