Your own quote is probably the easiest way to explain why your analysis is incorrect. The UCC-1s turn up outstanding debts that other reporting makes clear is still quite unpaid; the personal debt has not been extracted from the byzantine array of personal/business debt. It's part of the complex reason why Wilpon can't simply cash out and go home.

Howard, UCC-1s don't turn up outstanding debts. This is just factually wrong. I'm a restructuring lawyer for a big firm in NYC and I work with Article 9 matters, and I've done some work with other sports teams. The ownership structures are very complicated and the capital structures are very complicated. Having unreleased liens in place is not necessarily indicative of unpaid personal debt. Full stop. You should correct the article.

51. Your insistence, and citing other work you've done, alas, doesn't make you any more correct. Think we are going in circles here.

The best case, as you note, is that the many liens against the Wilpons are indicative of at least some debt, and we've seen in many places (including Howard's columns) substantive lists of the Wilpons very signficant and perhaps crushing debt.


I don't believe the Wilpon's have crushing personal debt - in fact, I'm quite certain they do not. I am equally sure that entities controlled by the Wilpons are highly levered, and I'm sure many of them are completely encumbered by secured debt. I don't have a problem with a best guess - and without being in the thick of it, all we can do is guess - of the finances of the Mets, but Megdal basically comes out and calls the guy a liar when he probably wasn't lying.

Smart, well-counseled guys like the Wilpons do not make brazenly factually inaccurate statements to the media. Even the owners that you think of as buffons, the McCourts, Wilpons and Lorias, are very, very smart and savvy businessmen.

Your insistence, and citing other work you've done, alas, doesn't make you any more correct. Think we are going in circles here.

Howard, go buy a Article 9 primer. You're wrong, factually. Its not an argument that needs to be cited.

Always a pleasure, 'zop.

We have mortgages on buildings and stuff like that

.

Well listen!
I got mortgages and homes
I got stiffness in the bones
New stadium in Queens paid for by peasantry (I tell ya)
But my pyramid of pleasure
Depleted much of my treasure
So I sell Amway, a great business opportunity!

Having unreleased liens in place is not necessarily indicative of unpaid personal debt.

How can you have a lien without debt or some other liability?

How can you have a lien without debt or some other liability?

The UCC-1s that Howard refers to are financing statements, and they are used to perfect liens. Anyone can file a UCC-1 against anyone or anything, more or less, regardless of whether there's a lien in place. Normally, UCC-1s aren't filed unless they are perfecting some underlying security interest, but that's not always true.

Additionally, I can grant you a lien without there being an underlying debt supporting it. I generally wouldn't do that, but I might. Say, for example, I borrowed $X from you, and indemnified you from any liability with respect to that borrowing. In a separate agreement, I granted you liens/security interests in certain of my assets to secure that borrowing.

I pay you back. You might be concerned that I don't have the cash to back up my indemnity obligation. In theory, you might keep the liens in place to secure those obligations, even though there's no outstanding funded debt.

Another example - and more likely to be relevant in the case of Wilpon. Say there's senior debt and junior debt in place, and the rights of the senior and junior tranches with respect to each other are governed by an intercreditor. Often, intercreditors will provide that one tranche gets the benefit of the other tranche's liens in certain scenarios - say, for example, if the senior tranche's liens are found to be unperfected, but the junior tranche's liens are fully-perfected, the intercreditor may provide that amounts recovered with respect to the junior tranche's perfected liens must first go to pay back obligtations under the senior tranche.

If the junior tranche is paid in full, the senior debt may insist that the junior liens stay in place because, indirectly, they also support the senior debt obligations.

Or a really common one, for operating entities. Borrower has a revolving facility with Bank X. As part of that facility, Bank X provides LCs for the Borrower which it uses to conduct its business.

Borrower decides to repay, in full, all amounts drawn on the revolving facility. BUT, replacing LCs is a huge administrative pain in the ass, so it leaves the existing LCs in place. There will be no obligations owed under that revolver but the liens will still be in place and perfected, just in case one of the LCs ultimately gets drawn on.

Howard:

zop also thinks the Yankees can void ARod's contract under a mutual mistake theory.

zop also thinks the Yankees can void ARod's contract under a mutual mistake theory.

No, I don't think that, but feel free to misquote what I said for strawman purposes.

Please, clarify my misapprehension.

Please, clarify my misapprehension.

I said it was a theory that had almost no chance of winning, if fully litigated, but it might survive at least a little while and it certainly would generate bad publicity for A-Rod, so you threaten privately to bring that action against him in order to gin up settlement value if buying out his contract. The folks arguing againt said that it was such an outlandish theory that its settlement value would be zero - my point was that even if the settlement value was 5 ot 10 cents on the dollar, when you're talking about a 9 figure obligation that's real money.

re # 64: That would be spectacularly bad lawyering. Don't know if Zop is right in his criticisms of Howard, although the tone seems totally uncalled for, but post #64 is a poor argument for bringing a bad faith claim.

re # 64: That would be spectacularly bad lawyering. Don't know if Zop is right in his criticisms of Howard, although the tone seems totally uncalled for, but post #64 is a poor argument for bringing a bad faith claim.

<shrug> People do it against us all the time, but to be fair, that's the bankruptcy context and its a bit more gloves-off than normal big-firm litigation.

The UCC-1s that Howard refers to are financing statements, and they are used to perfect liens. Anyone can file a UCC-1 against anyone or anything, more or less, regardless of whether there's a lien in place.

Bingo. Some lunatic filed a UCC-1 alleging millions of dollars in debt against some attorneys in my law firm (and a lot of other attorneys) who do foreclosure work. Until they get taken care of, they show up in credit reports, and have to be explained.

67, Except "some lunatic" didn't file these. They are filed by the large lenders who Sterling also owes, referring to the same transactions that are intertwined.

I'll believe the Wilpons don't have money problems when they start spending money like they don't have money problems.

I'll believe the Wilpons don't have money problems when they start spending money like they don't have money problems.

Heh. The Mets payroll will be less than one-half that of the Yankees. It's currently at 79m acc to BBRef, estimated at 90m for the start of the season, and I see no reason to think it's bottomed out.

I haven't had the stomach to follow the machinations in the court. Is John Ricco now Alderson's heir apparent? He used to be Jeffy's favorite.

This is apparently two weeks old:

Giancarlo Stanton Blockbuster Trade With NY Mets in the Works?

How is it possible that didn't get posted? Stanton and Juan Pierre for Zack Wheeler and D'Arnaud. Given the Mets would be letting Stanton walk after 2016, at the latest, I don't know that I'd do it, though it's always tempting to get the best player in a deal.

I'm.... not sure how I feel about that trade. It seems a few years (in either direction) on the wrong side of a good idea.

I think I would do it - that is, if I felt that I would be able to extend him before he hit free agency. Stanton is a superstar that may hit 60+ homeruns. D'Arnaud and Wheeler are very good prospects that may amount to little or nothing.

@73: Yup, the issue of an extension is everything. You can build a championship team around Stanton. If I had a $150m payroll I'd definitely do it. As things stand, it's four years of player control versus thirteen or fourteen years of player control.

Stanton through his arb years might make (WAG, he could break records) $50m for 20 WAR. D'Arnaud, IF he doesn't get hurt, has a diverse game and I'd be a little disappointed if he didn't average 2 wins a year, and of course his arb years will cost according to his performance. Same with Wheeler, who could turn out to be anything, but as a top ten prospect if he's only a 2 win pitcher that would be something of a disappointment, though it's tempting to cash in any AAA pitcher (other than Strasberg and his rare ilk) for 14 wins over 7 years. Between them D'Arnaud and Wheeler could come up with 28 wins between them while under control, without playing up to their projections; and, of course, D'Arnaud was just hit by a pitch and we'll find out in two weeks the medical staff let him play with a fracture that turns him into a AAA backup, and Wheeler will flameout in middle relief for the big club.

With D'Arnaud and Wheeler, if your payroll is stuck at 80m, you also get to churn them into prospects in five or six years. That's a big deal, though I suppose you could keep Stanton for three years then try to turn him into 2016's version of D'Arnaud and Wheeler. If you can get D'Arnaud and Snydergaard for one cheap season of Dickey and two years of Dickey around market value, I imagine you could get D'Arnaud and Wheeler for one year of Stanton at 80% of market and a six+ year market value extension, assuming he continues his HOF pace.

This is apparently two weeks old:

Giancarlo Stanton Blockbuster Trade With NY Mets in the Works?

How is it possible that didn't get posted? Stanton and Juan Pierre for Zack Wheeler and D'Arnaud. Given the Mets would be letting Stanton walk after 2016, at the latest, I don't know that I'd do it, though it's always tempting to get the best player in a deal.

Poor Giancarlo...from the frying pan to the fire.

If there was ever a time for Theo to pull the trigger on a blockbuster trade it would be now with Stanton.

Rizzo
Stanton
Castro

with possibly Jackson and Castillo being around average could give the Cubs a pretty good offense for a few years.

I'm late on this, but a UCC lien search is just a terrible way to figure out what debts any entity has outstanding. In addition to everything zop said, lots of times UCC-3 termination statements just aren't even filed to terminate the related UCC-1 when the debt is repaid. And this happens even with very sophisticated parties.

If there was ever a time for Theo to pull the trigger on a blockbuster trade it would be now with Stanton.

Rizzo
Stanton
Castro


You think the Cubs are getting Stanton w/o giving up Rizzo? I don't see them having the chips for that.

A little off-topic, perhaps, but what IS the best way to find out about debt that has gone through the courts and, say, converted to a judgment?

A little off-topic, perhaps, but what IS the best way to find out about debt that has gone through the courts and, say, converted to a judgment?

I'm not entirely sure what you're asking. If an entity defaults on its debts, and there is no work-out, that should result in a bankruptcy filing.

@81: I have a friend who owed money, got taken to court in 2005, and late that year a court decided the debt was legit and awarded a substantial judgment (bear with my terminology--I have no experience with this kind of thing). So, it's now 2013, and my friend hears a rumor that after seven years debts can be removed from ones credit report. He writes and gets Experian's (?) report on him, and there's no mention of the debt (that he was never able to repay).

So, he's wondering, does a debt get taken off a credit report/record automatically after seven years? Did Experian make an error in not listing the debt? Does he cause problems for himself by bringing the omission, if that's what it is, to Experian's attention?

In short, then, is there a place for him to start looking into the matter without disturbing a dog he'd very much like to keep sleeping? Is there a place that lists any debt (he's in NY, fwiw) that's gone through the courts?

edit: There was no bankruptcy filing. He's also a good friend, the debt was obtained by a business partner who cheated him badly, and I'd like to help him if I can, even if it's just with some useful info.

The credit bureaus are private companies whose purpose is to provide an estimate of an individual's credit risk - their reports have no legal significance. Your friend has a legal obligation to pay his debt (which seems to have been a contractual arrangement upheld by the courts), independent of whatever his credit report says. For some reason, his creditor doesn't seem to want to collect on the debt. There may be some state laws that dictates that a debt is deemed waived if a creditor doesn't attempt to collect for some period of time, but that's just my speculation. I imagine a conversation with an attorney with experience in this sort of thing could provide a reasonably quick, clear answer.

Thanks, billyshears. Much appreciated. I'll pass on what you wrote.

Your friend should also check the other two major credit reporting bureaus, not just Experian. Everyone is legally entitled to one free credit report per year from the three major bureaus, and it should be done through annualcreditreport dot com. Accept no imitations; this is the only site that gives truly free credit reports, so do not listen to commercials and advertisements claiming otherwise. This site is the one recommended by the FTC.

If your friend's debt was from 2005, it is possible that it was held by one of the many banks that went under and/or bought out by a bigger bank post-crash. A bank has to actually report the debt to the credit reporting agencies (every month, I think), and if they no longer exist, they are not going to report the debt. Likewise, if it was bought out by a bigger bank, the debt may have been lost in the transferring of records and stopped showing up on your friend's credit report.

There are statute of limitations for repaying debt that vary by state; NY I believe is seven years (and NY is on the high end), and I'm not sure if there are states that have it longer limitations. (Please note that I am not sure if this applies to all kinds of debt - It certainly does for defaulted credit cards). The seven years statute of limitations for NY state happens to coincide with the time that bad debt stops showing up on your credit report. You may have had a credit card for ten years, but if you missed a payment in April 2004, it will no longer be noted on your credit report.

Without knowing what kind of debt your friend owes, I am not sure what his actual legal obligations (if not moral obligations) are at this point. But it is true that after seven years, negative information drops from your credit report, and it is also true your credit report may not necessarily paint an accurate picture of your debts. But if your friend wants to apply for a mortgage or a new credit card or anything else that requires a credit check, it sounds like this previous debt shouldn't have any influence on it.

Thanks for the followup, Dock. When you wrote, "There are statute of limitations for repaying debt that vary by state; NY I believe is seven years (and NY is on the high end), and I'm not sure if there are states that have it longer limitations," does that mean that the debt literally expires and can be stricken from the record (if you know what I mean)?

--edit-- Btw, here it says 6 years for various kinds of debt in New York: http://www.creditinfocenter.com/rebuild/statuteLimitations.shtml

I think it's simply a personal debt, if I have the term right. I mean that in the sense that it was a debt between two people. His business partner stole the inventory, which happened to be in the business partner's name. The partner then claimed my friend owed him for half the missing inventory and was able to go to court and get a judgment for that amount--it was a couple of hundred thousand dollars. Other than forcing my friend to go through a deposition in 2010, I imagine in order to seek out assets that could be seized, the creditor hasn't made any moves. Nor has my friend made a single payment on the debt, although I wonder if the fact of a deposition wrt the debt resets the clock...

My friend knows the debt was fraudulently obtained, as does the creditor. That's taken some of the wind out of the creditor's sails, and I suspect he's aware that my friend, old and now disabled and poor (though with a Special Needs Trust some of us established on his behalf), isn't hiding any assets, at least none worth hunting down.

Thanks again for the comments. My friend has trouble these days with information, so I know any concrete help I can give him or pass on to him will be appreciated.

I'm mistaken, then. NY state is six years. I got into some credit card trouble during college, and did a lot of research when collection agencies started banging down my door, and that site you mention is indeed where I got some of my information. I live in NY but clearly in this case my memory failed me.

Anyway, to answer your question, the best of my understanding is that the SOL means that the debt literally legally expires, but it does not mean it will be automatically stricken from the record. It can be stricken from the record (depending on what kind of record we're talking about; for example it may be included in your credit report for up to seven years regardless of the SOL). The creditor may attempt to pursue the debt even after the SOL, and it would be the responsibility of the debtee to prove that the SOL applies in that particular case, at what point in the debt the SOL began, and that it has indeed expired.

IANAL so I am not sure if your friend's debt qualifies as the kind of debts that apply to the SOL per the website. Going by what you've said, it doesn't sound like a promissory note or open account kind of debt. It could be an oral/written debt if your friend was taken to court based on a contract he entered with his business partner that somehow stated in the legalese that he would be half-responsible for compensating for stolen inventory. I am sure other kinds of debt have different (or even no) SOLs (like, say, child support payments), so that is something you should probably research further. I am a bit surprised that there is no record of the judgement on your friend's credit report, which is why the other two should be checked (but if it's been seven years since the judgement, it has probably dropped from the credit reports). Credit reporting agencies are not always consistent with each other. The creditor may be reporting to TransUnion, but not Experian.

Creditors are also inconsistent in how they decide to pursue debt. In my experience, it may depend on the size of the debt, and how big the bank is. A bigger bank may not care about a few thousand dollars, and it may matter more to a smaller bank, or they could be bored enough to more dilligently pursue it. A smaller bank may also be more familiar with the particular case, and if your friend's creditor went through a deposition and decided that your friend does not have assets, and that the debt was probably fraudulently obtained, then they may have decided it's not worth the trouble to even bother reporting to the credit agencies. I can tell you making a payment on the debt can absolutely reset the SOL clock, but I do not know if a deposition would.

As I've said, IANAL, and I'm speaking from personal experience with credit cards. I was already mistaken about the SOL in NY state so It's possible I'm wrong about other things, or at least giving outdated information. Your friend's situation sounds more complicated, and I think the first step would be to determine what kind of debt this, if there is an SOL, and if that SOL has expired. If the SOL has expired, then your friend should legally be in the clear. However, that doesn't mean the creditor won't pursue the debt. Your friend would just have to be prepared to prove the SOL has expired.

EDIT: As an aside, everyone should obtain their yearly free credit report and review it every year. You never know when someone with the exact same name as you is having credit trouble that mistakenly gets added to your report. It can be a huge time-consuming pain in the ass to get these deleted, but it's certainly worth it if you're trying to get a mortgage or something.

Dock--I really appreciate the time you took to post. I will pass the info on to my friend and use it to steer where we go next. Sad to say he's struggling a little with memory and it looks like it's falling to me to see this through. He'll be able to afford a consultation with an attorney and I'll use your info to guide the assembly of facts in advance of that consulation.

I'm glad you mentioned getting all the credit reports. It reminded me I've heard that agencies don't always automatically remove information older than 7 years. I've heard of disabled people being turned down for even emergency Section 8 housing on the grounds of bad credit, so it may prove crucial at some point to have gotten any info older than 7 years off his credit reports. Other than this, fortunately, my friend's credit is clean.

Btw, if you're still around, when credit report companies are contacted, do they sometimes then contact the creditor? Sleeping dogs, and all that.

Oh, and you mentioned child support. While that's not an issue here, I've read that in cases where back support is not considered a criminal matter it gets reduced to a civil judgment. I don't see that mentioned in those debt tables as a specific category, so once it's converted to a judgment I wonder if it gets classed as any other civil, personal debt? I do know the two common debts bankruptcy can't eradicate are student loans and child support, but bankruptcy's different, of course, from a discharge due to SOL.

I imagine, too, that the gummint has made student loans somehow immune to the various statutes of limitations, but I didn't see any specific references to their SOL-based expiration in my recent research.

Thanks again, Dock.

Jack, it's my pleasure. I spent a lot of time researching this sort of thing, and I was a bit shocked to find out how many rights the consumer has to project themselves from unethical/illegal practices of collection agencies, so I'm happy to pass on what I've learned because I think it's important that people understand their rights when it comes to owing debt. (Though it's important to note that there is an important difference between the rights of the original creditor's collection methods, and the rights of a third-party collection agency that bought the debt from the original creditor for literally pennies on the dollar. When it comes to the latter, oh boy do you have so many rights on your side).

I actually have never heard of much negative information older than 7+ years old not being removed from a credit report. It should just "fall off." If it stayed on, then it's probably either a bankruptcy (that can stay on your credit report for up to ten years), or a judgement whose SOL is longer than seven years. It's also possible that what you've read has the timeline wrong on when the SOL begins and ends, which can vary by the kind of debt it is, when the delinquency started, and when the creditor started pursuing your delinquency.

To your question, the short answer is yes, the credit bureaus contact the creditor when you dispute information on your report. When you get your credit report, you have a right to dispute any piece of negative information on it, and the interesting thing is that the onus is on the credit bureau to prove that negative is in fact true. You can simply write to the credit bureau a letter stating "I hereby dispute that I was not late with my credit card payment in April of 2009. Please investigate." And at that point, the credit bureau has to reach out to the creditor to determine if that information is true. If they cannot prove it, then it must be removed from your report. If they write back and tell you that you were indeed late in April 2009 and that the negative will remain on your report, you have the right to demand a method of investigation that explains how they arrived at that conclusion.

If your friend's judgement is not appearing on any of his three credit reports, and your friend has not made any payments at all, and the creditor has not pursued him for some time, you should absolutely let sleeping dogs lie. It looks like your friend already has the SOL on his side, and you don't want to risk any kind of inquiry that could restart the SOL. I am not sure if it's even possible that the SOL can be restarted after it has expired, but I don't see any point in trying to find out by asking the creditor or the credit bureaus.

I have no idea how child support is treated as far as this sort of thing is concerned (and I hope to never find out!) but to the best of my knowledge, there is absolutely no SOL on student loans. I've heard tell of some crazy stipulations where if you owe like less than 10% of the original amount, and it's been 50 years or some crazy length of time since you took it out, then your student loan will be eradicated. If that's even remotely true, then it's likely so far in the future that it's not even worth considering walking on them.

Crazy, isn't it? You can very easily get rid of credit card debt being collected by a third-party agency by fighting it until you've trapped them into an illegal method and call them out on it. You can stop paying your mortgage and continue to live in the house for free for a long time until you're forced out. You can declare bankruptcy and the simple passage of time will make everyone forget it ever happened. But your student loans are forever.

Unfortunately these various methods of avoiding debt are largely useless because you have to pay for extensive legal advice to be sure you're doing them the right way.

The partner then claimed my friend owed him for half the missing inventory and was able to go to court and get a judgment for that amount--it was a couple of hundred thousand dollars

I'd wonder about your friend's story if the partner was able to get a judgment. Not my area, but in most jurisdictions, judgment debt is treated differently than secured or unsecured personal debt, which seems like what much of the above advice pertained to. The laws of the particular jurisdiction will provide how long a judgment can be collected on. Sounds like the only reason the collection efforts haven't been more aggressive is that your friend is judgment-proof, or close thereto. People with real legal problems should seek advice from real lawyers in the actual jurisdiction that the case arises from.

Crazy, isn't it? You can very easily get rid of credit card debt being collected by a third-party agency by fighting it until you've trapped them into an illegal method and call them out on it. You can stop paying your mortgage and continue to live in the house for free for a long time until you're forced out. You can declare bankruptcy and the simple passage of time will make everyone forget it ever happened. But your student loans are forever.

It's the least crazy thing in the world. Student loan debt is enormous and unsecured, and is essentially a loan against the student's future income stream (when not federally guaranteed, which is a whole other boondoggle). If not for the nondischargable nature of student debt, it would be irrational not to declare bankruptcy the day after graduation.

There is no non-dischargable debt that allows people with no assets and no guaranteed income stream to incure $100-200k in debt. The best way to conceive of student loan debt is that it is secured by the student's future income.

The problem with student debt isn't non-dischargability, its that we allow kids who are either not-old-enough or barely-old enough to vote to incur $100k+ in debt obligations. The 18 year old mind simply isn't wired to understand the consequences of that.

If your friend's judgement is not appearing on any of his three credit reports, and your friend has not made any payments at all, and the creditor has not pursued him for some time, you should absolutely let sleeping dogs lie. It looks like your friend already has the SOL on his side, and you don't want to risk any kind of inquiry that could restart the SOL.

If there is a judgment, is the statute of limitations for the underlying cause still relevant?

If there is a judgment, is the statute of limitations for the underlying cause still relevant?

Again, it is not my area, but I believe most states have specific statutes that govern how long you can collect on a judgment and what types of property you can collect on. The SoL on the underlying cause of action isn't relevant once you obtain a judgment. The judgment might be good for much longer than the original SoL.

#90 - In my case, I was exploring/researching my options over a $1,000 credit card debt that was passed on to a third-party collection agency after I defaulted. I am not proud of my fiscal irresponsibility when I was much younger, but I don't think anyone deserves to be hounded by endless threatening phone calls full of verbal abuse these third-party agencies are known for. All it takes is a little research of your rights to beat them at their own game to get them to leave you alone, and that's what I was basing my advice on. You don't always need to pay money to consult a lawyer if you thoroughly do your homework, but considering the amount of the debt Jack's friend owes, it would certainly be wise to talk to someone more knowledgeable than some jerk on a message board like me.

#92, 93, and 94 - After doing a bit of research, you guys are right. The SOL for judgements in NY state is actually ten years, and somehow it can actually be renewed. I was totally speaking to my experience involving unsecured debt. I do find it odd that the creditor has not made any moves to collect on Jack's friend's debt except for the deposition five years later, and that the judgement did/does not appear on his friend's credit report. I have no idea how one can be "judgement-proof" but I am interested in knowing how this can happen. I apologize to Jack if I've given him bad/wrong information on SOLs, but it seems like he's already planned on consulting a lawyer, and I hope I've given him enough information to at least ask the right questions in his consultation.

I'm totally open to being enlightened about any misinformation I've been presenting. It's very possible I've been talking out of my ass this whole time. Thanks, guys.

I have no idea how one can be "judgement-proof" but I am interested in knowing how this can happen.

Have very little money or assets, and be prepared to testify under oath about it. Actually, it is somewhat more complex, since state law varies quite a bit. Bowie Kuhn moved to Florida to take advantage of its unlimited Homestead Exemption which prevented creditors from seizing his house when his law firm went bankrupt. In general, being judgment-proof isn't a good thing.

Thanks, #96.

Didn't realize the thread was still alive.

@95: np, Dock. Your remarks (and the remarks of others, too) have been invaluable in steering me in useful directions.

#90 - In my case, I was exploring/researching my options over a $1,000 credit card debt that was passed on to a third-party collection agency after I defaulted. I am not proud of my fiscal irresponsibility when I was much younger, but I don't think anyone deserves to be hounded by endless threatening phone calls full of verbal abuse these third-party agencies are known for.

Don't things like an unlisted phone and P.O. Box spare you the worst of it?

I have no idea how one can be "judgement-proof" but I am interested in knowing how this can happen.

In my very limited experience, this is a colloquial rather than a technical term, meaning only that either the debtor has no or minimal assets, or his assets are protected from seizure, as with the home-exemption mentioned upthread.

In my friend's case, where he lives is protected (let's leave it at that). His disability income is also protected by law, and it is deposited into a bank account that gets muddied with no other funds and thus remains immune to taking. The Third Party Settled Supplemental Needs Trust we set up on his behalf is likewise immune. The legal basis for that is that the money in the Trust is never, legally, his. It is administered by a Trustee on his behalf, and while my friend has input into how the money gets spent, he cannot dictate how it is spent. Nor can the Trust give him cash, or buy him things that can readily be turned into cash.

There are other, weird stipulations. The Trust cannot buy him food or pay his rent without penalty, though if the Trust had enough money it could buy and operate a house for him to live in. He would also have to pay a very nominal rent to the Trust on that house; that rent money could then be spent by the Trust on his behalf.

I know a fair bit about it since I did some research into what was the best sort of Trust to establish and while a lot of the rules are reasonable, the ones such as when the Trust could send him on a vacation to Paris without penalty, but if it paid his grocery bill there would be a deduction in kind from his disability check, are silly.

The problem with student debt isn't non-dischargability, its that we allow kids who are either not-old-enough or barely-old enough to vote to incur $100k+ in debt obligations. The 18 year old mind simply isn't wired to understand the consequences of that.

Not sure what the alternative is, other than complete public funding of education, and there is one more problem. Even a permanent disability doesn't necessarily allow for the discharge of a student loan. That shouldn't be the case, imo.

Don't things like an unlisted phone and P.O. Box spare you the worst of it?

I'm not sure how much good that would've done me if I had them. They are bastards. They will call and send letters to every single number and address they can find related to you. They were calling my parent's house long after I had moved out. That's when I discovered ways to put a stop to it. It's flat-out illegal for third-party agencies to do that. You can demand that they stop calling you, and demand that all communication has to be in writing henceforth. If you're diligent about keeping records, you can sue them for violations of the FDCPA. There are many ways to trap them into illegal practices.

@99: I've heard of those protections. I'm impressed at the laws in place that let people protect themselves. I can only assume collection agencies haven't contributed to Congress the way the banks have.

Btw, I saw a documentary on one small time collection agency, located in Buffalo. A sad business indeed.