Being Sued By Collectors?

Typically when one is sued by the holder of an unsecured note (credit card, medical bill etc.), it is often best to try to contact the company who is suing. Contact the plaintiff, and you can usually count on one of two offers:

1. A lump sum settlement, wherein you will pay all at once. They often will offer to settle somewhere between 70% and 90% of what you owe, but I have also frequently seen them settle for 60% of whatever is owed if the debtor pushes back and negotiates.
2. The other scenario is that they will offer to put you on a monthly payment plan, which is the route that you will have to go if you don’t have the money for a settlement.

Whatever you decide with the company who is suing GET IT IN WRITING. Do not send a dime until they send a written agreement. If you agree to a settlement, for example, and don’t have it in writing, you could send in a lump sum, only to find that they are still claiming that you owe the entire amount.

We did have one client that responded in court, and the plaintiff could not prove that the customer had ever co-signed a note, but usually, if you owe the money, you will lose and spend more on legal fees than necessary.

You will have to pay it back, or the company can get an abstract of judgment, which places a general lien on your properties. They can’t take your homestead, but they can place a general lien. They can take investment properties and second homes and auction them. We have even seen instances where bank accounts have been frozen by collectors.

Do not ignore the suit. Try to contact them to work it out. If you have the attitude that you don’t own any property anyway, the get used to the idea of not having any for about seven to ten years. If you’re ok with not owning property, and perhaps not having a bank account, and financing autos only through small-time dealers for a long time at high interest rates, you probably need not worry about the law suit nor the forthcoming judgment.

If the company does not respond to your calls or letters, then I we recommend calling in for a consultation with Attorney Hector A. Chavana.