How to Deal With Legal Actions Submitted by Lenders?
19 Jan 2016
Many people don’t know that it is possible for creditors to sell our debt. And when they do, it is possible for collection agencies to threaten us with court actions. We will be demanded to pay the alleged debts. Technically, it is illegal for creditors and collectors to threaten court action, if they don’t really plan to carry it through. Legal procedures and court actions can be expensive and time consuming for people who are already distressed financially. Also, there’s no guarantee for creditors to get the outcome they want. Consumers will need to be prepared to face court actions by lenders that are aimed to get us fork over money. Lenders will try to obtain default judgment against consumers, if they don’t respond to complaints and summons.
Consumers should know lenders can still sue them, even if they don’t have money. The court can still enter the appropriate judgment against customers. Being broke shouldn’t be seen as an excusable reason that will back out our financial responsibilities. Lenders will always try to shake the money out of us. The court may require us to file an affidavit and financial statement concerning our finances and case. It is important for consumers to show that they don’t have the financial capability to repay the funds, especially if they don’t have steady income. In this situation, lenders could be willing to negotiate with us for a workable settlement plan.
Unfortunately, they don’t really have to enter an agreeable payment plan with us. Lenders could still reject our offer and sue us the whole amount of our debt. Lenders could do this if they believe that we still have the means to repay the debt. As an example, they may try to garnish our wages and they may see that we have valuable properties. They may also try to raid our bank account. It means that we could are more likely to reach settlement plans if we really don’t have means to repay our debts. Whatever we do, we should answer complains and summons. We could avoid default judgment if we are able to answer within specific timeframe.
We should also know the stature of limitations. They could vary depend on the type and state of debt. The time of limit in which lenders can obtain a judgment against creditors could vary anywhere between three years to ten years. Creditors should know limits in their state and take advantage of this fact. Their plan should be determined by the length of the time limit.
We need to realize that debt stature of limitations is not the same with credit bureau limits. Federal law states that credit bureaus must drop any negative information after seven year. It means that if we miss a debt repayment seven years ago, this negative detail must be removed. However, more crucial details, such as tax liens and bankruptcies may stay longer, about ten years or more. So, we shouldn’t use credit reports to help us determine whether we owe debt. However, we can use this to know when lenders first considered us to be delinquent.