If you owe money to a credit card company, debt collection agency or other entity, they can take action to collect it by filing a civil lawsuit against you. When a lawsuit is filed, you are notified through a summons. The summons identifies the party bringing the suit, the amount you're being sued for and the date of your court hearing. Failure to answer the summons can potentially result in negative financial consequences.
Answering the Summons
Depending on your state of residence, you typically have between 15 and 30 days to answer a summons. In answering the summons, you must outline the reasons for not paying the debt. Your answer must be filed with the clerk of court in the county where the lawsuit was originally filed. If you do not respond to the summons or appear in court on the scheduled hearing date, the creditor is likely to be granted a summary or default judgment against you. Once a judgment is in place, the creditor must then take additional steps to collect what is owed.
Wage Garnishment
The first option creditors have for collecting a debt is to pursue garnishment of your wages. Every state allows garnishment of wages for credit card lawsuits, excluding Texas, North Carolina, South Carolina and Pennsylvania. In order to pursue garnishment, the creditor must file a writ of garnishment with the court. The court must then pass the order on to your employer, who is legally required to comply. The United States Department of Labor allows a creditor to garnish up to 25 percent of your disposable income each pay period. The garnishment order remains in effect until the judgment is satisfied.
Bank Account Levy
In addition to wage garnishment, creditors also may choose to attach assets in your bank account. To levy a bank account, the creditor must file a writ of garnishment with the court. The court must then forward this order to your bank. The bank is required to freeze funds in your account up to the amount of the judgment. In some cases, the bank may also charge you an administrative fee. After a holding period, the bank is then required to turn over the funds in your account to the court up to the amount of the judgment. The money is then given to the creditor.
Considerations
You can attempt to have a summary judgment vacated if you believe you have sufficient grounds to do so. For example, you may be able to vacate the judgment if you can prove that you were unable to answer the summons or attend the court date due to circumstances beyond your control. If a judgment is entered against you and you do owe the debt, you can attempt to avoid garnishment by working out a payment or settlement agreement with the creditor. If a garnishment order is issued against your bank account, you may be able to exempt certain types of income under federal guidelines.
0 comments:
Post a Comment