SALT LAKE CITY — The hospital bill was nearly a decade old, but John Balaich couldn’t pay it — at least not without eating ramen noodles for dinner every night.
So Balaich, a disabled retiree whose income is less than $800 a month, stopped making payments on the debt.
And that’s when the constable showed up with a letter threatening the seizure and sale of almost everything that Balaich owns.
The constable told him a judge had issued a writ of execution, a last-resort strategy used by creditors and collection agencies trying to collect old debts. (Another is a writ of garnishment, used to garnish the income of someone in debt.)
For someone who has numerous assets and income from a job — such as the governor of West Virginia, who recently had a writ of execution served on him — these orders can motivate people to come up with a way to pay past-due bills.
But when served to people like Balaich — seniors with little income and few possessions — writs of execution are more like court-sanctioned bullying, says the director of nonprofit that advises older Americans who have unmanageable debt.
And the practice is particularly egregious in Utah, which lacks a protective law that most other states have. Called a "wildcard exemption," the law helps seniors keep some of their most treasured belongings, as well as common electronics like a television or cellphone, said Eric W. Olsen, executive director of the nonprofit organization HELPS, based in Salem, Oregon. But not in Utah.
“I assist the poor in 50 states and have seen no other state with any practice remotely similar,” Olsen said.
With debt levels of seniors steadily rising and rates of bankruptcy increasing among people of retirement age, more older Americans will be opening their doors to find a constable holding a disturbing letter like the one Balaich received.
But despite their threatening nature, writs of execution have limitations, and knowing those limitations can help seniors struggling with unmanageable debt. In fact, in some cases, they may not have to pay the debt at all, and they may not have to file for bankruptcy to get relief. Here's why, and what happened to Balaich.
'Dirty little secret'
Sidelined by multiple heart attacks, diabetes and other chronic health conditions, Balaich, 63, left most of his possessions when he separated from his wife a few years ago. He has a television, a computer and enough furniture to modestly furnish a one-bedroom, government-subsidized apartment in Washington Terrace, Weber County.
This is why he was so unnerved when a constable tracked him down at his elderly parents' home. As written now, Utah law would allow the constable to take and sell everything but his bed, clothes, kitchen appliances and enough food to last a year. "I've been terrified," he said.
Looking for hope on the internet, he came across the website of HELPS, started in 2012 by Olsen, a graduate of Brigham Young University who retired from commercial law practice in 2015. (HELPS stands for "Help Eliminate Legal Problems for Seniors and Disabled.)
Olsen said he started the nonprofit to help seniors and disabled people navigate through what he considers “despicable” practices of debt collection, such as writs of execution served on poor people.
“It has long been an irritant to me,” Olsen said. “The practice drives people into bankruptcy. It’s a dirty little secret that I don’t think too many Utahns have any idea about.”
Creditors can apply for writs of execution and garnishment after they sue a debtor and a formal judgment is entered. But there are limits to what constables can seize and sell.
Exemption laws allow people in debt to keep some of their essential belongings, and these laws vary by state. Utah's exemptions include specific items, such as a microwave, stove and washing machine, a bed and clothes, and a year's worth of provisions.
Debtors under a judgment can also keep up to $1,000 in value of sofas and chairs, $1,000 in furniture for the kitchen and living room, $1,000 for family heirlooms, and $1,000 in animals, books and musical instruments. They can also retain one car with a value of no more than $3,000.
After that, most anything can be sold.
Most states, however, also have a wild card exemption (named after the wild card in poker) that allows people to keep property that is not specifically exempt, or that exceeds the value set by the law.
Idaho, for example, has a wild card exemption for possessions up to $800; Colorado's is $3,500 for household goods. Nevada raised its wildcard exemption from $1,000 to $10,000 in 2017.
Robert S. Payne, a bankruptcy attorney in Salt Lake City, confirmed that Utah has significantly fewer protections for debtors than other states.
“If I banged on your door today with a sheriff and I have a writ of execution, I would come in and I’d take your cellphone, your laptop, your TV, and your kid’s Xbox. They’re not worth a lot of money, but it’s mainly to humiliate you, to make you make some kind of payment," he said.
The law could be changed, but Olsen, who used to practice in Utah, said he hasn't been able to generate any interest among bankruptcy attorneys. Payne, too, said he's not sure why no one has tried to change the law to make it more protective of people in debt.
(Utah did, however, increase its homestead exemption — the amount of equity in a home that can be protected in bankruptcy — from $30,000 to $42,000 earlier this year.)
“My only guess is, we are generally a fiscally conservative state, so even our exemption laws are conservative," Payne said.
Insolvency and seniors
Even though bankruptcy rates are declining in the general population, they’re increasing for people 65 and older, both in Utah and nationwide.
In 1991, 2.1 percent of people filing bankruptcy were between 65 and 74; in 2016, 12.2 percent were, according to a 2018 report, "Graying of U.S. Bankruptcy."
When collectors start calling, seniors often turn to bankruptcy, thinking it's their only option, or continue to try to make payments, even if there's not enough money left over for food.
But in fact, certain types of income are protected by federal law, including Social Security, disability, pensions and VA benefits. That's why Olsen counsels many senior citizens to simply stop paying on old debt. HELPS then sends a cease-and-desist letter telling creditors that the client only has income that is protected by federal law, and not to contact them anymore.
This is something that anyone can do on their own; a template can be downloaded from the HELPS website and sample letters can be found elsewhere on the internet.
Even with a court-ordered judgment, a constable may survey the home and decide it's not worth the effort to proceed with seizure of property and recommend that the creditor try to collect the debt another way, said Travis Reitz, a constable in Midvale, Utah.
Reitz said that he can’t speak to the practices of other constables in the state, but says his agency strives to be non-threatening and respectful when serving a writ of execution. "That part of what we do is the part we like the least," he said.
Also, he added, “If we served a hundred writs of execution last year, only about 30 of them would have gone to a sale." The others were either resolved by the debtor, or dropped because there was so little to sell.
'Judgment proof' debt
Edward R. Morrison, the Charles Evans Gerber Professor of Law at Columbia Law School in New York City, wasn’t familiar with HELPS but said the nonprofit’s strategy is reasonable — for some people. “It can be a good strategy for some clients, and not for others,” Morrison said.
A Utah native who specializes in bankruptcy law, Morrison said the best option for debt-saddled seniors depends on their assets, especially if they own a home that a judge could order be sold to cover debts. For some homeowners, Chapter 13 bankruptcy might be the best option. But homestead exemptions also vary widely by state.
A senior who rents and has only protected income is considered “judgment proof,” meaning there is little a creditor can do to collect it. In those cases, it may make sense for an insolvent senior to send a cease-and-desist letter to collectors or to engage an attorney or an organization like HELPS to do so on their behalf, Morrison said.
That said, these letters only stop the creditor or collection agency from contacting the debtor; they don't make the debt go away.
This might not be a good option for people who still have active credit lines they would like to keep using because credit issuers will likely close the lines of credit, Morrison said. And because their credit scores will be damaged, they may not be able to get new credit in the future.
Many seniors, however, aren't concerned about getting new lines of credit; they just want to be able to pay their utilities and buy food and other essentials of life.
Costs of relief
Attorneys who specialize in bankruptcy say many people resist filing bankruptcy because they believe they have a moral obligation to pay their debts, even if paying them means they don't have enough to eat.
As such, the average senior suffers financial distress for an average of five years before filing bankruptcy, the Consumer Bankruptcy Project found. Often, seniors use up their retirement savings to pay medical or credit-card bills, even though in both Chapter 7 and Chapter 13 bankruptcy, retirement accounts are protected assets.
(Chapter 7 discharges most medical and credit-card debt, although people will have to surrender some of their assets to pay creditors. Chapter 13 bankruptcy allows debtors to keep their assets while establishing a repayment plan.)
But many seniors can't afford to file for bankruptcy. According to one study, the average attorney fee for Chapter 7 is around $1,200, paid up front; for Chapter 13, $3,200, paid over time.
HELPS, in comparison, charges a monthly fee on a sliding scale based on the client's income; many, including Balaich, qualify for help at no cost.
Robert Lawless, a professor specializing in bankruptcy, consumer finance and business law at the Illinois College of Law in Champaign, Illinois, said what HELPS is doing is "spot-on" and is similar to advice given by other agencies and law firms that specialize in consumer debt.
"Most people want to pay their debts, but if it’s a question of having food on your table and a roof over your head, or paying debt, that’s a choice that the individual can make. And that’s what the law does, give that choice to the individual, not the creditor," Lawless said.
Money for food
Balaich no longer works because of multiple health issues. He's had five heart attacks over the past decade, but the source of his debt was an accident. He was sitting in his backyard, carving a stick, when the knife slipped and sliced an artery on his hand. He had no health insurance, having been laid off from his job in construction, and went to the emergency room, where his portion of the treatment came to about $2,700.
Hospitals typically work with patients to establish payment plans, but between his divorce and help he has provided an adult son in trouble, Balaich said the hospital account fell into arrears. His story is typical of many seniors who have trouble paying their debt. Medical bills are the No. 1 reason seniors file bankruptcy, and an increasing number of seniors say they went into debt helping their children pay for college or helping adult children in other ways.
Balaich said he has often lived on a "Top Ramen diet" while struggling to pay all his bills. "You love your kids, how do you tell them 'no' when they're standing at your door, saying they're hungry?" he said.
"I probably made some mistakes along the way myself, but I just couldn't see my way out," he added.
Having signed up with HELPS, Balaich's debt won't go away; it will still show up on his credit history. But now that he's no longer making payments on the debt, Balaich has more than $100 a month that he didn't have before, money he can use on food and other living expenses. And he's no longer worried that the constable or a sheriff's deputy is going to show up with a truck to collect his furniture, television and computer.
"I'm scared to lose what little bit I do have," he said.