FAQs About Debt Collection Lawsuits And Judgments

A man signing papers and reading documents related to debt collection

Letters and phone calls from debt collectors are bad enough. But getting hit with a lawsuit can bring stress and frustration, especially if you’re struggling to pay your bills. If you’ve been sued, you probably have a few questions about what to expect with litigation, a court judgment, and the various tools that debt collectors can use to make good on the debt you owe.

The Fullman Firm is here to answer those questions. We can also help you pay off your debt for a fraction of what you owe by using a tool of your own: debt settlement. Even if a lawsuit has been filed or a judgment has been entered against you, debt settlement is an option. Talk to us today about it.

I’ve been served with a lawsuit; what’s next?

The first thing you need to do after being served with a lawsuit is to read the allegations made against you. Check to see if you are the individual against whom the lawsuit has been filed. Many individuals are wrongly sued every year for various reasons, such as a clerical error or because they have a common name like John Smith.

Also, examine the paperwork for any other mistakes. Have you ever heard of the creditor? Is the correct amount stated? Do you actually owe the debt? Read the allegations, make note of any errors, and talk to a lawyer.

Your lawyer will help answer the lawsuit. Having legal assistance with this process is critical because there are procedural steps required to properly respond to a complaint. You also want to make sure you correctly assert any legal defenses you have. If you fail to answer the complaint within 30 days, the plaintiff will obtain a default judgment against you.

If you actually owe the debt and lack sufficient legal defenses to contest the lawsuit, the plaintiff will likely obtain a judgment anyway. Using this judgment, the plaintiff can collect on what you owe by means of a wage garnishment, levying your bank account, or placing a lien on your property.

My paychecks are being garnished; what now?

A wage garnishment allows a judgment creditor (which is what the plaintiff is at this stage) to take money directly from your paycheck to satisfy the debt. You have several options for how to handle a wage garnishment.

One option is to file an exemption. This can be used to either stop the garnishment entirely or reduce the amount being garnished. An exemption is permitted if the person whose wages are being garnished can show that the money is needed to provide for basic family needs or the necessities of life.

Another good option for most debtors is to work out a debt settlement agreement with the judgment creditor. This is available even after the court has ordered you to pay. See below for details.

My bank account was levied; what now?

When a judgment creditor intends to levy a bank account to satisfy a debt, it will usually send a Notice of Levy to the debtor indicating which accounts it is levying. But there are ways to stop the levy and have money that has been taken returned to you.

When an account is levied, it is generally frozen for 10 days. During this period, the account owner can file an exemption (which is different from a wage garnishment exemption). Some types of funds are exempt from levy by law, including:

  • 75% of earnings paid 30 days prior to the levy
  • Social Security benefits
  • Workers’ compensation benefits
  • Unemployment benefits
  • Money that is necessary for basic necessities
  • Veterans’ benefits
  • Supplemental Security Income
  • Disability insurance benefits

Other funds may also be exempt. You should complete the exemption paperwork as soon as you find out about your account being levied. If the creditor objects, a hearing may be needed to convince a judge to exempt the disputed funds.

Debt settlement is another option, which we will discuss in the next section.

I have a lien on my property, how can I remove it?

A judgment lien can be placed on various items of property – such as real estate, vehicles, and personal property – to secure payment of the debt. This lien can seriously impact the value of the property. For example, it is nearly impossible to refinance a mortgage with a judgment lien attached to the property.

Fortunately, there are ways to fix this situation. They include:

  • Paying the underlying debt in full
  • Disputing the lien, for instance, if it was obtained illegally or without following proper procedures
  • Negotiating a debt settlement with the judgment creditor

Debt settlement should always be on the table when considering how to clear up wage garnishments, bank levies, and property liens. In a typical debt settlement scenario, the debtor proposes a lump sum payoff that is less than the total owed. When done properly, the creditor will agree – in exchange for the lump sum – to write off the balance and never seek to collect on it.

Debt settlement is a possibility whether you’ve been sued or a judgment has already been entered against you. However, you generally have more leverage and can save more money the earlier you begin the process.

It is critical that you retain an experienced attorney to assist you with debt settlement negotiations. To begin with, the right lawyer will understand how to negotiate a reasonable amount that will satisfy the creditor while saving you money. Also, it is important that any agreement you work out with the creditor is binding and effective.

For example, some debtors work out agreements with the creditor over the phone. The creditor “agrees” to accept less than what is owed, takes the payment, and promises to waive the balance. Sometime later, the debtor is contacted and told to pay the full remaining balance. Because the settlement deal was conducted over the phone, the debtor has no proof and is stuck paying the rest of the debt.

The Fullman Firm Is Here To Answer Your Questions About Debt, Lawsuits, And Debt Settlement

If you’re tired of dealing with debt, lawsuits, and judgments, then it’s time to consider debt settlement. We’re here to answer your questions about wage garnishments, bank levies, and liens. And we can begin a debt settlement strategy that will save you money, time, and stress. Give The Fullman Firm a call.