An 8-part case study of an actual FITZGERALD & CAMPBELL, APLC client who did
Part Two – What Can A Creditor Do If I Don’t Pay Them???
John called back with some very good questions like what happens when you default? What can creditors do to you? Mr. Fitzgerald explained that there are only 3 things they can do when you don’t pay an unsecured debt like this:
1) They can contact you to demand payment. They can call, text, email, mail, even call you at work (until told to stop) to demand payment. Fortunately, in CA if you have a lawyer, they must stop contacting you directly. All communication must be with your lawyer. (This is only true if you have a lawyer- a debt settlement company cannot protect you from collector calls/harassment).
2) Damage your credit. This is the price you pay, at least temporarily, to settle for less than 100%. Once the debt is settled & paid, your credit will be updated to show you owe $0 and therefore improve.
3) Sue you. Fortunately, Fitzgerald & Campbell, APLC also defends these cases in court on a regular basis and sometimes gets better settlements in court. No one wants to get sued, and Fitzgerald & Campbell does not want you to get sued either. However, you cannot let your creditor know you are afraid of a lawsuit. By letting them know you will fight, if necessary, they become more agreeable as no collector really wants to send an account to legal as that means they don’t get their commission! John was pleased to know that if Navient took this route he was covered. And not by rookies. Fitzgerald & Campbell had decades of litigation experience on these exact cases. With actual results and client testimonials.
Bottom line, an unsecured creditor can take nothing from you until they sue you and win the case and get a judgment. Only then can they garnish wages or levy bank accounts. This is why having a lawyer settle your debts is the only way to go.
Click here for: Part Three – What About The Tax Consequences And The Dreaded 1099-C?