When a person is late paying back a debt to creditors, he faces a number of different options in managing his debt. Among the most popular options is enrolling in a debt settlement program. This program, usually run by a law firm, offers the debtor counseling and attempts to help him negotiate a settlement with his creditors. While a debt counseling program can help a person avoid lawsuits and wage garnishment, Nebraska law provides no legal protection to individuals enrolled in them.
Debt Lawsuits
If a person owes money and is late in making payments, the creditor has the legal right to sue her to collect this money. This is because the debt is secured by a contract, and creditors have a right to receive compensation if this contract is breached. However, creditors must file the suit before the debt's statute of limitations, as set by Nebraska law, has expired.
Wage Garnishment
If the creditor does file a lawsuit against the individual who owes him money, it is up the civil court judge hearing the case to rule whether the individual does in fact owe the creditor money. If the judge rules in the creditor's favor, then the creditor can legally force the individual to pay. One of the methods of doing this is garnishing the debtor's wage. However, in Nebraska, some low-income debtors are protected from garnishment.
Debt Settlement
If a person is enrolled in a debt settlement program, he is afforded no special legal protection to prevent garnishment or the filing of a lawsuit. While he may receive some credit counseling that will allow him to manage his debt in such as way as to prevent default -- for example, the program may show him how to shift his debt so he is no longer delinquent -- the counselor cannot file motions to prevent a lawsuit or garnishment.
Considerations
The only way in which a debt settlement program could protect a person from a lawsuit or garnishment would be by brokering a settlement with her creditors. In such a settlement, the debtor would agree to pay part of what she owes and the creditors would agree to forgo a lawsuit. In addition, the law firm that administers the program could provide separate legal services, but this would be outside the debt settlement program's scope.
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