What Mistakes Do People Make In Handling A Debt Buyer Lawsuit?
The most common mistake is agreeing to “settle” the case via a payment plan. First, you don’t get out from under the emotional and psychological weight of this debt- you will still be paying hundreds of dollars per month for years to try and make it go away. If you couldn’t keep up on payments before the lawsuit, what’s different now? Second, any “savings” you supposedly get by agreeing to a payment plan are often an illusion. If the claim is for $9,000, they might agree to take $8,000 and let you pay that off at $250 per month for several years. But what the fine print in the settlement agreement says is that if you miss any of these payments, you agree to be liable for the entire judgment amount (less any credits for what you’ve paid). If you miss a payment, the $8,000 goes back to $9,000.
What’s more, these agreements say that if you miss a payment, not only do you agree to be liable for the full amount, you also agree that, without any further notice to you, the debt buyer can go back to court and get a judgment against you for that full amount. And you won’t know about it because you’ve agreed that they don’t have to tell you. Now they’re in a position to collect– and suddenly your paychecks are being garnished or your bank account is frozen because of a bank levy.
The sad reality is that payment plans fail! People lose jobs. They get hit with medical expenses or divorce. I’ll ask it again: If you couldn’t make the payments before the lawsuit was filed, why do you think you can make the payments now?
Do People Settle With Debt Buyers Mostly Out Of Fear Of The Unknown?
That’s part of it. People feel like a deer in the headlights in debt buyer cases. But what most people can’t imagine is that they can actually win their case! The company suing you can’t win just by having a lawyer show up in court and wave some papers around. They need a real, live witness to come into court and testify about the history of those papers and verify the information in them– and they usually can’t do it.
Do Wage Garnishments And Liens Happen Before A Lawsuit Or After The Suit?
After. If a creditor wins the lawsuit, the court enters a money judgment in its favor and against the debtor. That judgment gives it the right to seize your assets and is automatically a lien on any property you own. The tools for collecting are many, but usually, creditors use either a bank levy, a wage garnishment, a citation to discover assets, or a lien foreclosure, or a combination of the above. These tools are used in what are called supplementary proceedings. The good news is that there are defenses that an experienced and determined lawyer can raise on your behalf to save some or all your assets without declaring bankruptcy! See my article on POST-JUDGMENT ACTIONS AND DEFENSES.
For more information on Mistakes That Can Hurt Someone’s Lawsuit, a free telephone consultation is your next best step. Get the information and legal answers you are seeking by calling (312) 759-1900 today.
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