Do you have any debt which is overdue? Have you encountered financial difficulties? Whatever the situation, it doesn’t how you’ll get ahead. In this article, we will address the debt Collection stages and Strategies actions.
Requests for Payment
If you don’t recognize the debt or you dispute the amount, you may ask the creditor to provide proof that this is your debt and proof of the amount. Sometimes the creditor has purchased your debt from the original creditor and may have difficulty proving either or both. If so, this may get them to go away.
If the creditor can’t substantiate that the debt is yours or if you don’t have the cash to offer a payoff or if you can’t make payments, then you can tell the creditor to leave you alone. The law allows you to impose a no-contact order on the creditor effectively. You need to say to them when they call not to contact you again and follow up with a letter to the creditor’s appropriate office. After that, the creditor is prohibited by law from contacting you to collect the debt. The only reason they may contact you is to inform you that they are initiating a lawsuit. If the creditor fails to heed your notice not to contact you further, then you should see a lawyer about suing the creditor for violation of the fair debt collection practices laws of your state or possibly federal law. Keep copies of all your communications with the debtor as evidence of your actions.
A lawsuit is where the creditor asks a court to order you to pay the debt. An order of this type is called a judgment. A judgment also allows the creditor to ask the court for permission to take money from you without your consent. The creditor can take payment by garnishing your bank accounts, including joint accounts, or wages. The creditor can also get money from you by the levy. A levy allows a creditor to take possession of your property and sell it in a sheriff’s sale. The proceeds go to pay off the debt, and you get any money left over after the debt is satisfied. If you have real property, such as a home, the creditor can place a lien on the property and then ask the court to order a sale in which the proceeds are used to pay off the debt. In some jurisdictions, a lien is automatically placed on the property which means the creditor does not need to ask the court for a claim, only record it.
If you have no defense, then your attorney will try to negotiate a payoff amount or payment plan. You could have done it before the lawsuit was filed, but sometimes problems are communicating with the creditor which prevents the debtor from making this happen. Sometimes it is the creditor’s fault and sometimes the debtor’s, and sometimes the parties were just only not that serious. Regardless, it didn’t happen, and now the situation is more urgent. At this point, you and the creditor are currently working through your respective attorneys who can help facilitate a settlement. If nothing else, using lawyers as intermediaries eliminates the rancor often associated with the creditor-debtor relationship in a collections matter.
Post Judgment Garnishment and Levy
Once the court awards a creditor a judgment, the creditor can take actions to collect on the judgment. One very common way to collect is to garnish a debtor’s wages and financial accounts. The creditor will issue a writ of garnishment to the employer or financial institution asking it to turn over any assets it holds for you up to an amount to cover the judgment debt. You will receive notice of this action, but it will be too late to stop it unless the property is exempted under state law.
Another common way to collect is for the debtor to place a lien on property you own; typically a home but can be other non-liquid assets, such as investment property and automobiles. Once a lien is recorded, the creditor can petition the court to allow a sale of the property. There are legal procedures to be followed that provide for notification and opportunity to defend against the action; however, at this point in the process, you will have few options left to prevent the sale. Nevertheless, you should consult an attorney to make sure the creditor is not violating some procedural rule or law. The sheriff of the local county will conduct the sale and proceeds will be distributed first to cover all liens in order of priority and then the balance to back to you, the debtor.
Find a lawyer who will work for a reasonable fee.
Things happen in life, and sometimes debt becomes unmanageable. You can try to hide and hope the statute of limitations runs out, but that tactic often fails. It’s best to try to negotiate a payoff with your creditors, either a discounted lump sum or monthly payments. Negotiations are possible from the first collections to step until the court, and even post-judgment enter a judgment. The debtor can usually negotiate for him or herself; however, an attorney can advise you of your rights and can often get you a better deal. Sometimes an attorney is necessary to get the creditor to negotiate at all. Find a lawyer who will work for a reasonable fee and who will arrange a deal that enables you to settle your debt. And choose a lawyer who can also advise you regarding bankruptcy – the ultimate debt eradication tool.