If you have ever received a summons, you know how stressful it can be!
The summons states that you have 30 days (more or less in certain states) to APPEAR and give an ANSWER...
Does that mean you have to go to court?
This will help...
You know that when we apply for a credit card, store card, or an unsecured loan, we are agreeing to repay whatever we charge at certain interest rate and minimum payment.
So what happens if I cannot keep up with the minimum payments?
You will start to get CALLS and LETTERS
We know that the credit card industry makes it's billions and billions from interest rates, annual charges, and late or over-the-limit fees
Miss a payment and they go into "over-drive" to try and get you making payments again.
You may get several calls a day (mostly from computer dialers) from the original creditor or from a debt collector who has been assigned your debt or purchased your debt/account.
As long as your account is with the original creditor, they have a right to call.
But, when the account is transferred, sold or assigned to a collection agency, you can put a stop to the calls:
But remember...
Just because the account has been outsourced for collection and you have successfully stopped the persistent and annoying calls, YOU STILL OWE THE DEBT!
There a several options for dealing with this:
- Debt Management (used to be referred to as Credit Counseling)
- Debt Settlement
- Bankruptcy
For more information on each option, click on the link above.
BACK TO OUR MAIN ISSUE...
You either were not aware of your options or just could not take advantage of either of them due to your financial circumstance.
After the creditor fails to get you to start paying again, they may assign your account to a Law Firm that specializes in Debt Collection.
This firm will make the calls and send the letters as before.
You might have to send them the same "Stop the Calls" letter.
If they are unsuccessful in getting you to start making payments again, they may file a COMPLAINT or CLAIM in the county courthouse where you live.
This will result in a SUMMONS being delivered to you.
The SUMMONS states that you have 30 days (average) to APPEAR and give an ANSWER.
Sounds like you have 30 days to show up in court and explain why you have not been able to pay this debt.
But, that's NOT what it means!
If you'll look closely at the SUMMONS, the words "APPEAR" and give an "ANSWER" are highlighted or in italics.
It means that if you have absolute, documented proof that you do not owe the debt, you have 30 days to file the proper documentation and proof with the court.
If not done within the 30 days, the PLAINTIFF (creditor or collector) may petition the court to be awarded a DEFAULT JUDGMENT.
This may take 2-3 months depending on several factors.
But, after being awarded the JUDGMENT, they can now apply for a WRIT OF GARNISHMENT or BANK LEVY.
WAGE GARNISHMENT in most states is 25% of your NET (after-tax) income!
Hard to make ends meet on 100% of your net, after-tax income?
Try it with 25% less!
Let's say you are bringing home $4,500 each month.
If a WRIT OF GARNISHMENT is sent to your employer, the employer has not choice but to comply with the COURT ORDER and send $1,125 to the creditor/collector per the ORDER!
Yep, that leaves you with only $3,375 to live on!
WAGE GARNISHMENT IS TERRIBLE and if an alternative payment arrangement cannot be negotiated, you may be forced to seek BANKRUPTCY protection!
OK...
You received the SUMMONS and you know you owe the debt.
Now you understand that you do not have to file any documentation with the court and you DO NOT HAVE TO GO TO COURT.
NOW WHAT????
Many times a SETTLEMENT can be negotiated with the law firm/collector.
If a SETTLEMENT cannot be negotiated, a repayment agreement called a STIPULATED AGREEMENT can be set up.
This STIP is usually filed with the court and it basically says that as long as you make the agreed upon payments on the agreed upon date, they will not move forward with legal options such as WAGE GARNISHMENT or BANK LEVIES.
Once the STIP has been completed, a LETTER OF SATISFACTION is sent to the court.
The JUDGEMENT is removed.
This is supposed to happen, but you have to follow up as many collectors do not do this!
OK...I hope you understand a little more about this process now.
The most important thing you need to take away from this is:
Even though you do not have to go to court (or necessarily file any documents),
YOU CANNOT IGNORE the SUMMONS!
You must be "PRO-ACTIVE" to prevent garnishments, levies or liens.
