By
Rob Lambert
President, Asset Protection
Corporation
Dear
Subscriber:
Last
week a subscriber
wrote me a short
note asking a very
common question:
"I
currently have a
judgment against
me and my enemy is
currently collecting
25% of my pay for
the next 20 years
or until I can pay
this judgment off.
Anyways this whole
legal battle has
been unimaginable
and financially devastating!!!
Is there a way to
legally start a business
and set it up so
that these people
cannot come after
the revenue that
the company generates?
I know they can come
after my salary at
25%, but that is
already my current
reality."
Basically,
he wanted to know
how he could move
forward with his
life with a voracious
creditor on his back.
This is an important
question. Many people
give up. It seems
to be especially
hard on men who often
judge their value
in life by their
ability to support
their family. My
advice to everybody
is to never give
up and to never let
a judgment destroy
your direction or
focus. There is life
after debt.
Here
are the options I
see for this poor
guy.
First:
It would have been
great if he had an
old and cold plan.
That way he would
have protected assets
which would not be
available to his
creditor. Normally,
in this type of situation,
a pennies on the
dollar deal can be
made with the creditor
because they would
rather receive something
than spend a lot
of money and time
to get nothing. Remember,
most suits are brought
for money and not
to prove some point.
In this type of case
a little bit of money
can often buy a lot
of relief. Unfortunately,
my Subscriber was
a lurker and not
a doer. He did not
have a plan, and
lost his unprotected
assets.
What
does somebody with
a judgment and little
in the way of assets
do? That is a difficult
question. One thing
he should not do
is give up or lose
hope!
I
always consider bankruptcy.
It is for about 4
more months, a great
way to get rid of
a rapacious creditor.
After that, if this
Subscriber is at
all financially successful,
he will be precluded
from a fresh start
Chapter 7 bankruptcy
and instead will
have to pay out most
of his earnings for
five years to his
creditors. Not a
good result and not
all that different
from his current
situation. Note:
a great time to implement
a solid asset protection
plan is right after
a debtor is discharged
from bankruptcy.
There is little risk
of a fraudulent conveyance
claim because all
past debts are eliminated.
Many doctors do this
knowing that they
will still have the
same income level
the day after the
discharge is final.
What
are the other options?
Well,
the Subscriber with
the creditor problems
could move out of
the country if he
could find work or
continue with his
profession from another
location. Remember,
no country automatically
enforces US judgments.
Sometimes it is better
to live in England
with your money in
hand then to live
in Pacoima under
the threat of garnishment
and attachment. This
is a very harsh step
and one which most
people will not take.
It is also not available
to many people who
do not have the freedom
to pull up stakes
and move.
Well,
even if this Subscriber
isn't willing to
buy his 'round the
world ticket and
become a perpetual
tourist, he still
has other options.
Let's assume that
he is an inventor
or an entrepreneur.
He would be foolish
to invent some new "thingie" and to hold title to it in his own name. His creditors would take the "thingie" away as soon as they heard about it.
One
technique which is
often utilized by
the hard line entrepreneurs
is to form a company
- either in the US
or often better,
offshore - and have
the interest in that
company owned by
a solid asset protection
trust. This company
(let's call it NewCo)
has to start life
completely empty.
IF substantial assets
were transferred
to it that act would
be a fraudulent conveyance.
However, there is
nothing illegal about
our entrepreneur
working for NewCo
and adding value
to NewCo based on
his blood, sweat
and tears (as well
as skill). Yes, our
Subscriber's wages
can still be garnished
(assuming they are
paid in the USA!)
but, if he invents
some new thingie
while working at
NewCo or if he builds
up a substantial
business of any kind,
that business or
that "thingie" is owned by NewCo which is owned by an Asset Protection Trust and NOT OWNED
by our Subscriber.
By walking down that
road many debtors
can still experience
some of the benefits
of a fresh start.
Creditor problems
need not destroy
incentive if you
structure things
correctly. Remember,
nobody can take from
you what you don't
own. The Subscriber
doesn't own the "thingie."
With
a little bit of luck
NewCo will prosper
and thrive. At the
very least, if done
correctly, our Subscriber
is back to work with
some realistic hope
that he will be able
to survive and eventually
eliminate his creditor
problems.
Hope
this was interesting
to you.
Best
Rob
Lambert
If
you would like more
information regarding
asset protection,
trusts, family limited
partnerships or the
subject of this article
please call or email
our office.
