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Have you received notice that a debt lawsuit may be filed against you? Maybe a coworker tipped you off that someone came looking for you. Or you or your family/friends started getting calls on an older debt that you thought the creditor may have forgotten about. Or even the creditor has sent you a letter and said they are going to sue you.  

What do you do now? Your first instinct may be to hide and try to prevent the person from serving you. Is that the correct thing to do? Probably not. In this article, I walk you through all the possible negative implications that could come from purposely avoiding being served court papers.  

Process of Being Served 

You may think that the longer you wait to accept a summons, the lawsuit will just go away. Unfortunately, that is rarely the case. You are just doing yourself more harm than good. Hollywood makes legal matters appear much more severe and involved than they can be in real life. Getting served in the movies looks more dramatic than what actually happens. There are 3 main ways that you could be served:  

1.) Having the court documents given to you directly, either a county sheriff or a professional process server will give you the documents directly.  

2.) Through the mail. Many courts allow summons and complaints to be sent out via Certified Letter.  

3.) Finally, in some instances the courier can give the papers to any person over the age of 18 who lives at your residence or job/business.  

Negative Implications of Dodging the Court Summons 

Many things can happen to you if you dodge the court summons, either by not signing or accepting any certified mail/letters, or successfully avoiding being served by a process server or sheriff.  

Depending on your contract with the original creditor, if you do not respond or ignore the lawsuit you may be on the hook for all of the legal and collection fees that the creditor incurred trying to find you. This could add hundreds to thousands of dollars to the amount you owe. You also run the risk of having a default judgement entered against you. A default judgment is the worst case scenario, this allows the creditor to start garnishing your wages, levy your bank accounts, place a lien, or seize your property. Once a judgment starts, there are few ways to stop them.  

Default Judgement – What is it?  

Default judgements happen when you either do not respond, ignore, or are not notified of a civil debt collection lawsuit. Like I mentioned above, a default judgement can take on many forms. Wage garnishment, bank account levy’s, liens placed on your property or even having your property seized. Wage garnishment, bank account levies and property liens are the most common forms a creditor may collect after a default judgment has been issued. Property seizure varies from state to state and is less common, but it can still happen.  

Wage Garnishment 

When a default judgment is enforced for a wage garnishment the maximum amount that can be garnished under federal law is 25% of your pay checks. This is a sizable amount and nothing to be ignored. Depending on your situation you cannot lose your job if you are being garnished by one person, however if you have more than one garnishment that could cause some complications. Title III provides a more in-depth look and clarification on your rights.  

Bank Account Levy  

Bank account levies can be scary, overwhelming and can come when you least expect them. In most cases a judgement is required in order for a bank account levy to be executed. However, some government agencies like the IRS, Department of Education and The Office of Child Support Enforcement usually do not need a court order to levy your bank account. Bank account levies are not as common as garnishment and are often utilized as a final attempt for the creditor to recoup some or all their money. Levies can be renewed as many times as they need to be until the judgement is satisfied, however it can take 21 days (About 3 weeks) or more for the bank to release the funds to the creditor. During this period, your funds may be frozen, and you will not be able to access them. You can usually stop a levy if you believe that the money in your account came from an exempt source such as social security or veterans’ benefits.  

Property Lien and Property Seizure 

Property liens are much more common than property seizures. However, they can still happen. These are usually done as a last resort if the creditor is unable to obtain the money they are owed via garnishment or account levy. The creditor can only seize or place a lien on an amount that is above either federal or state exemption limit. Meaning, that anything if you own less than what the state or federal exemption is for that category then it may be protected.  

A property lien is when the creditor places a lien on your real property. Real property is often described as your home, or land that you may own. Typically, the lien gets placed on your property and nothing happens until the sale of that specific property. At closing the title company will pay the lien amount to the original creditor and give you the difference. However, just like with property seizures, they are only allowed to place a lien on the amount that they are owed that is over the state or federal exemption.  

Ways To Stop a Garnishment 

You have an active garnishment, bank account levy or property lien. Now what? You still have options; it is important to take your full financial picture into account when exploring all of your options. I will walk through the 3 most common options people use to help fight judgements and stop collection activity.  

Chapter 7 Bankruptcy

Bankruptcy can be a rather popular option when people are faced with a judgement. The main reason is the moment that you file for bankruptcy an automatic stay goes into effect. An automatic stay prohibits the collection of any and all debts, and that includes judgements.  

Chapter 7 Bankruptcy is often known as liquidation bankruptcy. All eligible debts are typically discharged in 90-120 days from your filing date. In this type of bankruptcy, you must take and pass the means test. During a chapter 7 bankruptcy case, the trustee will take a look at all your assets and anything that is worth more than the state or federal exemption could be sold and the funds above the exemption would be used to repay creditors and the remaining would be returned to you. 90-120 days after you file your case will be discharged and you will no longer be legally responsible for most debts. Certain debts like student loans, child support and alimony cannot be discharged in chapter 7 bankruptcy.  

Chapter 13 Bankruptcy

Chapter 13 Bankruptcy is sometimes referred to as the wage earners bankruptcy. This is for people who do not pass the means test for their state, or have assets that are above the exemption limits, and they do not want to part with them. In this type of bankruptcy, your debts get restructured and a portion of the debts are repaid over 36-60 months. At the end of the chapter 13 plan, if there are any debts left, they are discharged. Use our Chapter 7 vs Chapter 13 calculator below to compare the two options and see if either may be a good fit for your situation.

Debt Settlement

Debt Settlement is where you work with a reputable debt settlement company or attorney and negotiate the amount owed down. This is either repaid in one lump sum or monthly installments. It is much easier to settle with the creditor before they are awarded a judgment, but it is still possible to obtain success after, though it may be more difficult.  

Final Thoughts  

It may feel tempting to avoid creditors and collection calls, especially when you have more than one entity trying to collect from you. The best way to deal with these is to take them head on and find out what your options are. Dealing with any creditors before they get to the judgement phase could save you a lot of time, money, and stress.  

Even if you feel like your back is against the wall, or that it is too late to do anything about it, contact us and we may be able to help. There are many ways to deal with debt, each person’s financial situation is unique, we can help you figure out a plan and get you back on track.  

Post Author: Ascend

Group of guest writers and industry experts who have specific expertise in Chapter 13 bankruptcy, Chapter 7 bankruptcy, debt relief, debt settlement, and debt payoff.

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