If you lose that hearing and your wages are attached, you can request a second hearing if your circumstances have changed, causing you hardship for example, you have sudden medical expenses or must make increased support payments. In most states, you cannot request a claim of exemption to protect your wages if your debt was for basic necessities, such as rent or mortgage, food, utilities, or clothing. The law says that you should pay for your necessities, even if you suffer a hardship in doing so.
Still, you can request a claim of exemption hearing if the debt now part of the judgment was for a basic necessity. The creditor may not challenge your claim. Or, the judge might not care whether the debt was for a basic necessity and may consider only whether or not you need the money to support your family.
To get an overview of how a claim of exemption hearing normally works, see How to File a Claim of Exemption. If you need more information about exemptions or want help with a hearing, consider talking to a lawyer.
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Meet the Editors. You might be able to prevent collection of a judgment by negotiating with the creditor or claiming property as exempt. Here are some ways you can head off a creditor's collection attempts. Negotiate With the Judgment Creditor It's never too late to negotiate. Claim Property as Exempt Most important, just because a judgment creditor levies on your property or attaches your wages, it doesn't mean that the creditor is entitled to take the property.
How to Claim Property as Exempt Any time the sheriff or marshal levies against your property, you must be notified. Debts for Necessities In most states, you cannot request a claim of exemption to protect your wages if your debt was for basic necessities, such as rent or mortgage, food, utilities, or clothing.
Claim of Exemption Hearings To get an overview of how a claim of exemption hearing normally works, see How to File a Claim of Exemption. Chances are that after the months of missed payments stack up, the original creditor will cut its losses and sell the debt to a debt collection agency.
The debt collector who purchased your debt will then begin collection activity against you. If all collection activity fails and you continue to default, a debt collection lawsuit can be filed against you. It continues to be reported on your credit report, harming your credit score, and leaving you at risk of potentially being sued.
A debt collection lawsuit commences when the law firm that represents your creditor files a case against you in civil court. You will be served a court summons and a copy of the complaint, which is the legal document that spells out the amount your creditor believes you owe and the reasons why they believe you are accountable for this debt.
The worst thing you can do after being served is to ignore the lawsuit. If you ignore the lawsuit, then your creditor can get what is called a default judgment.
Once your creditor has a default judgment because you did not respond to the lawsuit, or a judgment because the lawsuit was successful, they can ask the court for a wage garnishment order or a bank account levy.
Wage garnishment gives your creditor the power to take money directly from your paycheck until the debt is paid in full. A bank levy gives your creditor the power to take money directly from your bank account. There is a limit to the time period a creditor is allowed to file a debt collection lawsuit against you.
The length of the statute of limitations varies by state and typically falls between 3—10 years from the date of the first defaulted payment or the date of the last payment received, depending on the state.
If a debt collector tries to file a lawsuit after the statute of limitations has run, then you can use the statute of limitations as a defense against the debt collection lawsuit. If the defense is successful, the case will be dismissed. At that point, there is nothing they can do to collect payment from you other than to ask you to make good on the overdue balance. Federal law requires collection accounts to stay on your credit report for up to seven years.
That length of time is calculated from the date of your first missed payment. Upsolve Community Member Can I file chapter 7 if I sue someone for a personal injury Anyone know What the protocol for a car loan debt is when you do not have the vehicle anymore due to When it comes to debt relief, you have options. You can still resolve a debt after a lawsuit has been filed. You can even resolve a debt after a creditor is successful in a lawsuit and obtains a judgment against you.
As long as you face your debt problems head-on, you almost always have options that will allow you to seek significant debt relief or to restructure your debt so that paying it off becomes a more manageable process. Many creditors will let you resolve your debt at any time, whether by debt settlement, payment in full, or by another option for debt resolution, and even after they have filed a lawsuit. Oftentimes, the court will require that both parties in a lawsuit try to reach a settlement agreement.
A debt collection lawsuit can potentially be resolved with debt settlement. You can do this on your own or hire a debt settlement attorney to help.
You can make a payment plan with the creditor to pay off the sum of the debt or partially pay the sum in a lump-sum settlement. Payment plans are not always possible when it comes to debt settlement, as creditors have little incentive to risk another default. As a result, a significant lump sum payment might be required. There are a few things to be aware of when considering debt settlement.
This is often a last resort, and if you go through with this option it will lower your credit score. Negotiating your debt involves a manageable process, and Sterling recommends this sequential approach:. Before starting negotiations, check a recent statement or contact your issuer to determine your balance due and interest rate.
Decide if a lump-sum settlement, workout arrangement or forbearance makes the most sense for your circumstances. Do you want to handle the negotiations yourself or rely on a professional?
Review your current financial situation and risks involved. Explain your situation and make an offer. Prepare a script beforehand so you know exactly how to make your request.
Be honest, clear and polite. If you are unable to negotiate, be prepared to ask to speak with a supervisor or to call back. Document the dates and times of your conversations and keep as a reference full names and titles of anyone you spoke with. If you successfully negotiate your debt, get everything in writing. Make sure you understand and agree with the new terms.
It should be a goal for all consumers to stay out of debt, according to Sullivan. Although this advice seems obvious, it helps to adopt good credit card habits. Sean Fox, president and revenue officer of Freedom Debt Relief , explains how consumers can stay out of debt:. Successful negotiation of credit card debt is possible if you understand the process and your best options. The editorial content on this page is based solely on the objective assessment of our writers and is not driven by advertising dollars.
It has not been provided or commissioned by the credit card issuers. However, we may receive compensation when you click on links to products from our partners. Essential reads, delivered straight to your inbox. By providing my email address, I agree to CreditCards. Your credit cards journey is officially underway. Depending on your financial situation, a big tax windfall can have a major impact on your financial well-being.
But the question every refund recipient faces is what you should do with that cash.
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