In these troubling economic times, people are having trouble meeting their monthly payment obligations. The cost of living is rising along with unemployment and underemployment. As a result, people borrow more and more to meet their monthly needs.
This vicious cycle usually results in extensive credit card debt and a further inability to pay these bills. Unpaid credit card debt eventually becomes a collection account and culminates in a consumer credit lawsuit. Being sued is a very scar proposition. Understanding the process can go a long way in protecting the debtor's rights and taking proper action.
Summons and Complaint
As with any lawsuit, the initiation of the process starts with the "Summons and Complaint." These documents start a lawsuit and contain the allegations being laid out against the debtor. Consumer credit lawsuits must be labeled as such and must be served on the debtor. Service can be in person or by some alternative method prescribed by the law in that jurisdiction.
In addition to service on the debtor, a copy of the Summons and Complaint must be filed with the proper court.
Once served, the debtor will have a specified time to respond, also defined by the laws of that jurisdiction. The response is known as an "Answer" and if nothing else, prevents a default judgment from being entered.
Judgment
The goal of any consumer credit lawsuit is a final judgment. This judgment is a court order that drastically changes the legal rights of the creditor and the debtor. A judgment could be awarded subsequent to a successful trial or motion or by default if a debtor fails to answer the complaint.
The court ordered judgment changes the relationship of the creditor to the debtor as new legal remedies become available to the holder of the judgment. A judgment debtor may be subject to asset seizure and/or wage garnishment. This process is usually "executed" by local law enforcement on behalf of the creditor. This execution is a highly intrusive remedy and can cause embarrassment and hardship in addition to financial distress.
Debtor Protection
Prevention is obviously the best protection when it comes to debt accumulation and potential collection actions. Unforseen circumstances do happen and sometimes financial hardship is unavoidable.
Debtors that receive a consumer credit lawsuit should take action. Answering a lawsuits not difficult and it can go a long way towards protecting a debtor's rights. Of course, it is always advisable to consult with an experienced attorney before doing anything.
If a judgment has already been entered, a debtor's legal rights are severely limited. Often viewed as a last resort, bankruptcy is an excellent option for fighting back and shielding debtors.
Chapter 7 bankruptcy or chapter 13 bankruptcy will invoke the automatic stay, stopping all creditor action dead in its tracks. Bankruptcy can stop asset seizures, wage garnishment and extinguish the judgment.
All too often, people experiencing financial hardship bury their heads in the sand and ignore the compounding issues. It is important for debtors to take a stand and take action when necessary. Unpaid debt can quickly escalate into a default judgment.
Debtors need to make sure they face their creditors and protect their rights.
Frank Pipitone helps people file bankruptcy in Long Island. His practice focuses on all issues relating to consumer protection and debt resolution.
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