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The Bill Collection Process Step #3 The Legal Process

I'm not a lawyer. This is not legal advice. The following is for informational purposes only.
No, I'm not a lawyer but I have had a great deal of experience in helping people understand and emotionally deal with the legal process in regards to debt collection. I'm going to discuss this in general terms so that you may have a better understanding of what could happen to you and to give you some ideas about potential courses of action. Keep in mind The United States of America has fifty states, hundreds of counties, and thousands of cities, towns and other municipalities. The laws will vary depending upon which jurisdiction you’re in. If you want to know specifics about your local laws or your specific case talk to a local qualified legal expert. In other words don’t use this information to form a legal strategy, go see a lawyer!

I’m going to sue you!

It’s not uncommon for a collector at a collection agency to tell you that you’re going to be sued if you don’t pay your bill. While it is possible that you will be sued, a collector can’t tell you that you are going to be sued unless the collection agency has the ability to do so, either they are attorneys or they use attorneys, and they actually intend to sue you. If they tell you they’re going to sue and they don’t have the ability to do so or the actual intent to do so they are in violation of the Fair Debt Collections Practices Act and can have a claim filed against them.

When a bill goes to a collection attorney they, just like the collection agency before them, must notify you in writing that they’ve taken the account over and give you the opportunity to challenge the validity of the bill. While the may send letters my experience is that they rarely spend a lot of time calling you unless they are just looking for a quick payment. They certainly don’t spend time trying to track you down over the phone to tell you they’re going to sue you if they really intend to sue you. They’re attorneys they'll just sue you and let the summons and complaint do their talking.

Legal Documents and Jargon

If you receive a legal document in regards to your debt it’s likely that your first word will be “Huh?” Well maybe not your first word but the first one when you actually sit down and try and read the document. While some jurisdictions are writing their documents in very clear and easy to understand language, most of them still can be very confusing and frustrating to read. It’s just like they are some kind of, well, legal document.

Once again, I’m not a lawyer but I have read through hundreds of legal documents that pertained to debt collection. With a little bit of definition you should be able to understand even the most confusing document. One of the biggest mistakes that you could make when you receive a legal document, one from a court, not a letter from a law firm, is to do nothing. That is unless you understand the document and your decision on how to respond to it is to do nothing. Don’t just throw it in a pile of stuff because you think you won’t be able to understand it. Here’s a list of legal terms and jargon that should make your reading easier. If you have any legal questions, get qualified legal advice.

  • Arbitration - Arbitration is a forum where a dispute can be settled without the formalities of a trial. More and more credit card companies are using the arbitration process. From the standpoint of the debt collection process arbitration can be yet another intimidating series of letters and legal looking documents that may spur one into making a payment. In my experience even if the arbitrator rules against you the credit card company would still need to file a traditional lawsuit to enforce the ruling. While most people probably ignore the arbitration papers, and therefore atomically lose, some will respond and either win the arbitration outright or at the very least slow the collection process down for a while.
  • Complaint - A complaint is a legal document that states the case against you in a lawsuit. Most often a summons and complaint are the two legal documents you initially receive when you have been sued. The complaint contains the specific charges against you.
  • Garnishment - A garnishment is a way for someone who has a judgment against you to collect. Generally this is in the form of a wage garnishment. In order for a garnishment to occur several things must happen. First you must live in a state that allows wage garnishments, most but not all do. Then after a judgment is rendered against you the creditor needs a file garnishment papers, usually with the local Marshall, and then your employer is notified. Of course you need to be working for this to happen. Then your employer withholds part of your paycheck, usually no more than 25% of your net earnings and sends it to the Marshall who forwards it to the creditor. Even if you have a garnishment placed against you, you may be able have it removed or reduced based upon your financial needs.
  • Interrogatories - Interrogatories are questions that are given to you in written form before the trial. This usually only happens if you file an answer to the complaint. This puts your case in the legal record and lets the creditor’s attorney know if you have any legal defense. Usually the interrogatories are long and specific and if you don’t answer them it gives the other side ammunition to ask for a summary judgment, meaning you will probably lose the case.
  • Judgment - A judgment is a ruling in a law suit. If the judge finds that you do owe the creditor money a judgment will be entered against you. Once a judgment is rendered then it is up to the creditor to figure out a way to collect on it. No, if a judgment is entered against you, you are not arrested, and the bailiff doesn’t go through your pockets looking for money, really at that very moment nothing happens. Well the creditor gets a piece of paper that shows a judgment was rendered and generally they go back to the office and put it in a file. Because most defendants didn’t pay their bills because they didn’t have the money most judgments go uncollected. But with the judgment in hand the creditor can then go back to court and pursue a garnishment, a lien, or a levy.
  • Levy - A levy is a way for a creditor to, with a court order, go into your financial accounts, like checking or savings accounts, and take your money. This can only happen if a judgment has been rendered against you, and if they know where your accounts are.
  • Lien - A lien is another way for a creditor, with a court order, to collect on a judgment. This is done by putting a lien on a piece of real property, usually a house. Except in rare circumstances where large amounts of money are involved a lien will not be paid until the property is sold or refinanced. Most creditors look at a lien as a sure fire way to collect on a judgment, the fact that it may take years to collect is of no consequence because they are huge corporations who plan to be collecting money from people for generations to come.
  • Summons A summons is the courts way of telling you that you need to do something, usually appear at a trial or hearing. Generally when you are first sued you receive the complaint, telling you what the case against you is and the summons which tells you when and where you need to appear for the trial.
  • More terms and definitions are coming soon.
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