Debts Do NOT Disappear

The situation is more often the norm than not these days…bills, for whatever reason, cannot be paid on time or paid at all. At some point a collection agency, a company that deals exclusively with delinquent debt, enters the picture. Reputable collection agencies will work with clients to establish repayment plans, but there are times when agencies and clients do not see eye to eye. What clients do not understand is that many collection agencies are associated with specialized law firms whose main focus is collection of debt, and, after a good faith effort is made to assist the client, the next step in the process is litigation. Lawsuits can be filed in an attempt to exact payment of a debt.

If the situation has reached this point, you need to understand (and accept) a few things. First, the days of ignoring collection phone calls and/or letters are over. Second, the filing of a lawsuit has started a judicial clock that you cannot stop. Third, your assets are now in very real jeopardy, especially “liquid” assets which mean bank accounts and assets easily converted to cash. Fourth, if a judgment is entered against you (the debt having been termed legitimate and enforceable) you must, under penalty of fine and possible imprisonment, respond to all requests for information regarding your assets.

So, what do you do if you find yourself presented with a lawsuit?
  1. Do NOT ignore the lawsuit. This will lead to what is called a default judgment against you. This de facto admission of guilt will seriously impair your ability to possibly negotiate with creditors.
  2. Realize that contacting a lawyer for advice is going to cost you money, and, if you really owe the debt(s) in question, what do you expect the lawyer to tell you?
  3. In the majority of circumstances, the debt(s) in question are legitimate; you do owe money, so, trying legal delay tactics (procedural questions/filing questions, etc.) are only going to cost you money you probably do not have and will only delay the inevitable.
  4. You can consider filing for bankruptcy. Bankruptcy lawyers usually make provision for a free consultation to discuss Chapter 7 or 13 alternatives and the viability of each.
  5. If the bankruptcy route is not chosen “answer” the lawsuit yourself (“how to” articles/websites etc. can be of assistance), but let’s walk down Realistic Avenue here. You owe the debt and it’s time to deal with it. So let your “answer” buy you time to set up as advantageous a negotiating position as possible, which means including in the answer all defenses/rationales available to you regarding your debt as well as a pro forma denial of the specifics laid out by the entity suing you. Collection law firms often assume that there will be no answer and, consequently, an automatic default entry, so your answer may open the door to payment discussions.
  6. If entering into debt discussions without an attorney:
    1. Make sure you know about “the worst that can happen” before you start negotiations;
    2. Treat the scenario as a business deal in which you try to achieve the best possible outcome for yourself;
    3. Do not agree to terms with which you cannot possibly comply;
    4. Do not link a settlement to the phrase “automatic debit/payments/withdrawals;
    5. FIND some cash to have a lawyer review the wording of any potential settlement prior to finalization. You would be surprised the difference that one word or punctuation mark can make!

A lawyer’s ultimate goal is money for his client; your ultimate goal is negotiating a sane and sensible way to clear your name and your debt. There is a meeting ground in the middle. Find it.

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