Have You Been Sued By A Debt Collector?

Most of my clients come to me after a garnishment has been sent to their job. A few come to see me as soon as they are served with the lawsuit.  I wish they would come to see me on the day they get sued, but that is not always practical.

If you get sued or served with papers trying to collect a debt there are several things you can do.

1) Ignore everything and hope it goes away.

This never works.  They will get a judgement against you and garnish your wages or freeze your bank account.  If you are buying a house or own land, the judgment automatically becomes a lien on your property.  The judgment is good for seven years and it can be renewed for another seven years.  If they don’t come after you right away by garnishing your wages you may think everything has blown over and you are safe.  Not so.  Every year or so the collection lawyers will review the case and start looking for you.  They always seem to locate you or your job or your bank account at a time when it is going to hurt you the most.

2) Work out a settlement.

The sooner you do this the better deal you can get.  If the collection attorney already has a garnishment against your wages, why should they make a settlement?  They already have a means to collect the money.  Why should they work out a payment plan with you?  They already have a payment plan, it is twenty-five percent of your pay check.  Chances are you are not going to quit your job just to avoid the garnishment.

Be warned, settling a case for less than the total amount you owe can cause you to have serious tax problems.  They will report the forgiven amount to the IRS and it will be reported as income to you.  This is income that you will owe taxes on.

3) Fight the lawsuit.

If you don’t think you owe the money or you have a valid defense, you should fight.  Don’t sit back and do nothing.  Fighting the case can lead to a better settlement or even a dismissal if the creditor can’t prove the debt or they don’t want to fight back.  Call me and I can assist you with this or help you find an attorney in your area that will represent you.

4) File bankruptcy.

I know, I know, you don’t want to file bankruptcy.  Or you don’t want to ruin your credit.  If we can make one of the other options work we will try that first.  But when your options run out bankruptcy may be the only one left.  If you are being sued for a debt, your credit isn’t in the best shape anyway.  If you owe other debts, the amount you spend fighting one debt could pay for a bankruptcy that would wipe out all of your debts.  Are you going to waste time and money fighting each creditor one at a time?

If you would like to discuss your options, give me a call to get the information you need to decide what is best for you.