“Actually, you probably don’t need too much help, but let’s talk for a second”, is what I usually say. I have this telephone or email conversation all the time. In fact, I had it today.
What I’m talking about is the standard form letter which our South Carolina sheriffs departments send out when a creditor obtains a judgment against someone and asks the sheriff to collect the judgment. This is commonly known as an “execution letter.” It is a form letter in my county and the same very nice lieutenant has been signing them for longer than I’ve lived here. But, what is this letter? Why did you get it and what does it mean?
Everyone’s heard of judgments. Telephone collection banks from India tell you that they are going to get one against you all the time. This conjures up scary images of Woody Guthrie dust bowls with homeless farmers roaming the dusty roads and, of course, when you get a judgement, you imagine that you’re that homeless farmer about to start ridin’ the rails. People cry in my office when they bring them in.
Unless you really do have something to lose, which is rare, you can relax. And if you you do have something to lose, I probably can help you, so come on in.
Think of it this way. You have two people. They argue about money. He said. She said. Until a judge says one of them is right, it means nothing. A lawsuit is a way to get your dispute heard by a judge. The result of that lawsuit is a judgment. It forever ends the dispute, and the judge then says that the debtor owes money to the creditor. A judgment is filed at the courthouse in the county where the lawsuit was brought. It collects interest at 7.25% a year. It is a lien on any real estate in any county in which it’s filed. It can be moved from county to county, state to state, and country to country. But a judgment is nothing more than a tool. It is a tool used to collect money. You collect money by collecting or taking assets and having the sheriff sell them in order to give the money to the winner of the lawsuit.
When a creditor gets his judgment, his attorney sends a form letter to the sheriff asking him to collect the judgment. He also sends that scary letter to you. It does, in fact, say that if you do not pay the sum of “$x” within 5 days then he will sell your assets in order to satisfy the debt (or something like that). What it does not say is that he can only sell your non-exempt assets, but that is all he can do. And, the fact of the matter is, most people do not own anything that is non-exempt.
An exemption is a dollar amount, of a certain type of asset, which a debtor (a person who owes money or someone with a judgment against him) gets to keep. Think of it this way. There are exemptions for all kinds of assets. But, in South Carolina a debtor can exempt $56,350 of equity in his residence. That means that if you own a house, the sheriff has to (1) sell your house at auction; (2) get enough money to pay off the mortgage and the sheriff’s cost of the sale; (3) get enough money to pay you your exemption amount ($56,350); (4) get enough money to pay anyone else who owns part of the house, like your wife, her share; and (5) still have some money left over to pay money to the creditor for his judgment. As you can see, that ain’t happening for most debtors who are getting sued.
This is a big protection, and most folks’ stuff isn’t worth more than what they can protect. If you are being sued, take the complaint to an attorney immediately, as you must respond to it in a very short time or a judgment is obtained. Even if it is too late, take it to an attorney so that he or she can tell you what is exempt and whether you “really” have an emergency. Even if you have a judgment lien on your house, a bankruptcy attorney can probably strip it from your house under certain circumstances.
The bottom line here this: Don’t panic! Just because you get a letter from the Sheriff’s department doesn’t mean you’ll lose your property.