Handle Being Sued by Creditors
Despite its many threats, it simply is not in the best interest of creditors to litigate every debt. costs of going to court can be more than the amount recovered through the trial. Therefore, if you are sued by creditors, it is likely that the amount involved is significant.
probably suit will claim the debt and entering documentary evidence. Proving that the debt should not probably be difficult, but if the game is not answered, or if you are in favor of creditors, resulting judgment will be easier for the creditor to garnish wages and attach other assets . question, therefore, must be addressed sooner rather than later. Get credit counseling.
Handle Being Sued by Creditors
Though it might seem degrading to seek advice from others about your less than ideal personal credit situation, professional credit counselor can actually be quite helpful in making suggestions for how to resolve debt problem. Credit counselors are trained to examine person’s budget, trim fat and devise payment plan. While this might not seem entirely desirable, attending certified credit counseling service is now prerequisite of bankruptcy.
Consider bankruptcy. Though bankruptcy does not automatically eliminate debt, it does freeze pending law suit for debt collection. individual debtor can file for either Chapter 7 or Chapter 13 bankruptcy depending on her income and assets, both of which are more likely to be more favorable to debtor.
Only in Chapter 7 are many types of debt discharged. Under Chapter 13, debtor must agree to repayment plan that is approved by creditors and court appointed trustee. Negotiate stipulation.
bankruptcy petition is not necessary for you and your creditor to agree on renegotiated payment plan, even after lawsuit has been filed. If such agreement is reached, parties can enter stipulation with court, which will suspend trial. But, be sure repayment plan is realistic, because if you default on terms of stipulation, creditor can go back to court and receive judgment in its favor.
Avoid confessing debt. Collections agencies are not particularly known for their scrupulous tactics–in fact, they thrive on intimidation and deception. common ploy is to get debtor to sign confession of debt, which bypasses need for court judgment, since entire purpose of lawsuit is top prove that debt is rightfully owed to creditor.
signed confession is like admission of guilt and makes it much easier for creditor to collect. Agree to mediation or arbitration. If, for whatever reason, direct negotiation with creditor is not possible or not fruitful, another option is arbitration or mediation.
Arbitration sends matter to third party who hears both sides and makes legally binding ruling on terms of settlement. In mediation, mediator makes recommendations and can bring parties toward compromise, but either side can end process at any time and pursue other means.
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