You get a letter in the mail. It says you’re being sued for non-payment of a debt. But you can’t afford it anyway.
You can no longer ignore that you’ve got a debt problem.
Our Louisville Chapter 7 bankruptcy lawyers want to reassure you right now that you aren’t going to jail for a debt you can’t pay. And even if the collection agency wins its case – which typically assumes you don’t respond to the proceedings – you probably still don’t have to pay it if you file for a Chapter 7.
But delay can be costly. Foreclosure sales can’t be reversed. And tax liens or other judgments may not be discharageable through bankruptcy once in place.
There are many things you can do to fight back against the legal action of a debt collector. But to have the best chance of being successful, you’ll want to make sure you have an aggressive attorney representing your interests. Often, the simple notification that you have hired an attorney can cause these entities to back down.
If it’s clear you do owe the debt, the collection agency has a right to collect on it and will press the matter. An experienced attorney can always help you negotiate a more reasonable settlement prior to any trial even in cases where it is not necessary to file for bankruptcy protection.
However, one of the worst things you can do is ignore that letter in the mail. Some people assume that because they can’t afford to pay the debt, there is no point in really bothering anyway. But if you don’t respond, what will likely happen is that the collection agency will get a default judgment. This means they can start putting liens on your property and garnishing your wages. You may be also stuck paying their hefty legal fees on top of the debt you already owe. This means your costs could triple. This is the key, though: these companies bank on the fact that you won’t respond.
Usually, you have 20 to 30 days to respond. If you do respond without a lawyer, make sure you don’t say you can’t afford to pay it. By doing this, you’re admitting liability, and that could lessen your chances of success.
Secondly – and this is where an attorney is critical – challenge the lawsuit. Often what happens in these cases is that the original company to whom the debt was owed writes it off. But they sell that debt to collection agencies for a small fraction of what is owed. This is why these companies can afford to hound you incessantly for a few hundred dollars.
Thirdly, another way to challenge debt lawsuits in Kentucky is to force the debt collector to prove exactly what you owe. This might seem simple enough, but it often requires that the company produce original documentation of that debt. Sometimes, even the original creditors don’t have this. If they don’t, there’s a good chance you’ll win the case.
And finally, if the debt is older, never simply assume that you are compelled to pay it. Most creditors have a limited time to attempt to collect. After that, they may not have any legal standing to collect.
Beware, though, that making a payment may reset that time limit.
If you need to speak to a Kentucky bankruptcy attorney or Louisville foreclosure defense firm, contact the Schwartz Bankruptcy Law Center at 866-270-4495 for a free and confidential consultation to discuss your rights.
7 ways to fight a debt lawsuit, Oct. 18, 2012, By Gerri Detweiler, Credit.com
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Report: Single People Face Unique Money and Debt Challenges, Oct. 29, 2012, Louisville Bankruptcy Lawyer Blog