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Lawsuits, Garnishments & Bankruptcy

It has finally happened.

The collection agency threatened to turn the debt over to an attorney.  You thought it was an empty threat and if you just gave them $50 a month they would work with you and it would be fine.  Unfortunately, it did not turn out to be fine.

The papers were delivered by the Sheriff and in all caps and bold it is there.

YOU ARE BEING SUED.”

I know that this is the moment when most of my clients finally come clean to a friend that I have helped and get my number or find me on the internet, as you have just now.   I bet you are freaking out right now.  You are wondering what happens next.  Should you respond?  What if they call your boss and take money out of your check?  That could be humiliating.

First of all, don’t panic!

This is just the first legal step that a creditor takes in an attempt to collect the money owed to them.  There should be a notice on there that says you have 35 days to respond.  This is a very good time to consult a bankruptcy attorney.  If you call me at this point, there is a good chance that I can review with you whether you qualify for a bankruptcy case and all of the options associated with this.  We will have plenty of time to prepare your case before this notice turns into a judgment and creates a race to the courthouse door.  You are in GREAT SHAPE if you call our office at this point.

Now let’s say you decide to go it alone.  If you do not respond in 35 days the creditor will file a motion for an entry of a default judgment.  There will be another 20 days to object to this default.

Once there is a default judgment the creditor will generally issue an information subpoena.  You will have 14 days to respond with your information.  Now this is important.  If you do not respond to this the creditor may file a Motion to Compel your response and request a bench warrant.  Don’t worry, nobody is going to jail.  However, if you are pulled over for a traffic infraction you will be taken to the public safety building and forced to fill out the subpoena.

Once the information subpoena phase has passed you will likely be served with a Notice of Execution on Wages and Property.  This means the creditor is looking to garnish your wages or levy on your account.

As you can see, getting to this part takes time which is why I like to see you when you get the notice because I have a lot of time to prepare your case for filing and have you filed well before any of this becomes an issue.

But what happens if you don’t come see me right away?

If you choose to ignore this notice than the creditor will get a default judgment and now you have a problem.  The creditor will seek to garnish your wages, levy on your bank accounts, place liens on your cars or home, or even sell property in your home (property in your home sales are rare in New Jersey).

Bankruptcy can still help you but we will have to move quickly.  I prefer to file cases before there is a lien on the car and the home however if there is we can deal with that too, just with a little more paperwork and we can go over that step with you.  The garnishments, levies, liens, and other collection activity will stop as soon as your case is filed.  In some cases, I can even get some of your garnished wages or levied funds back!

Now let’s say that you are like most people I have met in my office.  You try to make a deal with the creditor or work something out because you want to do the right thing and you are just not ready for bankruptcy yet.

As my father always said, no good deed goes unpunished.  Most of the time your creditor is not going to work with you.  If they have sued you all bets are off.  They can continue their action if they don’t like what you offer and have a legal right to get paid.  So you are stuck with whatever terms they come up with and those probably won’t be written in your favor.

If you have made one of these deals we can still file a bankruptcy case and discharge the portion of the debt that you have not paid yet.  There is still a way out.  You are in no way bound to an agreement that you can’t afford.  Don’t feel like you are and don’t let any creditor convince you that you are.  You have options!

Interested in how my office can help you with the lawsuit your were just served?  Give us a call at 732-302-9600 or fill out our online consultation form and we will call you!