In these tough economic times, debts can stack up like piles of bad laundry, with beleaguered borrowers just like you struggling to clean up your burdened budgets. This is especially true for folks who are experiencing a sudden economic setback such as being laid off from a job or an unexpected medical emergency, sending them through no fault of their own into an endless cycle of unpaid bills.
Such was the case for several local citizens featured in a recent segment entitled “Old Debts Must Be Dealt With Sooner Thank Later” from North Carolina’s own WRAL in which the Triangle television newscast highlighted the harms of waiting too long to pay back old debts:
“Plenty of people think when the collection agency phone calls and letters stop, it means the collections agency gave up and wrote off the debt. That's what Erin Miles thought. She had a tough time years ago. ‘The company I was working for closed, and I lost my job,’ Miles said. She had credit card insurance, which she thought covered payments if she lost her job. ‘It picked up a couple of payments, and then it stopped,’ said Miles. With no paycheck coming in, the $3,400 balance was more than she could afford. So, she let it go. A collection agency sent letters and court orders, which Miles admits she didn't fully understand and ignored. Years later, her credit report showed the bill as ‘paid.’ She thought the debt was cleared. Then 10 years after the bill went unpaid, the 2006 Honda Accord she recently paid off, was gone. ‘I was told the car was taken for a debt,’ said Miles. She's not alone in this situation. Eva Williams contacted WRAL about credit card debt from 15 years ago. Back then, she owed $3,000. The 68-year old thought disability insurance paid it. But recently, a collection agency contacted her wanting more than $10,000. For Williams, because of her current circumstances, the company decided to no longer pursue the debt.”
But apparently Williams’ “free pass” from paying her credit card debt is an aberration among bill collectors, many of whom could easily take your car, house, or household items— as in the case of Erin Miles—if you’re not careful.
Fortunately, a bankruptcy filing can be your first line of defense against a relentless collection agency.
A lawsuit usually comes after many months and sometimes years of chasing after a non-paying debtor. When a debtor fails to respond to a creditor lawsuit, the creditor will win a “default judgment” which will give them the power to take extreme collection actions against the debtor, such as seizing a bank account or garnishing wages….or even seizing assets.
But filing a lawsuit against a debtor is not a creditor’s first choice. Creditors know that even if they file a lawsuit, it can be quickly neutralized with bankruptcy.
While a creditor who wins a judgment can garnish your wages or seize your bank accounts without warning, only bankruptcy can stop the garnishment or bank seizure order. If a creditor seizes your assets after you file bankruptcy, you have legal recourse and you may be able to get those assets back.
Responding to a creditor’s lawsuit with an “answer” will buy the debtor more time to put together more money or to file Chapter 7 bankruptcy or Chapter 13 bankruptcy.
So, are you thinking about filing for Chapter 7 or 13 bankruptcy to stave off the seizure of your assets following a stint of unpaid debts? It’s probably best to call the bankruptcy attorneys at the Law Offices of John T. Orcutt who offer a totally FREE debt consultation and now, more than ever, it’s time to take them up on their offer. Just call toll free to 1-888-234-4181, or check them out online at www.billsbills.com.