When a creditor obtains a default judgment, it gives them the legal right to collect debt in a variety of ways. They are authorized to garnish and freeze bank accounts. They can put a cloud on property titles so that it becomes next to impossible to sell, refinance, or otherwise use the property as a financial asset in any manner.
People in debt who face such draconian measures often turn towards getting legal representation. Avenues for legal recourse may differ depending on the state in question. Every state has its own laws regarding what creditors granted judgments can and cannot do. In general, there are a few methods to obtain direct relief from the courts. There are also ways in which creditor actions can be put on hold to provide time to work out a settlement.
In states such as Texas, homesteads are protected from forced sale by creditors with judgments. However, the creditor may put a cloud on the title. They can also get a writ of execution to seize non-exempt properties.
Similarly, Texas does not allow wages to be garnished. The only exceptions are for recovery of unpaid government taxes, student loans, and court mandated child support and alimony payments. However, wages that are deposited into a garnished bank account can be taken by the lender. Debtors will therefore need to find a way to collect their salary without using the bank account.
Creditors with judgments also have the authority to initiate a discovery process to unearth the debtor's hidden assets. They can ask for sworn depositions regarding assets, wherein the debtor will be answering questions under oath. There are many ways to legally fight back against such actions taken by lenders.
There are process technicalities such as a "Bill of Review" wherein the court order can be reversed if it can be proved that the creditor did not properly serve the debtor. Lenders tend to be more amenable to settlements once they become aware that the debtor has got legal representation. Work out a mutually acceptable repayment plan which includes release of garnished bank accounts and property claims as part of the agreement.
One more option is to file for Chapter 7 bankruptcy protection. This will completely wipe out the debt and end the default judgment. Anyone with a significant amount of debt and no means to pay it off should be able to qualify. Most remaining assets can be saved, and very little of the debt will actually have to be paid.
People in debt who face such draconian measures often turn towards getting legal representation. Avenues for legal recourse may differ depending on the state in question. Every state has its own laws regarding what creditors granted judgments can and cannot do. In general, there are a few methods to obtain direct relief from the courts. There are also ways in which creditor actions can be put on hold to provide time to work out a settlement.
In states such as Texas, homesteads are protected from forced sale by creditors with judgments. However, the creditor may put a cloud on the title. They can also get a writ of execution to seize non-exempt properties.
Similarly, Texas does not allow wages to be garnished. The only exceptions are for recovery of unpaid government taxes, student loans, and court mandated child support and alimony payments. However, wages that are deposited into a garnished bank account can be taken by the lender. Debtors will therefore need to find a way to collect their salary without using the bank account.
Creditors with judgments also have the authority to initiate a discovery process to unearth the debtor's hidden assets. They can ask for sworn depositions regarding assets, wherein the debtor will be answering questions under oath. There are many ways to legally fight back against such actions taken by lenders.
There are process technicalities such as a "Bill of Review" wherein the court order can be reversed if it can be proved that the creditor did not properly serve the debtor. Lenders tend to be more amenable to settlements once they become aware that the debtor has got legal representation. Work out a mutually acceptable repayment plan which includes release of garnished bank accounts and property claims as part of the agreement.
One more option is to file for Chapter 7 bankruptcy protection. This will completely wipe out the debt and end the default judgment. Anyone with a significant amount of debt and no means to pay it off should be able to qualify. Most remaining assets can be saved, and very little of the debt will actually have to be paid.
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