Negotiating a Settlement with a Lawsuit or Judgment
If a creditor is suing you over a debt, or has already received a judgment against you for a debt, you have 4 basic options, which are outlined below, of how to deal with the problem.
This is not a complete list or description of the lawsuit process. I advise you to meet with an attorney to review your situation. We offer a Free Consultation if you would like to come in and meet with an attorney face-to-face to discuss the lawsuit and your options.
SERVING YOU WITH THE LAWSUIT:
Approximately 3 to 6 weeks after a lawsuit has been filed with the Court, you will be served with a copy of the Plaintiff’s Petition. In some cases, it may take much longer to serve you. You may either be served by a private process server or a Constable. They typically serve you at home, but if they know your work address and cannot contact you at home, they may serve you at work. I often have people ask me if they can avoid the lawsuit by making sure that they are not served. The short answer is “No”. You can avoid being served by not answering the door, but that is not going to get you very far. The Plaintiff will simply go back to the Judge and ask for permission to serve you in an alternate manner such as by certified mail or even publishing in a legal periodical. If that happens, they will likely move forward with the lawsuit without your knowledge of what is going on.
OBTAINING A JUDGMENT AGAINST YOU:
Once you have been served with the lawsuit, you have approximately 10 days to file an answer to the lawsuit if it was filed in Small Claims Court or about 20 days if filed in County Court. If you do not file an answer, or take some other measure to stop the lawsuit, they will receive a default judgment against you. The judgment will likely be for whatever amount you owe the creditor, plus attorney’s fees and court costs, as well as pre-judgment and post-judgment interest. A Judgment is valid for a period of 10 years and can be renewed afterward for another 10 years.
COLLECTING ON THE JUDGMENT:
After a judgment is obtained, you must act quickly if you are going to prevent the judgment creditor from seizing your non-exempt property. Non-exempt property simply means property,or assets, that are not protected under State or Federal law. It can include real property such as a land or personal property. Non-exempt property includes many things, but the most common forms are cash, money in bank accounts, Certificates of Deposit, stocks, bonds, more than one vehicle per licensed driver in the household or real estate other than your homestead. This is not a complete list. We would need to meet and discuss your assets to determine exactly what you have that may be seized. The first thing most creditors do upon obtaining a judgment against someone is to freeze their bank accounts. This is money easily obtained that is just sitting there in the bank.
OPTION 1: DOING NOTHING BECAUSE YOU HAVE NOTHING:
Some people tell me that they do fear a judgment because they have nothing for the creditor to seize. This situation is often referred to as being “Judgment Proof”. While it is true that a creditor cannot seize non-exempt property that you do not have, you must remember that the judgment is valid for 10 years and can be renewed after that has expired. At some point during this time, I am sure you hope to have a bank account or some other asset that may not be protected under State or Federal Law. I do not advise this option very often. With the judgment, the creditor will continue to call you, send demand letters and keep your stress level at an all-time high. The creditor will stand there ready to pounce if they perceive that you have any non-exempt asset.
OPTION 2: DEFENDING THE LAWSUIT BEFORE IT GOES TO JUDGMENT:
Occasionally, a consumer is being sued on a debt that does not belong to them or perhaps the consumer has some other reason as to why the lawsuit is not valid, such as the debt has passed its Statute of Limitations. This Statute of Limitations for most debts is 4 years from the date of default on the debt. If you have evidence to support your claim, this may be your best option. We would need to file an answer to the lawsuit, obtain discovery against the creditor and then file a motion for summary judgment with your evidence explaining to the Court why the creditor does not have the right to sue you. If you believe you have a solid defense, call me and we can schedule a free consultation to discuss this option in more detail.
OPTION 3: NEGOTIATING A SETTLEMENT OF THE LAWSUIT OR OF THE JUDGMENT:
If you know that you owe the money and you have sufficient resources to either make a lump-sum settlement or to propose a short-term payment plan to the creditor, we can file an answer to the lawsuit and propose an offer of settlement. This option is also available if you already have a judgment against you. Most creditors will accept a settlement for some amount less than what is actually owed, but there is no guarantee that the creditor will settle or for what amount they might settle. This is not true in every case as some creditors will not settle at all, but most of them do.
OPTION 4: FILING EITHER CHAPTER 7 OR CHAPTER 13 BANKRUPTCY:
If you do not have a defense to the lawsuit or you cannot afford to make a settlement, you should consider either filing a Chapter 7 or a Chapter 13. This is often the best option of the 4 listed here as it addresses not just the current lawsuit or judgment, but it also takes care of all of your debt problems. Many people today do not believe that bankruptcy is still an option, but that is simply not true. There are other people who believe that filing bankruptcy is morally wrong and I do not believe that to be true either. Forgiveness of debts dates back to the time of Moses in the Old Testament. It is a right that each American has and is protected by the United States Constitution. This past year, approximately 1 million bankruptcy cases were filed in the U.S. Many have no option but to file bankruptcy after their creditors have backed them into a corner from which there is no escape. I invite you to come in and meet with me for a Free Consultation to see if this is the right option for you. For more information on filing bankruptcy, click this link to read more about this option.
WHAT TO DO?:
I know that lawsuits and judgments can be very stressful, causing you to lose sleep night after night worrying about what to do. I want to help you solve this problem, but you must act quickly. Once your lawsuit turns into a judgment, the creditor may start seizing your non-exempt assets, making it difficult for you to settle or have money to file a bankruptcy.
I can help you find the peace and rest from this problem that you deserve. Call me for a Free Consultation right away.