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Summons and Complaint and Consolidation Company

I am in a debt consolidation program and the creditor is suing me. What can I do?

Two years ago I got very sick (brain tumor) and wasn't able to work for many months. At that time I had to rely on credit cards and I accumulated over $15,000 of debt. During that period I was late with one payment and Citi raised my APR from 14.99% to 29.99%. I was paying them monthly around $400. After few months I noticed that most money that I am paying off is just for interest and my balance wasn't going down. At that time I decided to contact consolidation company. In addition to citi card I had $2,000 on Walmart card. My consolidation company told me that I will pay $544 a month and after 18 months I will pay off me cards. So far I made 6 payments. Not long ago I received a letter from an attorney hired by citi regarding my debt. This week I received summons from them. What should I write in the summons? I know that I promised to pay off credit cards but with this high APR it is just impossible. I make $2,200 monthly after taxes and what I am paying right now is high enough. I have been trying to get advice from my consolidation company but they say they can't provide legal help. Should I write in the summons that I work with consolidation company? Will this make any difference?

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Highlights

  • People in debt settlement programs can be sued but it is rare.
  • Reputable debt settlement companies help customers being sued.
  • Be sure to answer the Summons and Complaint.

Debt Consolidation Companies

Unfortunately, not all debt consolidation companies are reputable. Bills.com has published articles describing how to choose a debt consolidation company. Review How to Find a Reputable Debt Consolidation Company and Debt Consolidation to determine if the company you chose is reputable and able to handle your debt negotiations.

Summons and Complaint

Bills.com has also published articles regarding what to do if you receive a summons and complaint. Read Served Summons and Complaint and Advice on Court Summons for Debt. I advise you speak with an attorney in your state who is experienced in debt. You may still be able to negotiate a settlement with the creditor prior to the court date. Discuss the summons with your debt consolidation company and determine whether you have enough funds to negotiate a settlement with the creditor.

Does your summons indicate just a written response and/or appearance in court? It is in your best interest to answer the summons and/or appear in court. Bring all of your documentation regarding the debt and why it resulted (your medical issue) and the contract you signed with the debt consolidation company.

Levy, Lien or Wage Garnishment

Read the Bills.com resource Advice on Judgment Garnishment. The most common method used by judgment creditors to enforce judgments is wage garnishment, in which a judgment creditor would contact your employer and require your employer to deduct a certain portion of your wages each pay period and send the money to the creditor.

Another option for a creditor trying to enforce a judgment is to request that your bank to place a levy on your bank account. Basically, this means that the creditor has the right to take whatever money in your 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, you 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 you should review your state’s laws to find out if your bank account can be levied.

The third common way that creditors enforce judgments against consumers is by placing liens on properties owned by judgment debtors. For example, if you own a home, a creditor with a judgment against you will likely place a lien on your home, meaning that if you sell or refinance your home, you 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 you have in your home, then the lien may prevent you from selling or refinancing until you can pay off the judgment.

Again, every state has its own rules about property liens, so if you have a judgment against you and own property, you should review your state’s laws to find out what your creditor can and cannot do to enforce its judgment.

To learn more about your state’s laws regarding the enforcement of judgments, visit the Bills.com State Consumer Protection Laws and Exemptions page.

Recommendation

If you are unable to afford an attorney, call your county bar association to get the name of the organization that provides legal assistance to people with low or no income. Make an appointment with that organization and bring all of the documents you have regarding the debt and the summons to your meeting. Answer the summons and complaint unless otherwise advised by your attorney. Otherwise, the court will issue a judgment against you and the creditor may take further legal action to obtain payment. Be sure to discuss this with your debt consolidation company to determine the funds available to negotiate with the creditor.

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

Best,

Bill

Bills.com

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4 Comments

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  • RW
    Feb, 2011
    Robert
    Bloomington, IL
    I just receive a summons for an out of date credit card through Chase. We went with a debt consolidation company almost 2 years ago which helped us settle the first 2 but this one is still hanging out their. I am not sure what to do next, should I contact the debt consolidation company and ask them to help us or just contact Chase and see if we can settle before it goes to court.
    0 Votes

    • BA
      Feb, 2011
      Bill
      There is no harm in consulting with the debt settlement company about this debt and any others that may exist. If your draw account has enough funds, the debt settlement company may be able to negotiate an out-of-court agreement before the trial to avoid a trial.
      0 Votes

    • RW
      Feb, 2011
      Robert
      Bloomington, IL
      should i contact the debt company first or the credit card company... also I was offered a settlement plan last year but did not have the money for this credit card because we were doing the other two. Is their any chance they would settle for a lesser amount in order to avoid going go court with chase
      0 Votes

    • BA
      Feb, 2011
      Bill
      Yes, there is always a chance the creditor will accept a reduced amount to avoid the expense of going to court. There is no harm in making an offer to the creditor.
      0 Votes

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