Have you been sued by a creditor?
Unsecured creditors frequently file lawsuits against people when they are unable to pay a debt. In so doing, the creditor is seeking a judgment of the court declaring that the person owes them a monetary debt. They need a court judgment before they can take advantage of available legal processes for collecting a judgment. These processes include actions to seize the person’s assets, such as money held in a bank account, and perhaps the most prevalent and harmful process: a wage garnishment action.
The process normally proceeds as follows. The creditor files a lawsuit in state court, usually in the county where you live, asking the court for a judgment that you owe them a debt. They then serve you with a summons and complaint. The summons and complaint demands that you file an answer to the complaint within 30 days of being served, or risk a default judgment. If you do not file an answer, the creditor obtains a default judgment after the expiration of the 30-day period. Once they have this default judgment, they can then invoke further legal processes to collect, such as wage garnishment or seizing the funds held in your bank account.
Chances are however, that you do owe the debt, and since you were unable to pay the creditor previously, you still do not have sufficient funds to offer them a settlement that they would accept. If this is your situation, bankruptcy can help.
No matter the stage of the process, whether you have just been served with the summons and complaint, whether your employer has just been served with a wage garnishment order, or whether you have been living under a wage garnishment order for some time, filing a bankruptcy proceeding will halt the process immediately. Once your bankruptcy is complete, and the debt is discharged, the creditor will be forever prevented from resuming any legal process to collect the debt.
The process normally proceeds as follows. The creditor files a lawsuit in state court, usually in the county where you live, asking the court for a judgment that you owe them a debt. They then serve you with a summons and complaint. The summons and complaint demands that you file an answer to the complaint within 30 days of being served, or risk a default judgment. If you do not file an answer, the creditor obtains a default judgment after the expiration of the 30-day period. Once they have this default judgment, they can then invoke further legal processes to collect, such as wage garnishment or seizing the funds held in your bank account.
Bankruptcy Can Help
Bankruptcy is not the only way to handle this problem. If you believe the creditor is wrong you can defend the lawsuit in court. You will have to answer the lawsuit and explain to the court why you do not owe the debt. You can also contact the creditor and attempt to negotiate a settlement of their claim.Chances are however, that you do owe the debt, and since you were unable to pay the creditor previously, you still do not have sufficient funds to offer them a settlement that they would accept. If this is your situation, bankruptcy can help.
No matter the stage of the process, whether you have just been served with the summons and complaint, whether your employer has just been served with a wage garnishment order, or whether you have been living under a wage garnishment order for some time, filing a bankruptcy proceeding will halt the process immediately. Once your bankruptcy is complete, and the debt is discharged, the creditor will be forever prevented from resuming any legal process to collect the debt.