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A lawsuit is one of the most anxiety-inducing consequences of unpaid debt. Calls and letters are easy enough to endure, but what happens when a credit card company or debt collector takes you to court? What could be the result of a judgment in their favor?
If a creditor or collection agency secures a judgment against you, they may be able to:
- Garnish your wages. Your employer will withhold a portion of each paycheck and send it directly to the creditor or collection agency. Wage garnishment typically lasts until your debt has been paid in full (or until you file bankruptcy).
- Freeze your bank account. If your bank account is frozen, you cannot access your funds. Your bank will then send all or a portion of your funds to the creditor or collection agency.
- Place a lien on your property. When someone places a lien on your home, vehicle, or other property, they hold a legal claim to that property or a portion of your equity. They would then be entitled to that amount when you sell the property. They might also force a sale to recover the amount.
- Foreclose on your home. In some states, foreclosure cannot occur until the lender takes you to court first. Once the court rules in the lender’s favor, they can evict you and sell your home.
- Add litigation and attorney’s fees to what you owe. You may become liable for whatever it cost the creditor or collection agency to take you to court.
Fortunately, you have several options at your disposal if you believe a lawsuit is on the horizon or even if the lawsuit has already begun.
What to Do if You’re Sued Over Debt
The biggest mistake people make when facing a lawsuit is believing it will go away if they do nothing.
When you’re served papers for debt, take the following steps right away:
- Get in touch with an experienced attorney. With professional support, you will have access to options you may not have previously considered or heard of. A skilled attorney will be able to assess your situation and determine which lawsuit defense is right for you.
- Formally respond to the lawsuit on time. If you don’t respond, the court will most likely rule in the creditor or debt collector’s favor.
- Dispute the debt, if appropriate. It might be an inaccurate amount, or it might not even be yours to pay. The collector could also have missed the statute of limitations. Once an unpaid debt is a certain number of years old, it is considered time-barred, and you can no longer be taken to court for it.
- Consider filing bankruptcy. Because of a court order called the automatic stay, bankruptcy freezes all collection activities—including lawsuits.
Because of the potential consequences, lawsuits can be exceedingly overwhelming. However, you do have options, and the most important thing to remember is that you need to act quickly. The sooner you get professional assistance, the better your chances of defending yourself against aggressive collection actions and avoiding devastating financial losses.
Bring Your Financial Crisis to Our Firm
If you’re facing a lawsuit over debt, bring your case to Joseph J. Mancuso, P.A. With over two decades of experience, Attorney Mancuso has what it takes to build a solid defense on your behalf, expose any incorrect or time-barred debts, and help you begin your journey toward financial freedom.
Ready to get started? Call (407) 378-5488 or contact us online to schedule your free initial consultation today.