About 20 years ago I lost a civil case in the amount of $13,000.00
plus interest which resulted in the party getting a judgment against
me. I filed for bankruptcy to negate the judgement but later dropped
the proceeding so as not to have it on my credit record. The
plaintiff/his attorney have since made no effort to collect but they
file annual renewals on the civil judgement. The only thing I have of
value is my home worth about $100,000.00, a small IRA  and a bit of
personal property. I am now 65+ and want to avoid  a legal hassle over
the real estate property when I pass on. I have a will and my wife and
grown children are my sole heirs. How can I negate this judgement
while I am still living? Is bankruptcy still the only option?

dbell,

You don't mention what the total of the judgment is now, including the
20 years of interest. You do say that you have your home of value
$100,000, so I take that to mean that your mortgage is now paid off
and you own your home free-and-clear.

If you passed away today, then the person with the lien on your
property could file proceedings to get the total amount due from your
estate. If that happened, your wife would probably have to sell the
home to cover the amount owed -- and she would no longer have a place
to live.

For that matter, the person with the lien on your property could file
proceedings to get that money at any time -- possibly forcing both of
you to sell the home to pay it, which would leave you without a place
to live. As long as the lien on your property exists, you will have
this danger hanging over your head.

If you do own your home free-and-clear now, I think your best bet
would be to find a reputable mortgage lender (your local Bank would
probably be the best place to start) to give you a new mortgage, or
Home Equity loan, for the amount that you now owe for the $13,000
judgment plus the interest-to-date. Once you have been approved for
the loan, contact the attorney of the person to whom you owe the
money, and tell them that you want to pay off your debt.

Some things to bear in mind:

1) This solution requires that you and your wife together have enough
monthly retirement income to make monthly payments on the mortgage or
Home Equity loan, in addition to covering monthly living expenses.

2) A mortgage would probably allow you to set the repayment term for a
longer period of time (possibly 30 years), and therefore, require a
lower monthly payment than a Home Equity loan.

3) The interest you pay on either a Mortgage or Home Equity loan would
be tax-deductible.

4) If you pass away before your wife, your wife would hopefully be
able to continue to make loan payments using the remainder of your IRA
and/or the proceeds of any life insurance you may have. If this is not
the case, you will need to have a "Plan B", since it is most likely
your wife would have to sell the home.

5) Do your homework on lenders. Do NOT get a loan from a "predatory
lender" -- companies or individuals who usually prey on people in
difficult financial circumstances. These lenders will typically charge
an interest rate that is way too high, and they will probably move
immediately to repossess your home if a payment is one second late.

6) If you do not currently have life insurance, you may want to look
into getting some -- at least enough to pay off the loan for your wife
if you should die. However, at this point, it may be cost-prohibitive
to do so. If you choose to look into this, do your homework well and
be VERY careful about with which companies you deal. There are also
predatory life insurance companies out there, and you don't want to
buy a policy that will end up costing more than the benefit it will
provide -- or worse yet, a worthless policy.

7) If you have a competent attorney whom you can trust and afford, I
recommend that you consult them to help you resolve this situation.
You and your wife should be able to enjoy your retirement together,
and you do not want to have to worry about the situation escalating at
any moment and ruining all that.

At any rate, I do not recommend that you just do nothing. You are
extremely fortunate that the person holding your lien has taken no
steps to collect it in the last 20 years. However, they (or their
heir, if they should die suddenly) could do so at any moment -- at
which point you would be operating under serious time pressure, making
it more difficult for you to make financial arrangements that are the
least punitive to you.


Before Rating my Answer, if you have questions about this information,
please post a Request for Clarification, and I will be glad to see
what I can do for you.

I hope that this Answer has provided you with exactly the information
you need to resolve your situation, and for you and your wife to be
able to enjoy the rest of your retirement worry-free!

Regards,

aceresearcher

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Clarification of Answer by aceresearcher-ga on 28 Dec 2002 00:24 PST

dbell,

Researcher expertlaw has reminded me that, on occasion, creditors who
are owed old debts may be willing to negotiate a settlement for a
lower amount than the total debt outstanding, if it means that they
are more likely to actually get paid. In your case, this is certainly
something to consider. Some helpful information on this may be found
at Your Credit Source's section on "Debt Reduction Settlements" at:
http://www.yourcreditsource.org/your_credit/debt_reduction_settlements.html

Thanks to expertlaw for their expert assistance!

Best wishes,

aceresearcher

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Request for Answer Clarification by dbell-ga on 28 Dec 2002 07:27 PST

We do not own the home free and clear. In fact, the property was
recently refinanced and still has a first mortgage of about 40K and
while I still have to work, our only guaranteed income is Social
Security which amounts to about $1500 monthly combined.  I also have a
home operated sales business that gives us a small margin of income
but it is not something my wife could operate after my death. I have
paidup life insurance of only $10,000 and I am uninsurable due to
health.

In our state, a homestead law protects us against creditor seizure
except for IRS fraud or unpaid local property taxes.  I have no idea
of the amount of the accrued lien interest . I am attempting to find
out.

Since the homestead law exempts us from civil seizure, I am
contemplating bankruptcy to clear the judgment.  We have no other
major debt and I could still operate my business for additional
income.

My only concern is that I not leave a probate mess for my wife.

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Clarification of Answer by aceresearcher-ga on 28 Dec 2002 08:17 PST

dbell,

These things do complicate your situation considerably. In what state do you live?

aceresearcher

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Request for Answer Clarification by dbell-ga on 29 Dec 2002 05:32 PST

We live in Texas

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Clarification of Answer by aceresearcher-ga on 30 Dec 2002 13:33 PST

dbell,

From "An Overview of The Texas Homestead Law" by Mark T. Curry of
Hughes, Watters & Askanase, LLP (October 1999):
"Texas homestead law exempts qualifying real property from forced sale
by general creditors. In Texas, every family and every single adult
person is entitled to a homestead exempt from seizure for claims of
creditors, except for encumbrances properly fixed on homestead
property...
There may only be one homestead per family. However, in the event of
divorce, each spouse may claim a separate homestead. In the event of a
death of one of the spouses, the status of family is unaffected as to
the surviving spouse."
http://articles.corporate.findlaw.com/articles/file/articles/hwallp/hwallp000013/title/Subject/topic/Bankruptcy%20Law_Collections%20%20Repossessions/filename/bankruptcylaw_1_24

What this means is that, should you die, the Homestead protection
still applies, and the person possessing the lien cannot force your
wife to vacate or sell the house to satisfy their claim.

If your wife is not currently listed on your deed and your mortgage as
joint owner of the house, I would recommend that you make this so, to
prevent any possibility of a doubt that it is also her homestead, and
to prevent a "probate mess" should you predecease her.

Filing for bankruptcy is purely a personal choice. For myself, I would
certainly not recommend that you do so; on the other hand, if you are
not concerned about the effects it will have on your credit rating, it
IS an option available to you. Be aware that there may well be
significant attorney and court fees for doing so, and you will have to
pay for these now.

If you simply let the lien on your house ride, once both of you have
passed away, the creditor will be able to force the sale of it to
cover the amount of the $13,000 judgment plus any interest accrued to
that point. However, if your children have their own homesteads, this
should not threaten them, and the $60,000 equity you have in the home
should more than cover the amount of the lien, so it will not place an
additional burden on them.

I hope that this additional information has provided you with the
knowledge you need to make an informed decision.

Regards,

aceresearcher

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Request for Answer Clarification by dbell-ga on 02 Jan 2003 15:09 PST

Both my wife and myself are named on the homestead exemption and
assuming my wife survives me, can the property be sold or transferred
to our son/s while my wife is still alive (as sort of a reverse
mortgage) and is the homestead exemption transferrrable to them? I am
not interested in settling the lien—only some legal way to wipe it
out.

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Clarification of Answer by aceresearcher-ga on 02 Jan 2003 16:42 PST

Greetings, dbell!

I believe that I have answered your original questions "How can I
negate this judgement while I am still living? Is bankruptcy still the
only option?", and that I have given you excellent value for your fee.

However, it appears that it has launched us into an area that, while
related, is beyond the scope of the original question.

Your additional requests would best be served by being posted as a new
question specifying exactly what additional information you require,
and I am sure that I or one of the many other qualified Researchers
would be glad to help you get the Answer you need.

Be sure to include ALL the relevant facts in your initial question, so
that a Researcher can provide you with the best, most applicable
information to your situation, and will not spend time searching for
information that you already have.
 
This link to Google Answer's pricing guidelines may be helpful in
order to price the new question.
https://answers.google.com/answers/pricing.html  
  
Sincerely,  
  
aceresearcher