My husband & I decided a couple of years ago to contract a company that negotiates with creditors on your behalf. We pay this company monthly & the contract is for 3 1/2 yrs. Obviously we stopped paying our cards at the time the contract was made. Many of the debtors settled, however his Chase account would not settle. We just received a summons for civil court. I contacted the company we contracted, & they have a litigation team working on trying to settle before it goes to court. My questions are what if they don't want to settle. My husband owes $10k + 3 in accrued interest, we have no money, I had lost my job and we are in a really bad situation with just barely scraping by. We have about $4k in the account with the contracted company to offer (and i figured if they wouldn't maybe offer them another 1-2k with the money we'll receive back from taxes) but what if they dont want to settle, what kind of judgment can be given if we present that we've been payg this co. to help?
If the creditor does not want to settle the account it will be up to the court to decide what options the creditor will have to collect the money owed. It is impossible for me to say what a judge will decide when he or she considers all the facts involved in the case. Below I can provide you with the typical results of what happens when a judgment is won against an individual. However, I cannot say which of these options will apply in your case, should the creditor win a judgment against you.
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.
The most common method used by creditors to enforce judgments is wage garnishment. A wage garnishment empowers the creditor to contact the debtor's employer, requiring 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 Advice on Judgment Garnishment to learn more about wage garnishment.
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 Bills.com 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 Bills.com resource State Consumer Protection Laws and Exemptions for an overview of each state's rules.
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.
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