Being Sued For Debt – Advice on What To Do If You Are Being Sued For Debt

If you genuinely owe money to a company and you do not pay it back in accordance with the terms you agreed, then the hard fact is that lender is perfectly entitled to sue you in order to get their money back. In borrowing the money, or buying things on credit, you will have signed an agreement that legally binds you to paying the money back under strict terms. If you break this contract they may choose to sue you.

Finding yourself in the increasingly common situation of not being able to keep up with the repayments on a loan or credit card will almost certainly result in the lender taking some sort of action to get their money back, but this does not necessarily mean they will take legal action. What they want is to get their money back, or as much of it as they think possible. They will only decide to sue you if they believe that taking such action is the route most likely to result in them getting the most money back from you.

They will rarely proceed quickly to suing you, the typical system being to hand the debt over to either their internal debt collection people to chase you, or else an external debt collection agency. It is usually only if this fails that legal action will be considered. Even then, a lender will consider various factors when considering whether to sue you or not.

If they think that it will cost them more in legal fees than is worthwhile, or they believe that you really do not have the money to pay them anyway, they may opt to try to negotiate an agreement with you instead. Taking court action will involve legal advice, which carries a cost, so you are less likely to be sued for a fairly small debt.

It is important to understand the type of debt you have if you are in danger of being sued. If you have defaulted on payments for a mortgage or secured loan, you could very easily lose your house. Any form of secondary or unsecured debt, however, can not result in the loss of your home through the initial court action. Neither can you expect to have bailiffs coming to take your possessions away (UK only). The initial result of court action (assuming you do owe money and you admit this) will be that the court makes a judgement against you and sets out a schedule for paying back what you owe.

The legal details involved in being sued for debt will vary depending what country or state you live in, but the overall processes are very similar whether you are in the US or the UK. In the UK, the claim will be dealt with through the County Court system, and in the US through the small claims court or higher court. Wherever you live, your first move if you are being sued for debt should be to seek proper legal advice.

If someone decides to sue you, they must first make a claim through the court. You will then receive paperwork informing you about the details of the claim. You must always respond to such claims within the timeframe given and attend court at the specified time in order to answer the claim. If you do not respond or do not attend court, the claim will automatically be awarded against you. In the UK you need to complete and return a form giving your own details and view of the claim.

You may wish to consider contacting the company you owe money to in order to see whether you can come to an arrangement to pay back what you owe, or as much of it as you can afford. You could also consider whether you wish to make a counter claim against the lender, if you think there is a legitimate reason for off-setting some or all of the money you owe. Reasons for a counter-claim could be because the lender has behaved unfairly towards you or not followed consumer protection laws. Making counter-claims can make it more likely that the lender will drop the case or choose to settle out of court, if they think it could be a long and costly legal process.

If a judgement is made against you in the UK this is known as a County Court Judgement. This will involve the judge looking at your financial situation and setting out a repayment schedule for you to pay back what you owe at a rate you can afford. A County Court Judgement will show up on your credit file, and therefore have an impact on any future applications for credit.

If you do get sued and a judgement is made against you, it is very important to stick to the terms of the judgement. If you do not, then the way is open for far more serious legal consequences, which could include the loss of your home and even imprisonment.

Being sued for debt can be a stressful experience, but if you understand the nature and limitations of the immediate court judgement this can help to make the process slightly less daunting. The main thing to remember if you are being sued for debt, is that if a judgement is made against you, it is extremely important to do everything you need to in order to stick to the terms of the judgement.

It is best if you can avoid court action in the first place, and one way to do this is to seek the help of a debt management company to pay off your debts. You can find recommendations for some of the most reputable debt management companies here.

Can A Collection Agency Sue For Debt – Advice On the Legal Powers of Debt Collection Agencies

If you owe money to a company and you are behind with your repayments, they may well use a debt collection agency to try to collect the money from you. A collection agency is not the same as a Bailiff (UK only), as debt collection agencies have no rights to enter your home or take your possessions. All a debt collection agency can do is chase you by telephone, write to you and call at your home in an attempt to get payments from you.

This is an important distinction to make for UK residents. What Bailiffs do is to enforce legal orders from the Courts or government departments. By law they can enter your home and take your property to auction off to repay your debt. Unsurprisingly, Americans would have no truck with the idea of someone coming into your home to take your goods – the powers of Bailiffs in the UK is a hangover from medieval times. Debt collection agencies, on the other hand, are private organisations that charge for the service of collecting debts, and the principles of collection are largely the same in both the UK and US.

Can A Collection Agency Sue For Debt:

That Depends Whether They Own The Debt Or Not

If you genuinely owe money, then the person or organisation you owe money to has the right to sue you by taking legal action against you through the Courts. Typically a company will try a debt collection agency first, and then consider legal action if that does not work. Any subsequent legal action will be on the part of the original creditor, but they may still use the collection agency to progress the matter on their behalf.

A debt collection agency can only sue you if your debt is with them, not a third party creditor. Some debt collection companies buy bad debts for a fraction of their value and make their money by trying to recover the full amount of the debt. If the company you originally owed money to sold the debt to such a collection agency, then that agency could indeed sue you to recover that debt, because the debt now legally belongs to them.

Can A Collection Agency Sue For Debt:

Just Because They Can, Does Not Mean They Will

Even if you are chased by a debt collection agency and are threatened with legal action by the agency or the original creditor, it is by no means certain that they will go ahead and sue you. Whether they take legal action will depend on many things, the overall governing factor being whether they think they are going to end up better off by suing you or not.

There are costs involved in legal action and the process can be slow, so if the debt is relatively small, or if they think you really haven’t got the money to pay, they may decide to cut their losses. Bear in mind that only a small proportion of debts end up being settled through the court, and that even if the court finds in their favour, there is still no guarantee they will get the money.

Can A Collection Agency Sue For Debt:

The Legal Process of Being Sued

The exact process of going to court will vary depending which country or state you live in, but essentially you will be required to appear in either a small claims or higher court (US) or a County Court (UK). The first thing you should always do if you are being sued is to take legal advice. The principles in the US and UK are very similar, but I will outline them separately in the interests of clarity.

The Process In The UK

Suing for debts in the UK is done through the County Courts, where the claimant makes a ‘Money Only Claim’. On receipt of this the court will send you a claim form to complete and return. If such a claim is upheld by the judge, a County Court Judgement is made against you, setting out a repayment plan that you have to stick to.

Your finances ought to be taken into consideration, and repayments based on what you can actually afford. Once the County Court Judgement has been made, it is very important to stick to the repayments specified, otherwise there are much more serious legal actions that can then be taken to recover the debt.

The Process In The US

You will receive a court Summons and a Complaint (stating how much they say you owe). It is important that you take notice of these and that you attend court on the specified day. Failure to do so will result in the court judging in favour of the company suing you. Prior to this you are free to contact the company you owe money to and see whether a settlement can be agreed.

If you can’t reach a settlement, then you will need to attend court. If you do not agree with the amount being claimed (or that you owe the money at all), you must attend court to fight your case. When you inform the judge that you are contesting the case there will need to be a ‘trial’ which may well be on another date.

You should also consider whether you wish to enter any defences or counterclaims. A defence should be based on legal reasons why the claimant is not entitled to any or part of the money claimed. Counterclaims might be for something like a violation of consumer protection laws by the creditor. The lodging of a valid defence or counterclaim can increase the likelihood of the claimant dropping or settling the claim if they think the case is going to be lengthy and costly to fight.

Can A Collection Agency Sue For Debt - Conclusions

Anyone who you owe money to can sue you to recover it. This will only be a collection agency if they have bought the debt from the original company that you owed it to. It is obviously preferable to avoid letting things get this far in the first place. No debt is impossible to deal with. It may take time and be painful for a while but you can deal with any debt crisis yourself if you take the proper step by step approach.

For detailed guidance on debt cures see the step by step guide on ways to pay off debt at DebtAssistanceSite.com

Can Bankruptcy Stop Foreclosure and Repossession – Advice On How Bankruptcy Affects Foreclosure

Bankruptcy law in the US obviously differs in some respects from bankruptcy law in the UK, so I will cover both in order to provide useful information for residents in both countries. The UK legislation is slightly more straightforward, so I will look at this first.

Bankruptcy and Foreclosure - The UK Situation

If you are a UK resident and you file for bankruptcy, a Bankruptcy Trustee is appointed, who immediately takes over responsibility for all your assets. Any of these assets can then be sold off to pay back your creditors, and this includes your house, even if it is mortgaged or owned jointly with someone else. Whether your house gets sold or not will depend on various factors, including the size of your debts and what other assets you have.

The good news is that if you are the subject of repossession proceedings, your filing for bankruptcy will immediately stop the process of repossession. The process of repossession is not allowed to carry on until either the end of your bankruptcy or if the court gives your creditor clearance to continue the process. Filing Bankruptcy does not ssecure your home in the long term, but it does at least provide a breathing space.

In the UK there is an alternative to bankruptcy called an IVA (Individual Voluntary Arrangement) which has slightly less drastic consequences. However, an IVA does not legally stop repossession proceedings like bankruptcy. It may be possible to halt proceedings by getting an Interim Order to prevent further action until the IVA is in place, but this is not automatic.

The US Situation

The first thing to say is that there are different types of bankruptcy in the US. It is particularly relevant to this situation to understand the difference between Chapter 13 bankruptcy and Chapter 7 bankruptcy.

With Chapter 7 bankruptcy the responsibility for paying off your debts is taken on by the court, but in exchange for this, full control of your assets transfers to them, and as with UK bankruptcy, your property can be sold off to repay your creditors.

The alternative to this, however, is Chapter 13 bankruptcy, which is essentially an agreement you make through the court to gradually pay off your debts over an appropriate length of time. This is much more appropriate for the purposes of stopping foreclosure. How much of your debts you manage to pay off, and the size of the repayments you have to make, will depend on many factors. The more obvious of these include how much income you get and how much you owe.

If foreclosure proceedings have started against you, a very important point with regard to Chapter 13 bankruptcy is that the sale of your home will be stopped provided you can file for bankruptcy before the foreclosure sale date. Herein lies a problem, because changes to US bankruptcy law introduced in 2005 can sometimes make it impossible to file bankruptcy in time.

The change in legislation introduces the requirement that you cannot file for bankruptcy until after you have had credit counselling, and the counselling must be for not less than 180 days. The principle of undergoing counselling is not a bad idea, but if the foreclosure process results in a foreclosure sale of your home in less than 180 days, you will simply not have time to file for bankruptcy to stop it.

When foreclosure proceedings have begun, your options are fairly limited. The main choice you have is to either pay off what you owe in full (which seems unlikely) or file for Chapter 13 bankruptcy to halt the process. However, you must be aware that filing bankruptcy does not mean your home is then safe. It should be regarded more as a stay of execution! The problem will not go away and one way or another you will need to pay off your debts.

Declaring any type of bankruptcy should not be seen as any sort of easy option. It has serious and lasting consequences and should always be regarded as a last resort. Having your home about to be taken from you may very well be one of the few times that bankruptcy is a preferable option. So bankruptcy can indeed stop foreclosure, but only if you can do it in time, and only on a temporary basis. It is not a cure for mortgage arrears and is most definitely not a soft option.

For further information on a range of Debt Cures visit www.DebtAssistanceSite.com

Can You Be Sued For Credit Card Debts – Advice About Being Sued For Debt

The answer to whether you can be sued for credit card debts of not has to be that you can, but the decision to sue or not depends on many things. Bear in mind that what the card company want is to get their money, so they will only sue if they think that is the course of action that is most likely to achieve this end.

Whether they decide to sue you for the credit card debts will depend on things like how much you owe and how far you have fallen behind with your repayments. The fact that any legal advice and action will cost them money means that they are not likely to go down this path unless the gain is going to outweigh the cost.

Other factors that the card company will consider are how long you have been at your current address, whether you have a steady job and how old you are. These are the sort of things that will affect how likely they think you are to disappear to avoid the debt. If you look fairly settled and young enough to work for some time to come, you are a better bet for paying them back in the long term, so they might do a deal.

If you have your credit card in a joint name the company are probably going to try chasing the other cardholder as their first option, because if this works it is a lot easier and cheaper than suing you.

Can You Be Sued For Credit Card Debts:

Yes You Can – But That Is Not Necessarily The End Of The World

Leaving aside the legal action for a moment, most debt problems should be tackled in the same sort of way, by working out your exact financial situation and negotiating an affordable deal with your creditors. This is too big a subject to go into in this article, but is always the best solution as it does not involve borrowing more money or paying a company for a commercial debt solution which primarily benefits them. See this Debt Management Guide for further information.

Credit cards are a form of Secondary Debt, meaning that the immediate consequences of non-payment are less serious than those which could result in losing your home, imprisonment or having your possessions seized. A credit card company that you owe money to are perfectly entitled to take legal action against you, which is likely to result in the court ordering you to pay off the debt at a rate they decide, which ought to be within your means.

Can You Be Sued For Credit Card Debts:

The Legal Process

If you receive a Default Notice from the company you owe money to, then you need to seek legal

advice because they can then take you to court. You may well be advised to apply for a Time Order from the court, which can have the benefit of limiting the interest and penalties on your debt and setting a lower repayment amount.

To get a Time Order you need to send a letter to the company you owe money to and make an offer to pay them an amount you can afford. You case will be made stronger if you can include a Personal Financial Statement to show your exact financial situation. If the company turn down your offer of payment you need to approach the County Court to apply for the Time Order. The court will then decide whether your offer of payment was for an appropriate amount or not.

If the company refuse your offer of payment you can go ahead and make the payments you have offered anyway, then it is up to them to decide whether to take you to court of not. If they decide to take action then you will need to apply for a Time Order at that point, but in this situation the court fee will be paid by the card company, not you.

If no application for a Time Order is made, the credit card company make what is known as a Money Only Claim through the County Court. If their claim goes through, this will result in a County Court Judgement against your name.

If the card company lodge a claim against you, you will be sent a form to complete by the Court. Make sure you seek legal advice if this happens. What the County Court Judgement will do is set in place a plan for the repayment of the debt, and it is very important that you stick to this. The court should take into account your financial situation, so the repayment amounts ought to be affordable.

Can You Be Sued For Credit Card Debts:

When Things Can Get More Serious

Once there is a County Court Judgement against you, your situation changes to one with potentially more serious consequences. The payments set by the court must be maintained, otherwise the court can allow the card company to send bailiffs to take possession of your possessions.

Another possible consequence of court action could be the decision to implement an Attachment of Earnings, which allows the deduction of money direct from your wages. The consequences of not co-operating with such a requirement include imprisonment.

The other possible consequence that you really want to avoid is the setting up of a Charging Order. This secures what you owe against your home, so if you then default on your payments your home could be sold off to get the money you owe.

Can You Be Sued For Credit Card Debts:

Conclusions

As you have seen, you can be sued for credit card debts and other types of credit debt, but if you make an effort to tackle it the situation does not need to be too serious. Even if you are taken to court, the result will almost certainly be a payment plan which should be affordable, and you MUST stick to this. When it does start getting more serious is if you go to court and then do not adhere to what the court orders you to do.

Having court action against you is of course stressful and undesirable, and best avoided. If you have serious credit card debt problems there are definitely ways to tackle it. One of the best starting points is to talk to a debt management company about a payment plan. You can find recommendations for some of the best debt management companies here.