WHY YOU LOVE EXEMPTIONS AND REPOSSESSIONS SELDOM OCCUR
Exemptions are why you should not be terrified of most creditors. Before we talk about what exemptions are, let’s talk about what they are not. Exemptions are not something that helps you with your taxes each year. Likewise, are not what would keep you from having to serve in the military if the draft is ever re-instituted. Exemptions help you keep your property from being taken by certain types of creditors to whom you owe money.
Exemptions keep your creditors from taking your assets. Exemptions come from both South Carolina and Federal law. Congress, in passing the Bankruptcy Code, allowed states to set up their own exemption statutes regarding certain classes of assets. For this reason, someone who lives in a $100,000,000.00, yes 100,000,000 million dollar mansion in Florida may be able to keep that home, but, not in South Carolina. At one time, South Caroline had horrible exemptions that did not allow a debtor to keep very much in the way of assets. These exemptions were amended a few years ago and are now much more reasonable.
Exemptions do not protect you and your property from statutory liens such as Home Owner Association dues, taxes and most secured debt. Exemptions are why the local finance company wants to get a lien on your household goods. Under the rules that are in force at this time, exemptions are not effective against any lien that you allow to be put on your property or are put on by statute such a tax lien for unpaid taxes.
If you borrow money from someone, they may want a lien on your home. If you give them a lien, then your exemption will not work most of the time. You can give a creditor a lien by a mortgage, a second mortgage, an equity line mortgage, a UCC and there may be other ways. What all of these liens have in common is that you must sign something agreeing to the lien being put on your property. Nothing signed, nothing that you have put a lien upon.
The same goes for your household goods but it is even worse. No self respecting finance company wants your worn out television, your couch that was spit up on by the baby or peed on by the dog. So why does a finance company take a lien such as this? Pressure to encourage you to pay up. The finance company may threaten to come get the items that you pledged as collateral, but, when it comes down to it, most of the time the creditor will not pick up the merchandise.
It costs a lot of money to hire a moving company to come in and take out the items that you gave a lien on. Do you really think that the nice lady you made your payments to at the finance company is coming to pick up the merchandise? Look at the personnel in the office and see how many can even pick up a chair or couch. If everyone comes to your house, then who is making phone calls to try and convince other customers to pay or to make new loans to the next victims?
If a finance company comes to the door and asks to pick up an item, you need to tell them to go away. There is no reason to be nice to the person at your door. The person at your door is not your friend and, if they are trying to take your property, they are not likely to ever want to lend you more money, ever. Do not discuss anything with them. Firmly tell them that they are trespassing and call the police if the finance company people do not leave at once. You should never let the finance company pick up the merchandise without an Order signed by a Judge or Magistrate. Before the finance company can get such an Order, it must first go to Court. It will spend money to get an Order. Most of the time, the complaint that is filed does not even ask for the merchandise and it only asks for a money judgment.
A finance company cannot just get rid of your merchandise if it takes it. There are rules about how the property must be stored, how long the property must be stored and how the property must be sold. Finance companies simply do not have the ability to comply, in most situations, with all of the requirements and steps necessary to take before they can sell your property.
Do not confuse the situation with a finance company and a retailer who sells you merchandise and finances it for you. The retailer has a store to sell the merchandise in once the property is repossessed, has trucks and people who regularly deliver and pick up merchandise and has factored into the sales price the amount necessary to charge in the purchase price to take care of property that has to be repossessed. For that retailer who financed your purchase, it is not a huge expense to take and sell merchandise if you do not pay for it.
Once again, however, never give the merchandise back without a court order unless the retailer agrees, in writing, to waive all additional charges. Otherwise, you will be a nice guy who got nothing for allowing the property to be picked up.
All companies that finance things or take a lien on something do it hoping that if they have to repossess something it can be done quickly and with a minimum of trouble. If you buy something that has one of those tags that say the tag can only be removed by the consumer, the financing company cannot, in most cases, re-sell the item. The item has to be refurbished and it is seldom worth doing that. I do not know about you, but, I do not like to sleep on a used mattress that I have no idea where it has been.
When a creditor wants to know about your cars, furniture and investments, it is getting ready to try and obtain a lien on those things. Always read the paperwork before you sign it. The second page or the third may have a list of property that you are pledging as collateral. Make sure that you read, review and understand the paperwork. The person on the other side of the table is talking, laughing and generally trying to make sure that you sign all the paperwork. Do not be afraid to tell that person to hush and even pull out your own calculator to check the numbers.
Now lets pretend that the creditor gets a judgment against you and the sheriff comes to the house to take something. In this situation, however, the creditor did not have a lien that you signed and the exemption you have comes before the sheriff will take your stuff. If the Sheriff takes the stuff, it must be sold at a Sheriff’s Sale. If you are a single person, before a creditor gets to keep a dime from the sale of your household goods, the creditor must pay the Sheriff’s expenses and pay you over $4,000.00. I do not know about you, but, when I was single I did not have $400.00 worth of household goods much less than $4,000.00.
If the creditor wants to take your car, the creditor must pay the sheriff’s costs and pay you over $5,000.00 and pay off any lien on the car. Remember, I am talking about judgment creditors. If you gave a lien on the car, then the lien is ahead of your exemption.
Now it becomes clear why creditors want you to give them a lien on your stuff. Please remember two things, never agree to give a creditor anything and try to not give a creditor a lien on anything.
Come to see Nathan Davis to go over your exemptions and what you might lose from a creditor in either a State Court proceeding and/or a bankruptcy case. I have been practicing law in Charleston, South Carolina for many years. It always amazes me when someone tells me that they borrowed money and there is no lien when, in fact, a lien was granted to the creditor. I then have to remind myself that the person on the other side of the desk is trained to get you to sign, to make it as easy as possible to get you out and to not understand what you are saying.
The person preparing the paperwork is doing his or her job, it is your job to read the paperwork.
DO YOUR JOB AND KNOW WHAT YOU ARE SIGNING