Most people make reasonable attempts to fulfill their financial obligations. For people with overwhelming credit card debt or unexpected medical bills, staying up-to-date on financial obligations can be very challenging.
They may have to choose which bills to pay or may not have enough income to make minimum payments for all of their debts and accounts. In such situations, creditors may become frustrated. They may file lawsuits in an attempt to force a debtor to pay what they owe.
Getting served for a creditor lawsuit can be embarrassing. What can people expect if their creditors attempt to take them to civil court to demand payments?
Creditors often prevail in court
People who have fallen substantially behind on their financial obligations may have a verifiable reason. Maybe they got hurt, resulting in lost wages and a sudden influx of medical bills. Perhaps they suddenly lost their job due to their employer shuttering the business. Unfortunately, the law rarely takes the reason behind financial non-compliance into consideration during creditor lawsuits. What matters is the validity of the debt and the status of the account.
If a person has missed payments or become non-compliant with the payment arrangement due to sending less than the minimum amount, the courts may rule in favor of the creditor. Regardless of the debtor’s circumstances, the creditor may have the upper hand in a legal dispute.
A judgment in favor of the creditor could lead to wage garnishment. The creditor could intercept a portion of the individual’s income until the company recovers the full amount owed. Other times, it may be possible to place a lien against valuable assets to treat them as collateral for the debt.
Unless there are issues with the business practices of the creditor or mistakes in the claims that they make against the debtor, the creditor has a very strong chance of prevailing during debt-related litigation.
How can people protect themselves?
Once a creditor has initiated a lawsuit, there’s a limited window of opportunity to respond. Debtors who file for personal bankruptcy could prevent the lawsuit from going to trial. The courts grant an automatic stay during bankruptcy. Creditors have to cease all collection activity and may even need to dismiss pending lawsuits.
People dealing with aggressive creditor collection efforts or creditor harassment may want to consider personal bankruptcy as a solution. Acting promptly before creditors secure a judgment is often the best option for those with significant financial obligations that are spiraling a bit out of control.
