“ In some cases you may also be called to appear in court for something called a “debtor’s examination”, in which case, a bench warrant for your arrest may be issued if you ignore it. Sorry, but you can’t mess with the judge!”
HAVE you been sued or threatened to be sued by a creditor for an outstanding debt that you couldn’t pay? What are you doing about it?
Serious debt problems can put your financial security at risk. I am always perplexed as to why people wait until things get worse before taking action. For example, if you have just been sued by a creditor, the best time to find out what your options are is NOW, not after the creditor has obtained a judgment against you. Why is this important?
If you are already pulling your hair out just trying to make ends meet with your limited income, how much more painful would it be if your salary got garnished? Or what if the creditor emptied your bank account by doing a bank levy when you least expected it? Can you live on less income and still keep the lights on? If you are a homeowner, the judgment creditor can also place a lien on your property. This makes the creditor a “secured creditor” and the lien becomes an “encumbrance” on your property.
What this means in layman’s terms is that if you ever decide to sell your house in the future, you will need to pay the judgment amount in full, plus all the interest that has accumulated since the lien was recorded. Pretty convenient for the creditor, don’t you think? Like money in a savings account that earns interest, they just wait for the day you sell your property so they could collect on their investment.
Now if you have several creditors and they all got judgments and filed liens against your property, the lien amounts could potentially exceed your equity in the property at the time of the sale. This could make it IMPOSSIBLE for you to sell your property especially since you still have to pay your real estate broker. Is this what you want to have to deal with when the time comes? Thus, your home which you had originally thought to be “a good investment” turns out to be worthless!
But what happens if you have no assets? Well, if you’re unemployed and own nothing, maybe you can tell the creditor to go “pound sand”. In legal parlance, you may be “judgment-proof”. What this means is that although the creditor has a judgment against you, it may be worth no more than the paper it’s written on if the creditor is unable to collect. Thus, you may have to put up with the harassing phone calls and the nasty collection letters (In some cases you may also be called to appear in court for something called a “debtor’s examination”, in which case, a bench warrant for your arrest may be issued if you ignore it. Sorry, but you can’t mess with the judge!) Other than that, if you own nothing, obviously, there’s nothing to lose.
The reality, however, is that most people at least have a job and that is all a creditor needs to know before proceeding with a lawsuit. Once you’ve been sued, things could get ugly pretty fast. If you have a bank account where you keep what little savings you have and where your paycheck gets direct-deposited, the creditor could take all your money in one fell swoop and you’d be scratching your head trying to understand what just happened.
Since 1997, I have helped thousands of clients get out of debt. Let me help you determine if bankruptcy is right for your situation and/or if other options are available. Call Toll-Free 1-866-477-7772 to schedule a free office consultation. We have offices in Los Angeles, Glendale, Pasadena, Cerritos and Valencia.
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None of the information herein is intended to give legal advice for any specific situation. Atty. Ray Bulaon has successfully helped thousands of clients in getting out of debt. For a free attorney evaluation of your situation, please call Ray Bulaon Law Offices at TOLL FREE 1 (866) 477-7772.