A creditor or debt collect may sue a debtor to collect a portion of their wage through wage garnishment or may pursue real property such as a vehicle or a house through foreclosure or vehicle repossession. Property that was bought through a credit line can later be reclaimed through a lawsuit if the debtor fails to stick to the terms and conditions of the agreement. However, there are many ways that a debtor can prevent the outcomes of a lawsuit.

Debtors that cannot meet their financial obligations can find different ways to alleviate their financial stress. A debtor may either contact their lending agency to either negotiate a debt settlement to prevent a lawsuit. Through Making Affordable Housing , debtors have the opportunity to enter a loan modification program with their mortgage providers to avoid a foreclosure or a lawsuit.

A debtor may also file for bankruptcy. Debtors that choose to file for bankruptcy will be protected by automatic stay laws that prevent any debt collecting activity during the life of your bankruptcy. During this time, the debtor may create a debt settlement program that allows them to discharge some debt and create a repayment program that works around their earning potentials. Furthermore, a debtor may file for liquidation in which case most of their debt is discharged in exchange for their property.  

However, a bankruptcy is not for everyone. If you are an earning individual who has the capacity to pay back debt without entering a bankruptcy courtroom, you may want to consider other options to help you get back on your feet.

If you are facing a lawsuit such as a foreclosure, wage garnishment, or other lawsuits that impact your credit, you may want to speak with an attorney. An attorney can help you negotiate with creditors and debt collectors so that you achieve a debt settlement program that works around your earning potentials. An attorney can help you reduce monthly payments, reduce the amount you owe, and prevent lawsuits. If you receive notice of a lawsuit, you are encouraged to speak with the Bankruptcy Attorney. We can help you fight a lawsuit so that you maintain your wage and your property. To discuss your situation with a bankruptcy attorney, you may contact us at 424-285-5525. We can help discuss your financial situation to find the route that best suits your case.

Not everyone may apply for a bankruptcy and there are ways to prevent a bankruptcy if you take the correct measures early on. To learn more about your case contact a local attorney today.

Bankruptcy and lawsuits

Most individuals that file for bankruptcy will do so after receiving notice of a wage garnishment, foreclosure, or repossession. In most cases, it means the individual has taken too long to respond to a creditor or debt collector. Once there is notice of wage garnishment, foreclosure, or repossession, the debtor has of options to stop the creditor. Debt collectors may either negotiate with their creditor or debt collector so that they achieve a debt settlement program that works for both parties. In addition, a debtor may communicate with their debtor to establish a grace period to pay the amount of the loan or to come up with a debt settlement program. In many cases, your creditors will work with you on a debt settlement program.

However, if the creditor or debt collector is unwilling to cooperate because they know you do not have the earning capacity to remain faithful to a repayment program or because they want a stake on your property, they may proceed with a lawsuit.

When creditors are unwilling to negotiate with you and you are notified of a court date, it is in your best interest to present yourself to court. Failure to show up will result in the debt collector winning the case which means they get to set the standards for repayment resulting in wage garnishment, foreclosure, or repossession. If you wish to prevent these actions, you will want to challenge the facts presented by the creditors. This means you will have to prove that their documents are unlawful or that you never signed an agreement. An attorney can help you deal with a court dispute after an investigation of your case. In any case, if you face the potential of having a property of high value reclaimed through a lawsuit, you will want to discuss your case with an attorney.

The Result of A Creditor Lawsuits

When you fail to provide payment to your secured or unsecured credit, you may experience a lawsuit that aims to produce a form of payment. There are several ways that a creditor or debt collector can pursue some form of payment. The following are ways that a creditor can claim your property and/or legally remove a certain amount from your paycheck.

  • Wage Garnishment: A debt collector that is able to garnish your wage will have to work through a court. Wage garnishment occurs when the debt collector is able to prove that you have the means to pay, but you are neglecting your agreement obligations. When you wage is garnished, the creditor or debt collector is dealing directly with your employer. At the end of every pay period, your employer will be required to cut your creditor(s) a check. This amount will be deducted from the debtor payment until the said debt is paid off. To avoid a wage garnishment, the debtor may contact the creditor or debt collector in order to establish a debt settlement program that works for both parties. In some cases, you may be able to discharge debt that has accumulated over time such as late fees and provide new terms and conditions to the contract that better suit your economic situation.
  • Vehicle Repossession: you may receive notice that your vehicle will be repossessed by your lending company. Even though you don't have to enter a courtroom to challenge the case, you may want to prevent a vehicle repossession by bringing the case to a courtroom. You may want to bring a vehicle repossession case a to a courtroom when your vehicle has been unlawfully repossessed or when there was a breach of the peace by the repossession agency.
  • Foreclosure: When a homeowner has purchased as a home with a mortgage loan, it means that they are required to pay the estate every month as you would do so if you were renting. As with any other form of credit agreement, the situation involves a clear understanding of when the debt will be paid and the amount that will be paid every month. When a person fails to pay the debt, especially debt that arises from a mortgage, the creditor may pursue to reclaim the property. Foreclosure usually results in the property being sold in an auction for far less than the property's original selling price.

Challenging a lawsuit in court

When you receive notice of a lawsuit, you may either ignore it which means the case will default. When a case defaults the plaintiff, in this case, the accusing party will be able to proceed with a wage garnishment, foreclosure, or repossession. However, if the case does not default, the lawsuit will be handled in court.

First and foremost, you will receive a notice from the court notifying you of your creditor's lawsuit. When you receive this notice, this is your time to take action, you may either contact the lending party to come to an agreement or you may want to speak with an attorney about your case. The first notice is the first warning of the creditor or debt collectors intent to collect a payment through lawful action. Speaking with an attorney at this early stage may help prevent a lawsuit and may help you come to an agreement with the accusing party.

If you choose to work with an attorney and handle the case in a courtroom, you will be required to attend a settlement conference or attend a trial. In either case, you will want to have an attorney who is capable of challenging the prosecuting parties claims. For instance, if you did not sign a document or the document is in some way unlawful, an attorney can present these facts to counter the claims of the accusing party.

In some cases, a debtor will motion a summary judgment before a trial takes place. A summary judgment is when a creditor or debt collector presents enough information to a judge that will allow him to see that you have violated your agreement. If the judge finds that there is nothing to question or you fail to provide counter-evidence, then the judge will agree with the creditor.

If you are able to provide evidence that the plaintiff has faulty information, you may be required to attend a settlement conference. A settlement conference allows the collecting party and the debtor to meet one last time before entering a trial. You are not required to settle an agreement but it allows either party the last chance to find a common ground. During this time the debtor will usually meet with a law professional capable of predicting the outcome of the case should it go to a trial.

Finally, if after the settlement conference there is no sign of cooperation, both parties will enter a trial. In most cases, a lawsuit is settled through an agreement or it ends during the summary judgment. If you enter a trial you will need to present your case to a judge who will decide the outcome of the case. To speak with a law professional about your case, you may want to contact a local attorney.

Other ways to prevent a lawsuit

There are two common ways to challenge a lawsuit. A debtor may either negotiate with their creditor or they may proceed with a bankruptcy.

  • Negotiating: When you negotiate with your creditor, you can establish a debt settlement program. In many cases, the simple act of reaching out will allow your creditor to understand that your financial situation. You may be able to explain that you are no longer employed and they may be more willing to work with you on a debt settlement program. However, if negotiating does not work or there is no way you can pay your debt in the time frame they have requested, then your only option may be to seek bankruptcy protection.
  • Bankruptcy: A bankruptcy will prohibit any debt collecting activity. When a debtor files the required bankruptcy documents, the bankruptcy court will contact the creditors and debt collectors of the bankruptcy. The bankruptcy automatic stay prevents debt collectors from calling, emailing, leaving voicemails, sending letters and other means of communication to attempt to collect payment while the debtor is undergoing a bankruptcy procedure. Automatic stay also prevents repossession, foreclosure, wage garnishment, and other lawsuits that derive from your inability to pay off an unsecured or secured loan.

Keeping your property through a bankruptcy

When you file for bankruptcy you may be thinking that your property will be repossessed and that you will be left on the street. However, after filing for bankruptcy many have experienced a positive outcome after a bankruptcy.  

Chapter 7: Debtors that file through a Chapter 7 will find that they are able to maintain much more property than they thought was possible. Chapter 7 is the liquidation of assets which means that all of your non-exempt property is sold off to pay back your creditors. For instance, if you own a vehicle or a home, you will lose your property and the earnings will be used to pay back your debt. However, if your property is under a certain value, you may keep your property while having your debt discharged. In most cases, an earning individual with certain properties will not want to pursue a Chapter 7 bankruptcy. There are other options that can help a stable income individual achieve economic relief.

Chapter 13: A Chapter 13 is more geared for individuals with an income and the ability to repay their debt. A Chapter 13 is also known as a reorganization of debt. Through this process, a debtor is able to establish a three to five-year repayment program that suits their economic capabilities. Unlike a debt settlement agreement, a Chapter 13 will prevent debt collecting activity while you sort out your finances which means you will not be required to satisfy a payment while you are filing a bankruptcy.

To speak with a local attorney about a lawsuit, you may contact the Bankruptcy Attorney at 424-285-5525.