Collections Advice

I have some big debts. What can creditors do to me? What are my rights?

I have several debts -- a couple of them are quite large. What can the creditors do? What are my rights?

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Bill's Answer
(9 Votes) Team



  • Review the debt collection process.
  • Understand the importance of debt validation.
  • Respond to any summons you receive.

Thank you for your question about your debt, how the debt collectors will pursue collections, and what options you have.


When a debtor stops paying on a debt, a creditor will attempt to contact the debtor on the telephone and via the mail. When the number of days since the most recent payment reaches 120-180 days, the account is no longer considered current and the creditor is required by generally accepted accounting principles to “charge-off” or “write-off” the debt. Writing-off a debt does not mean the debtor is no longer responsible for the debt, or that collection efforts cease.

The charge-off date has almost nothing to do with the statute of limitations for debts. To learn more about the distinction between these issues, read Charge-Off & Credit Report.

At the charge-off point, the creditor will transfer the debt to a late-accounts department, or has the option to sell the debt to a collection agent. The collection agent will buy the debt at a discount. However, the collection agent has the right to collect the entire balance due plus interest.

Debt Validation

If a collection agent a debt it states you owe, you have the right to do what is called debt validation. If the debt is many years old or you do not recall the debt, validate it.

Fair Debt Collection Practices Act

Collection agents often use aggressive tactics, when contacting the debtor. Collection agents are know to threaten to call the debtor’s employer, file charges with the local sheriff, or say they will park a truck in front of the debtor’s house with a sign that reads "Bad Debt" on it. All of these tactics and many others are illegal under the Fair Debt Collection Practices Act (FDCPA). Start here to learn the rights consumers have in collections under the FDCPA.


A creditor -- a debt collector that owns a debt account is a creditor -- has several legal means of collecting a debt. Before the creditor can start legal collections, the creditor must go to court to receive a judgment. A court (or in some states, a law firm for the plaintiff) is required to notify the debtor of the time and place of the hearing. This notice is called a "summons to appear" or a "summons and complaint." In some jurisdictions, a process server will present the summons personally. In others the sheriff’s deputy will pay a visit with the summons, and in others the notice will appear in the mail. Each jurisdiction has different civil procedure rules regarding proper service of notice. (See Served Summons and Complaint to learn more about this process.)


If you ever receive a summons, you should do as it instructs! This is not a social invitation that you can ignore. In the hearing, the judge will decide if the creditor should be allowed to collect the debt. If the debtor fails to appear, the judge has no choice but to decide on behalf of the creditor.

Therefore, if you receive a summons, the first thing you should do is contact the law firm representing the creditor. Open a negotiation to see if they are willing to settle the debt. If not, it would be wise to respond as indicated in the summons. If there is a hearing, attend it and present your side of the story to the judge. Use facts, tell the truth, dress appropriately, and show the court respect. The court may or may not decide in your favor, but at least you will have exercised your right to be heard.

The court may decide to grant a judgment to the creditor. A judgment is a declaration by a court that the creditor has the legal right to demand a wage garnishment, a levy on the debtor's bank accounts, and a lien on the debtor’s property. Which of these tools the creditor will use depends on the circumstances. We discuss each of these remedies below.

Wage Garnishment

The most common method used by judgment creditors to enforce judgments is wage garnishment, in which a judgment creditor would contact the debtor’s employer and require the employer to deduct a certain portion of the debtor’s wages each pay period and send the money to the creditor. However, several states, including Texas, Pennsylvania, North Carolina, and South Carolina, do not allow wage garnishment for the enforcement of most judgments. In several other states, such as New Hampshire, wage garnishment is not the "preferred" method of judgment enforcement because, while possible, it is a tedious and time consuming process for creditors. In most states, creditors are allowed to garnish between 10% and 25% of your wages, with the percentage allowed being determined by each state. See the article Wage Garnishment to learn more about wage garnishment.

Levy Bank Accounts

A levy means that the creditor has the right to take whatever money in a debtor’s account and apply the funds to the balance of the judgment. Again, the procedure for levying bank accounts, as well as what amount, if any, a debtor can claim as exempt from the levy, is governed by state law. Many states exempt certain amounts and certain types of funds from bank levies, so a debtor should review his or her state’s laws to find if a bank account can be levied. See the resource State Consumer Protection Laws and Exemptions for an overview of each state’s rules.


A lien is an encumbrance -- a claim -- on a property. For example, if the debtor owns a home, a creditor with a judgment has the right to place a lien on the home, meaning that if the debtor sells or refinance the home, the debtor will be required to pay the judgment out of the proceeds of the sale or refinance. If the amount of the judgment is more than the amount of equity in your home, then the lien may prevent the debtor from selling or refinancing until the debtor can pay off the judgment. Again, every state has its own rules about property liens, so debtors with a judgment against them who own property should review their state’s laws to learn creditor can and cannot do to enforce its judgment. See the resource State Consumer Protection Laws and Exemptions for an overview of each state’s rules. Also see the Liens & How to Resolve Them article to learn more.

Debt Resolution

If you have a judgment against you, consult with an attorney licensed in your jurisdiction to learn how the judgment will affect you, based on your individual financial circumstances and your local rules.

It is not too late to contact the creditor or the law firm that either represented the creditor or bought the debt, and present them a settlement offer. Even with a judgment in place, the law firm must spend money to try to collect the debt. Getting a wage garnishment, levy, or lien takes time, and time to a law firm is money. The law firm may settle for a lump-sum payment. See "Debt Negotiation and Settlement Advice" before opening negotiations with a creditor. See "What Are My Debt Consolidation Options?" to learn more about your rights and options for resolving the debt.

Important! Get all settlement offers in writing before sending a check to the law firm or collection agent.

I hope this information helps you Find. Learn & Save.




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  • AR
    Jan, 2013
    I received a court order, which says I have a bench warrant because of failure to appear at court. I called the court house and they said I had to contact judge office when I did they said I needed to contact the attorney, so when I called him he said this was for a credit card debt which is about 10 years old I believe. I am in PA and am so scared. I am a single mother of 2 and I can barely make ends meet. This lawyer told me that if I can't pay he is not canceling the warrant. I don't know what to do. Now he sent me a interrogatories in aid of execution. I have nothing. I don't own a house or my car. I work to survive and do the best I can to support my girls. Now this guys is basically saying if I don't pay, he will issue a sheriff sale. I don't even know what to do.
    0 Votes

    • BA
      Jan, 2013
      Consult with a Pennsylvania lawyer who has consumer law or civil litigation experience immediately. If you cannot afford a lawyer, call your county bar association, or look online, and learn the names of the organizations in your area that help low- and no-income people in your area. Make an appointment with one of these organizations, and bring all of the documents you have regarding the debt, including the court order to your meeting. The lawyer you meet will discuss what I am about to mention below.

      You seem surprised by the court's order. If you are, then you did not receive an adequate notice of the summons and complaint filed against you several months ago. If you did not receive a notice of this lawsuit, then it is likely the plaintiff (the creditor that filed the lawsuit) did not follow Pennsylvania civil procedure rules and give you a notice of the action. Talk to the lawyer you meet about filing a motion to vacate the judgment against you. If you file such a motion, and the court believes your motion, the court will throw out the judgment against you, and possibly sanction the lawyers who failed to follow your state's civil procedure rules.

      If you can get the judgment vacated, the creditor may choose to file a second lawsuit against you. However, this time, it will give you an adequate notice. When you receive a notice of the lawsuit, consult with a lawyer about raising a statute of limitations defense.

      If you received a notice of the lawsuit and ignored it, then you may not file a motion to vacate the judgment on the grounds I just mentioned. However, there may be other reasons to vacate the judgment, which your lawyer will explore.

      If you have no grounds to attack the judgment, then discuss your options for responding to the interrogatories. Do not ignore the court's order. Take action and talk to a lawyer.
      0 Votes

  • JB
    Dec, 2012
    I'm from another country and got transferred in March 2012 to the US by my company. In May when I received my social security number I applied for two leases thinking that I will stay for at least three years. On October they made a lay off and now I'm leaving the country. I don't want to pay for a car I won't be using. What are the possible actions for them to take against me if I don't pay the difference of what they are able to sell it in an auction and of what it is owed? Could they take money out of my US bank account to cover it even when it is in another bank? How would this affect my entry to the US in the future? How can I protect myself? Would you be albe to help/protect me and how? How much would you charge for your services.
    0 Votes

    • BA
      Dec, 2012
      James, we are a consumer finance Web site that aims to empower consumers to make sound financial decisions. We are happy to offer some advice (not legal advice, though, as only an attorney can properly do that).

      Your creditor could sue you and that could lead to a judgment. With a judgment, your US bank accounts could be in jeopardy. A creditor can pursue debts for people living outside the country, but that usually happens over very large debts. A consumer debt is unlikely to cause problems re-entering the country.

      The best way to protect yourself is to speak with your creditor, explain that you were laid off and that you are leaving the country, and try to work out some kind of settlement or payment plan on the remaining balance.
      0 Votes

  • AB
    Nov, 2012
    My question s about non-federally guaranteed private student loans. have not defaulted on the ridiculous sum yet, but plan to. I live in Ohio now and went to school in Ohio when I took out the loans. I plan to move to PA where wages cannot be garnished if I am not mistaken. I plan to use an overseas bank account. I do not own and property, house, car etc. I own nothing. My credit s already terrible and I do not care. What can they do to me with a judgement given I am essentially "judgement proof" ?
    0 Votes

  • LM
    Jun, 2012
    I dont know what to do. I went on a road trip three years ago with a guy I was dating and he got me to open up a Best Buy card. I didnt think I would get approved because at the time I was over drawn on my bank account by $700 and I as maxed out on both credit cards I have. The guy said he was going to pay and he never did. I dont work because Im on KIDNEY DIALYSIS every single day and I have a 6 year old daughter to raise alone. I only make $600 a month all together. Im on SSI. The money is not there. I dont have a house, or a car to borrow money off of. I cant go and take out a personal loan for all my bills because my credit score is too low. THe collection lawyers send letters to my grandmothers house once a month. The total amount owed is $4400. Orginally spent was $1800. I only make $7000 a year on disability. If I had the energy to work I would, but I cant until I get a kidney transplant.
    0 Votes

    • BA
      Jun, 2012
      Lisa, it is clear that you can't afford to pay right now. The collectors can choose to sue you to obtain a judgment. If they do, you should be aware of the rules protecting your SSI from garnishment. This kind of creditor cannot garnish your SSI.

      No one other than you is responsible for your debt. Don't let any collectors pressure your grandmother into paying.
      0 Votes

  • LP
    Jun, 2012
    I just received a summons from a credit card company and I am being sued. I do not have a job and would really want to pay off my debt. I graduated nursing school a year ago and just recently passed my state boards. I am currently looking for a job and might soon have one. Would the card company work with me even if I do not have a job?
    0 Votes

    • BA
      Jun, 2012
      Lorena, the only way to know if the creditor will work with you is to contact it. Explain your situation. You may be able to work out a payment plan, but the creditor could choose to pursue the lawsuit. Don't work out a payment plan, unless you're confident you can make the payments. Congratulations on passing your exams!
      0 Votes