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I Only Have Social Security and They’re Suing – What do I do?

What You Should Do if You Only Have Social Security

You will find a lot of material on our site addressing this question. It really boils down to two things: what does it cost to fight? And what does it cost if you lose?

What it Costs if you Lose

The good news is that, if your only asset is Social Security – or comes from Social Security (including age or disability benefits), you are “judgment proof.” That is, they can’t garnish your Social Security benefits. We don’t think that means you should just give up and ignore the suit, but it establishes a limit to the price of losing – it’s a low price.

There are other costs, however, that aren’t so clear. A judgment will hurt your credit report, for example, and this could affect insurance rates, credit eligibility, and even job opportunities. Since it isn’t garnishment, it’s a sort of hidden penalty, but under the wrong circumstances losing a debt suit can hurt you even if they can’t get anything that you own. These are the costs you will want to consider as you decide whether to fight

What Does it Cost to Fight?

We recommend our Litigation Gold Membership, which has a monthly cost, currently $20/month. In addition to that you will need to find a way to do the work associated with pro se defense, and you will need to get to court some to do the things that need to be done. If you are too frail or disabled to do these things, pro se defense won’t be good for you. If you are able to do them you’re in a great spot: it costs little to defend, your chances of winning are excellent, and the price of losing if you don’t win is very small.

You will enjoy our materials, and you will probably also enjoy – eventually – the experience of defending yourself in court. Likewise, the debt lawyer trying to sue you will very possibly go away once the important facts are known. All these things are why a lot of older people do actually defend themselves – the deck is stacked in their favor.

What if you have something more than Social Security?

Well, it depends on how much. What you have is what you could lose, minus state exemptions from collection which are pretty generous. But they have to beat you to get them. Our materials help you fight and win, and you might also find a law firm willing to take the case “pro bono.” That means for free as a part of social service that lawyers often do.

Econ 101 or What Happens when the Bills Come Due

I believe it is a fundamental, unchanging law: there are no free lunches in life or nature. What gets bought must be paid for, eventually, by someone.Members at Your Legal Leg Up know very well that that law applies to daily personal purchasing decisions, and many have paid very steep prices indeed. But it also applies at the national and international level, and politicians who have long ignored the fact are soon going to be reminded of it.

As one economist puts it, in order for one person to get something for nothing, someone else must get nothing for something. So what happens to our current government debt of 21 trillion dollars (more or less, and growing rapidly) in a world of debt jubilee? Eventually it must be paid, right?

This is part of a series of articles on Occupy Wall Street, Debt Jubilee, and our future. Click on the links for the previous articles, but this article should stand on its own, also.

Debts Used to be Paid in Gold

Up until the 1930s, debts all the world round were settled, ultimately, in gold. A “dollar” was a fixed amount of gold, and for over a hundred years there had been essentially NO inflation. There had been occasional “runs” on banks that got overextended, and banks (and people with savings in them) got wiped out from time to time, and there had been occasional booms and busts. The Federal Reserve was put in to deal with those problems, and so it did. Thirteen years after its founding in 1914 the Great Depression began, and we’ve been on a boom and bust cycle ever since then.

But I digress.

Private Debts were Paid in Gold until the 1930s

The point is that Gold was first removed from actual circulation within the United State by Franklin Roosevelt and made illegal for persons to own. At the same time, the dollar was devalued (against gold on an international basis) by about thirty percent. International debts were still settled in gold until 1971.

So what does “settled in gold” even mean? When a businessperson in the U.S. buys a Japanese widget, he pays either dollars or yen. That is, either he sells dollars to buy yen, or the Japanese business ultimately does so. In any event, some dollars are transferred to Japan. Of course this happens in a gazillion ways and times throughout any given year, but in the final analysis one side is holding more of the other side’s currency. Mostly, that is allowed to persist, but at some point the side holding more of the other side’s currency may want to settle up in something else. Until 1971 foreigners could trade dollars for gold.

Dollar Window is Closed

Then there was the Vietnam war along with various U.S. policies that cost more than the government was taking in. That caused the dollar’s actual value to go down, but the official dollar value in gold stayed the same. That meant that gold was too “cheap,” and the French (in particular) decided to trade large amounts of dollars for gold. In 1971, the U.S. dollar was cut free of any specific relationship to gold and the government stopped giving foreigners gold for dollars.

At that point, the U.S. deficit was a few billion dollars and causing a lot of anxiety. Since then it has grown to 21 trillion (and adding, at current rates, another trillion or more per year) and causing very little anxiety. People on Social Security are hoping to get paid, and yet there are fewer and fewer workers to support them, so they are being paid out of taxes (or, realistically, government debt). The deficit is going to grow, inevitably.

Still No Free Lunches

What happens when the law against free lunches kicks in, finally? What happens when those trillions have to be paid? And what happens if, along the way, a lot of student loan and other debts are also wiped out by legislative act?

Right now, the dollar’s value is established by the free market (which isn’t to say it isn’t extremely manipulated). It’s worth what people all over the world say it’s worth without reference to any fixed point (gold, historically). When the law against free lunches kicks in, people will decide they would rather have things than dollars. They’ll say the dollar is worth less as they try to recuperate some of the resources they’ve been sending over in exchange for U.S. debt, in other words. This process has happened many times to various other countries. It is happening right now to Venezuela, whose inflation rate was, unofficially, approximately 1 million percent in 2018. It’s happening in Turkey right now. It happened in Germany, where one U.S. dollar was ultimately worth 4 trillion German marks in 1921.

Current Deficit is 21 Trillion Dollars and Growing

You can buy a lot of stuff for $21,000,000,000,000.00. If people try to buy stuff with that much money it’s going to cause prices to zoom higher. Many factors have held that result in check for the time being, but it will not last. If history is any guide, the change will be sudden and happen with incredible, bewildering speed. When adding straws to camel backs, one never knows which one will be the one that is too much. All that is certain is that currently over a trillion straws are being added every year. I think the one too much will happen within the next decade or two.

The havoc caused by currency destruction is almost unbelievable. Historically, it has meant the destruction of the middle class and all economic security. It has devastated the poor and led to widespread starvation and disease, and it has led to oppressive government and foreign wars. Without going into further details, I hope that the millennials will try to prevent it from happening. That’s going to mean some very tough choices.

As an aside to the reader, although I think the value of the dollar may, at the point foreseen, be among the least of your problems, it would probably be smart to try to keep it from being a problem at all. You should consider buying things of actual value no with whatever money you can afford. Talking about gold, silver, land, food… I’m not saying hoard cans of food like a survivalist. I’m saying it makes sense to recognize what seems to be coming our way and take rational steps to prepare where possible. There seems to be no telling when things will hit the fan, but that they will hit the fan is guaranteed by the law against free lunches.

Jubilee for Student Debt

There is a movement – in its very early stages – for a debt jubilee. You may not have heard of it, but it has some people very worried. And I think there’s a good chance it will come to pass. Soon.

This is the second of a series of articles on a continuing political phenomenon important to people with debt. The first article is “Occupy Wall Street.”  The second article is Econ 101 or What Happens when the Bills Come Due.

What is a “Jubilee”?

A jubilee is the mass forgiveness of debt – a governmentally imposed wiping of the slate clean from all debt of any specific, or all, types of debt. You might think it could never happen here in the United States, but it has, historically, happened several times in various places. Never was it more appropriate than for student debt, in my opinion. Of course, other kinds of debt could also get thrown into the pot when things get going. Is it good? Is it likely? And if it happens, what will be the probable consequences?

Any talk of student loan jubilee should begin with what has happened in the past forty years. During that time, student loans have become not just popular, but essential for almost all students entering college or other formal, advanced education in the United States. In some countries in Europe, for example, schooling is free, but here it is expensive – very expensive. And it has been getting more so at a rate far exceeding the rate of inflation for the past forty years. This is because student loans, which had a noble publicly discussed purpose (making education available to all) had the unintended consequence of making education unaffordable to all. By relieving the price competition, it has allowed schools to increase tuition at a tremendous rate.

The schools and the banks have become filthy rich from the system. Student graduation rates have fallen, and average length of college has increased. And a whole generation of students have entered adult life with a crushing burden of debt.

Because of “special government protections,” bankruptcy is almost never any help to people with student debt. They declare bankruptcy and still end up paying everything they have for student loans that, all too often, were completely useless to them. Whatever you think of Trump’s tax cuts for the super-rich in 2017, the amount would have been enough to rid people of their student debt burdens, so it can be done. It’s just a question of who gets the money: the super rich 1%? Or the poverty stricken 99%?

This question is soon going to be coming to the fore.

Social Security is a Huge Issue

There’s another factor at play. The baby boomers – people born from roughly 1950 – 1965 – have plundered the resources of the past and future. They’ve given themselves tax cuts and embarked upon expensive wars while decimating the interest rates that allowed old people to live on their savings. And while guzzling the resources that could have given the young a start in life. Now they’re beginning to retire, assuming that Social Security will keep them in the comfort to which they are accustomed, for the rest of their long lives. When boomers started paying into Social Security, there were many workers per retiree, now there are less than half as many workers per retiree. Social Security is paid out of current tax revenues, so what that means is that the “surplus” people like to talk about for Social Security is an illusion – that surplus is made up of government bonds which are paid (or rolled forward to be paid later) out of current taxes. The millennials will be paying for the boomers’ retirement, if they choose to do so.

By election time in 2020, the baby boomers will no longer be the largest voting group in the country. Millennials will become the largest voting block, and they will be gaining electoral power for many years after that. It is going to occur to them that the boomers have pillaged their futures. It will occur to someone that the time is ripe for a jubilee to set thing straight. That person will find a passionate following of people who have never felt called-upon to vote. Politicians have pandered to the boomers for many years. They’ve ignored the millennials, and the millennials have ignored them.

That could change very suddenly. I think it will. Some people are in fact already talking about it.

What it Means

The change in electoral power and the likely shift in governmental focus could be huge. One could hope that the millennials will strive to set some priorities that the boomers never managed. In that scenario, student loans would be eliminated and free education installed (perhaps). Social Security would be managed in some way take care of the old without overburdening the young, and peace and harmony could descend forever and ever amen. Something has to change for that to happen, though. Either the super-rich will have to pay much more or the military, for example, will have to take much less. It could happen, but these are both deeply entrenched special interests with a lot of money and power.

An alternative scenario is less attractive but more likely. In that scenario, student debt is eliminated and there’s a lot of talk about cutting back on money to retirees and the military and of taxing the super-rich. What actually happens is more of what has been happening, though – the deficit balloons. The money is paid in depreciated dollars, and the debt is pushed down the line for the future to pay.

Eventually, that isn’t going to keep working.

Occupy Wall Street and Debt Jubilee

This article was originally written only about the Occupy Wall Street when that was a “thing.” For an instant in time, it looked like people might look up and notice the huge shift in wealth from the poor and working classes to the rich. And from the young generation (Millennials as they’re now called) to the Baby Boomers That moment has passed but the issues remain, and a large-scale disruption seems inevitable. The student loan picture has grown much worse, and combined with health care and retirement issues, might well bring on an inter-generational conflict of massive proportions.

I think it will likely take the form of a “debt jubilee.” And this, along with other economic policies, will have consequences.

Occupy Wall Street – The Beginnings of a Serious Movement

As always, I’m a little cautious when I bring an “outside” issue into the discussion of defending yourself from a lawsuit brought by a debt collector. But there are links: there is increasing resistance to the status quo of banks and debt collectors using the legal system to take things away from people without a lot of money. So far, this resistance hasn’t accomplished much (if anything) on the broader political scene, but it is beginning to create an energy that may affect what litigants and judges will do. It may also radically change the whole debt legal landscape.

And that brings the discussion within the legitimate scope of my analysis.

Here’s what I wrote about Occupy Wall Street, and then there’s a link to an article about debt jubilees.

Occupy Wall Street Is Just Getting Started

I am very happy to see the demonstrations. As I have mentioned before, there is certainly a “class war” going on, but that war is not in the words of the fringe politicians. It is in the actions of the political decision-makers, who have transferred trillions of dollars to the wealthiest people (by and large, these are the people who own the banks) through the bailouts and other policies. It is the working and middle class people who are and have been under fire. They pay the price of the bailouts to the rich, and they are the ones being sued for debt more than anybody else, who are losing their homes and groaning under big credit card balances with outrageous rates of interest.

They should be mad. Occupy Wall Street has started, like so many other social movements, among the young, but it is showing some signs of attracting the working and middle classes. There’s smoke. Will there be fire? I think that possibility certainly exists, and the persistence of the “occupation” has been impressive.

The Occupiers’ Message

It isn’t that I think the demands of Occupy Wall Street are coherent at this point. I haven’t been able to make out any sort of specific, consistent message from the things they have written, or that have been written about them. But that said, I do believe that they have a point. They know they’ve been screwed –they just don’t know how. Yet.

“Green Tea Party”

Last year I called for a “Green Tea Party.” Although the name was a little tongue-in-cheek, the thoughts behind it were quite serious. The Tea Party, with its calls for “smaller government” (but apparently without wanting to reduce American military adventurism around the globe or subsidies for corporations and other traditionally right wing interests) captures the imaginations and hopes of a lot of people who feel disenchanted by politicians. Occupy Wall Street, with their opposition to bailouts for the wealthy and other corporate “help” (but apparently with some faith in the trustworthiness and goodness of government), really are a sort of mirror image of the Tea Party.

There is a lot of antagonism between the two groups right now, but they both, actually, seem to want the same thing. Both groups want a world where people have a chance to survive and get ahead in life. Each identifies one side of the coin as the problem. And the coin is that we have a ruling class that uses government as a tool -to take money from the lower and middle classes and give it to the rich, and to expand their reach and power through the world.

A Combined Populist Movement

What would happen if Occupy Wall Street came, as many progressive organizations did during the Great Depression, to view big government as the problem rather than the solution? What would happen if the Tea Party, as Ron Paul clearly does, came to see the assertion of U.S. military power around the world as a form of big government opposed to personal freedom? or corporate bailouts as contrary to free market enterprise?

Then the Tea Party and Occupy Wall Street might come together with some real populist power. It would never be called the “Green Tea Party,” of course, but it might be called “The New America” movement or something like that. Something that might capture the urgent need for our country to move back towards real democracy, away from the on-going siphoning of resources to the wealthy, and away from the constantly expanding government that makes that possible.

Public Response

The response to both the Tea Party and Occupy Wall Street has been “instructive.” It’s actually very similar to the initial response to “Arab Spring,” the movement which has toppled dictators in the Middle East and continues to reshape politics over there. The financial press ignored Occupy Wall Street as long as possible, and since then have been, almost uniformly, contemptuous or patronizing. Politicians have either ignored the group or tried to co-opt them. And the police response has mirrored what we saw in the Middle East out of the dictators: brutal and arrogant.

Meanwhile, more and more people are gravitating towards the marchers.

There has been criticism of the Tea Party that they were, in fact, co-opted by the Republican Party, and I think that is partially true. It has been a platform for the anti-intellectual side of the party, no doubt. But this co-optation is certainly not complete, as the Tea Party candidates have shown that they do have their own agenda that is not always under the control of the rest of the party. If the Tea Party and Occupy Wall Street could somehow see beyond their differences and develop the broad common ground they share, the resulting movement would, I believe, be beyond the power of either political party to co-opt.

Now a new phase of this movement is beginning – a call for “debt jubilee,” where student loans will simply be wiped off the books. How will this happen and what will it do? Click here for article on Debt Jubilee. The movement will dramatically affect everything in the U.S., from schooling to Social Security and beyond. And there will be consequences.

 

Secret Danger of Garnishment to Social Security Recipients

As I have pointed out in my video about garnishing Social Security, Social Security benefits are exempt from most forms of garnishment – the notable exception to that rule is that they may be garnished by certain government entities.

Although Social Security benefits are exempt from most forms of garnishment, I warned that they could still be attached and taken if they are in a bank account that the creditor happens to find. When bank accounts are garnished, they are held by the bank for a time to allow you to fight the garnishment. As a practical matter, you may be unable to fight the garnishment, and thus if you are having trouble paying your bills and have paid for them with an account that holds Social Security benefits, it makes very good sense to switch those benefits to another bank (not just bank account in the same bank) – because once there is a judgment against you the debt collector is bound to attempt to seize any assets in a bank they have on file for you. I realize this can be difficult or disruptive, but if you have paid an original creditor or debt collector out of an account, you must expect that account to be garnished – seized and taken away from you – if the debt collector manages to get a judgment.

If it is seized, you may or may not be able to get the money back, but there will certainly be a delay, and all the money in the account, up to the amount of the judgment, will be held by the bank and unavailable to you.

There is another danger to Social Security recipients.

Social Security recipients are often elderly or disabled, needless to say, and many of these allow other people to do shopping for them or to hold their assets in one way or another to use for their benefits. This money is held in trust and should not be available to debt collectors who are after the person who is holding the money.

Here is an example that might make it clearer. If Mary (a 70 year old woman suffering from Altzheimer’s) is being taken care of by her son Tom, Mary and Tom will frequently find it helpful to allow Tom to use Mary’s account to pay her bills. If Mary’s account contains only Social Security benefits, it should be beyond the reach of any creditor, and because the money is not Tom’s at all, it should not be reachable by Tom’s creditors in any event.

However, sometimes debt collectors will discover that Tom is paying bills using Mary’s account. If his name is on the account, or if he is permitted to write checks upon it, the debt collectors may attempt to garnish the account.

This is not as “evil” as it may first appear. From the debt collector’s point of view, how do they know what bills Tom is paying with the account? People have often tried to hide assets from debt collectors by using other people’s accounts, and the law is designed to let go after the debtor’s money regardless of whose name it is.

On the other hand, the impact of Mary’s account being seized for Tom’s debt can be devastating. Because once again the money will be held out of use for a period of time that allows the parties to prove whose money it is and whether it can be seized. During that time, the elderly person cannot pay her bills, may be evicted, or face other, life-threatening and disrupting events.

Get Legal Advice

Therefore, if you have a judgment against you on a debt you should seek the advice of a lawyer specializing in debt collection before allowing the account to be linked to you in any way. In my opinion, the risk extends beyond just having your name on the account. If you sign checks on behalf of someone else and there is a judgment against you, you may be putting this person at risk. Get legal advice and protect them and you. Better yet, don’t let a debt collector get a judgment against you.

Protect Your Rights

If you are being harassed by debt collectors and worry about paying your bills, you need to be extra alert to protect your rights. These calls are often a prelude to their suing you. Bankruptcy can sometimes be an option, yet it has very high costs. It’s worth considering defending yourself first. Membership with our site gets you our teleconferences and ecourses for free, plus gives you many other benefits. Or consider our prepaid legal plan to protect you from future possible litigation. With that, if you get sued, you’ll get a lawyer to defend you for free.