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Lafayette, Indiana Bankruptcy Attorney Helping You File Chapter 7 and Chapter 13 Bankruptcy

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What To Do If A Creditor Sues You

What To Do If A Creditor Sues You

What To Do If A Creditor Sues You

Uh-oh. You are being sued by a creditor. This is bad thing and you must prevent this from happening and you can definitely stop this in its tracks. 

Being Sued? Time To Jump Into Action

For various financial reasons, creditors don’t usually sue you as fast as they could, legally speaking. If you find yourself being sued, this means you are most likely in deep monetary trouble. If you feel as if you have been backed into a corner and there is nothing you can do, there are some actions you can take to prevent this getting any worse. This is a wake up call and should treat it as such. If you are more proactive about this, you will have a better chance of fighting this off. Instead of avoiding the situation out of fear or understandable embarrassment, you can learn your options and climb your way out of a hole. 

Usually when you fall behind on payments, you are sent to a collection agency. This often happens pretty quickly. There are two ways that this can happen.

  1. The creditor owns the rights to the debts you have acquired and the collection agency will take a percentage of what they collect from you.
  2. The creditor sells the rights to your debt to the collection agency and then they legally step out of the situation. 

In any case, the collection agency is trying to get you to pay this debt off. They are usually reluctant to sue because generally, the money that they spend on a lawsuit might be more expensive that what they’ll even get back from you in the first place. Usually they will aggressively try to get into contact with you and get you to pay whatever you can at the time. Depending on the specific circumstances of your employment status, assets and real estate, they will decide whether suing you is worth it or not. If the collection agency does end up suing you, it is because they believe that you have enough assets somewhere to be force you into paying. They can do this by:

  1. Garnishing your paycheck or bank account
  2. Putting a lien on your home
  3. Attaching other assets

If the collection agency does indeed sue you, this signifies that they believe that a lawsuit is worth investing in.

This is the sign you’ve been looking for: you need to pay attention right now!

Want To Play A Game?

Collection agencies are obviously always working to maintain their own self-interest. They will first do a cost-benefit analysis before they decide to sue you. If they are not going to receive a respectable return on investment, have the debts repaid and the lawsuit fees paid off, they will not sue you. Strictly speaking from good business common sense, a collection agency that sues too much on lawsuits that don’t pay out well won’t be in business for long. 

Therefore, if you are being sued, this is because the debt collector has set their sights on something of yours and they are going to try to force you to pay. Even if you are currently unemployed, your work history may even be enough to make them come after you. The collector will force you to pay by court order and enforcement:

  1. Again, through Garnishment and putting a lien on real estate
  2. Forcing you to appear in court in front of a judge for a judgment debtor examination

Unfortunately, the sad, sad truth of it is that most people don’t take these lawsuits seriously and the collection agency is banking on that. Most people don’t respond to these lawsuits in time (if at all) and judgments are entered against them by default. The collector knows this and they are hoping to get this judgment against you in order to use the power of law to start seizing your assets and income. 

How To Beat This Game

There is something you can do! Don’t assume that there isn’t! Understand that you don’t have to accept whatever the collector tries to do. You need to talk to a bankruptcy attorney and find out exactly what they can and cannot do to you in order to protect yourself. You must do this before the time is up and the collection agency (or creditor) gets their judgment against you.

Don’t let creditors take advantage of you! Most bankruptcy attorneys will give you a FREE consultation with HONEST advice. Figure out what is best for your specific situation, depending on what you want. You must figure out a game plan!

Timing Is Everything

If you are being sued, don’t hesitate to respond. There is very little time for error here. If you don’t respond in time, you will lose the lawsuit automatically by default.

The judgment that will result from this is so much more than a statement that you owe the debt. The creditor will formally complain that you owe a debt and now you must pay the balance in full, PLUS THE INTEREST that you have collected up to this point as well as into the future, PLUS any attorney fees and other costs that have resulted from suing you.

Even if whatever the creditor has put into their statement is INCORRECT, not supported by the contract, or the law, you will forever be legally forced into paying whatever debts you have accrued if you let a default judgment be entered against you. This might even include dangerous accusations that you incurred the debt through fraud. What does this mean? Even if you file for bankruptcy, your debt may not be dischargeable.

 

5 Reasons To Prevent a Default Judgment

If you are being sued see a bankruptcy attorney RIGHT AWAY because:

  1. You should understand the repercussions of the lawsuit.
  2. You should know your options instead of assuming you don’t have any.
  3. You might be able to fight this and not have to legally pay the debt back. Collection agencies frequently try to collect debts on which the statute of limitations has expired. They can sue the wrong person and include allegations, which are incorrect or not legally supported.
  4. You may have a counterclaim. What’s a counterclaim? It’s an argument that the creditor did something illegal in some way in order to get you to pay. In this circumstance they actually owe you money for damages. At the very least, this might gain you the leverage to settle your debut under better terms.
  5. If you’ve waited too long and you’ve had a judgment entered against you, it is too late to deny whatever allegations have been filed against you.

If you have an attorney review your lawsuit and your overall debt situation, you might even end up solving deeper problems you might not have been aware of. Most people don’t have an attorney that they frequently talk to. Therefore, problems can accumulate and you might not even know it! Avoid a lot of anxiety and confusion and talk to a bankruptcy lawyer today about any pending lawsuits you might have. This will better your entire financial life and you will be better off!

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