Creditors suing you for debts you owe?

We all know owing a debt is sometimes not a good thing as it brings about embarrassment. Creditors can go any length to get their money paid by a debtor. They even have a well deserved reputation of being scary, heartless and rude while trying to get their money from a debtor. Sometimes they reach the extent of trying to harass the debtor that hasn't paid them, which is against the law.

Debtors are often embarrassed and harassed by creditors. They call them before 8:00am without their permission, and sometimes threaten to arrest them for not paying their debt.

The word creditor is not limited to only a bank or a credit card company, but a creditor can be anybody to whom you owe money.

Most of the creditors earn their money by charging interest on the money they lend. Creditors and lenders are often being swapped, but creditors are often used for legal proceedings.

There are various examples of creditors, we have;

● Real creditors which are mostly financial institutions like credit card issuers.

● Personal creditors which are relatives and friends that you owe money to.

● Secured creditors are the one who has the legal right to debtor's properties, the one used as collateral.

● Unsecured creditors are the ones you owe but do not have the right to your properties because you have not agreed to give your property as collateral.

A good example of a creditor is a credit card company.

CREDIT CARD COMPANIES

They are unions or banks that issue credit cards to people, mostly referred to as consumers or small business owners. They order where credit cards can be used. They also help in increasing the payment process at point of sales. Examples of credit card companies are American Express, Barclays, Chase, Capital One to mention but a few. Creditors that work in a credit card company are often called Credit Card Issuers.

LEGAL ACTIONS TAKEN BY CREDIT CARD COMPANIES FOR NON PAYMENT OF DEBT

Actions taken by credit card companies whenever a debtor does not pay off his debt is two-sided. One, they sell your debt to collection agencies [these are agencies that specializes in pursuing people's debt, they are used by creditors to recover funds that are past due] and two, they file a complaint to sue the debtor to court.

Credit card companies most times don't start a lawsuit when debtors don't pay off their debt. Lawsuits are most times not a credit card company resort because the conduct of lawsuits is expensive in terms of money and time, but there are times they don't have an option. Credit card companies don't sue for a small amount of money.

If a credit card company notifies or calls a debtor for a lawsuit by summons and complaints, the debtor literally have less than 30days to respond; and if the debtor does not respond, the court would grant a default judgement and that automatically means the court is in the favor of the card issuers, and they are granted the authority to garnish the debtor's bank account and their wages. They can sue legally to court or put a levy on the debtor's property.

Initiating a lawsuit is influenced by the statute of limitations in some states. Creditors might not collect the debt for close to a year before they then decide to sue, and sometimes six months. Some states have the limitation of unpaid debts for close to 15 years while some 3 years.

STAGES OF SUING THE DEBT HOLDER

Everything in life they say is in stages. There are basically four stages involved for a creditor to sue a debt holder. Resulting in court sometimes is always avoided by creditors because it is expensive. It should be noted that creditors don't sue if the debt is secured by collateral, they would just be in possession of your properties rather than sue. The stages go thus;

● The filing stage - here the creditor files a complaint against you in the court of law. The creditor gives reasons for suing the debtor. They sue for money owed with interests.

● The research stage - As a debtor, smartness and ability to gather information is important. After being summoned to court, it is essential to search for details on the creditor and the accurate amount of debt before paying. It is possible the debt has been written off or is in the statute of limitations. But if the debtor owes the debt then this is the best time to pay.

● The hearing stage - this is the last chance to state one's defense or probably work out a deal to pay. There are times creditors are unable to prove their case; in cases like this, the case is dismissed and the court orders the debt collectors to pay for the debtor's legal fee.

● Judgment - after the earlier mentioned stages, if the judge is against the debtor, then the debtor has to pay the debt but if otherwise, the debtor is sued.

OUTCOME OF BEING SUED BY A CREDITOR

After being charged to court, and the creditor won the case over, the creditor is granted access to have any cash from the debtor's business bank account, assets and income to pay off the debts. They are also granted access to cut your wages close to 25%.

RESOLVING MY DEBTS

Some might ask can I resolve my debt after filing a lawsuit? Well, yes you can resolve the matter potentially by managing the debts and in cases where the debts aren't managed, debt settlement is employed.

The process of offloading all or part of your debts through settlement is called DEBT SETTLEMENT. It is an agreement between the creditor and the debt holder to pay a small amount of the loan balance while the rest is forgiven. It means the lender has agreed to accept a smaller amount of the debt you owe.

Debt settlement is sometimes known as Debt-relief. The debt settlement company serves as a middle man between the lender and the borrower. When the company negotiates the debt with the creditor, the debtor is required to start making some payments to the company till it reaches settlement.

In this case, the debtor won't have to worry about getting sued by the creditor. However, some lenders might not accept the settlement if they have a reason to believe that the debtor can pay the full amount of money they owe.

IS DEBT SETTLEMENT RISKY OR DOES IT HAVE DISADVANTAGES?

This is a question often asked by debtors. Although there are disadvantages to using a debt settlement company due to what they say like reducing your debt by 50%. Well this is true, but it is not as easy as said. There are risks accompanied by debt settlement. Some of which are;

Your credit card account might be closed after the settlement is complete because during the settlement, the credit card isn't in use and not paying bills can damage the credit card. On the other hand, the creditors will not also lend money because of the bad record of not paying back what you owe.

Furthermore, forgiven debts can have additional tax. Settling for a debt can be dangerous because of the additional tax obligations on forgiven debts.

IS THERE A WAY OUT?

Debt settlement is the best way of resolving debts without having to file for bankruptcy and avoid having to carry the burden on your credit history for the next 7-10 years possibly affecting your ability to get a job, rent or buy a property, security clearance, future loans/credits.

CONCLUSION

Creditors suing for debt happens mostly when the debt is so much and a secured debt can be sued. If a debtor is being sued or threatened of being sued instead of trying to settle the debts by debt settlement, chapter 7 bankruptcy is a better option.