Creditor Lawsuits

November 2, 2022

Eric Seyvertsen, Attorney
Bankruptcy Law
120 North Hunter Street #307
Stockton, CA 95202

CREDITOR LAWSUITS

You’ve tried and tried but you just can’t afford to make your monthly payments.  Like many other people in your situation, you kind of just gave up. It’s not that you don’t want to pay back the money you owe but you just don’t have the cash. You ignored the debt collectors, you ignored their letters, and let the endless non-stop phone calls go to your voicemail.  Several months go by and then someone comes to door with some paperwork which says that you’re being sued.  What’s going to happen?

Well, if you do what the majority of people do you’re just going to ignore that lawsuit.  For the majority of you who ignore the lawsuit, what eventually will happen is that the credit card company or perhaps in your case a debt-buyer is going to win a default judgment against you.  Usually, it takes a few months, but I have seen cases where it takes over a year before a default judgment is issued. 

For the rest of you, maybe you’re going to try to fight the lawsuit.  Maybe you have a good reason to fight.  Identity theft, for example, would be a good reason to fight your lawsuit.  The expiration of the statute of limitations is another good reason.  Ultimately, if the debt is legitimate and you don’t have a good defense you’re likely going to lose that lawsuit and the creditor will be awarded a judgment.

What happens when a creditor wins a judgment against you?

The credit card companies are going to attempt to use that judgment to collect their money.  So, what are they going to do?  Judgment holders have multiple ways of getting their money.  Two common strategies are to garnish your wages or put lien on your home.  In California, a creditor with a judgment can garnish up to 25% of your net pay.  A second tool that is commonly used by creditors to collect their judgments is placing a lien on your home.  A creditor simply has to file the proper paperwork with the county recorders office in order to have a lien placed on your home.  Once a lien is recorded, it becomes very difficult to refinance or sell your property until the lien has been paid off.

What can you do?  You can do nothing if your judgment proof.  You can negotiate with the credit card company that is suing you.  Or, you can file bankruptcy which would stop the lawsuit and wipe that debt out.

Maybe you’re judgment proof and you decide to do nothing.  When I say judgment proof what I mean is that even if your creditor has a judgment against you they can’t collect on it.  If you don’t have a house and don’t have a job, then a creditor isn’t going to be able to collect at least right now.  A judgment last 10 years and can be renewed at the end 10 years.  Your judgment proof status can change – maybe you get a job, maybe you inherit money, or maybe even cash in on that winning lottery ticket.

If you’re not judgment proof then you might want to consider reaching out to the law firm that is suing you.  Their phone number should be in the top left corner of one of the papers that were brought to your house.  Frequently, they will be willing to work out some type of payment plan with you and sometimes if you can pay a lump sum they’ll accept less than what you owe them. Another solution is to file bankruptcy.  Bankruptcy can wipe out your unsecured, get rid of the judgment, and stop creditor lawsuits.  Bankruptcy can even remove the lien that was placed upon your property so long as the bankruptcy is done correctly.  Need more help?  Call, text, or email me to set up an appointment. 209-800-6292 eric@seyvertsenlaw.com