The doorbell rings and you are handed a summons regarding one of your past due credit accounts.

Now what?

First…DON’T PANIC!

• You are not going to jail!
• You most likely (about 99.9% of the time), will not go to court!
• They are not going to come take all of your belongings!

Next…DO NOT IGNORE THE SUMMONS!

For the sake of this article, we're talking about unsecured debts such as:

• Credit cards
• Personal loans
• Medical bills
• Personal line of credit
• Store cards, etc.

When a creditor cannot get a consumer to pay as agreed they may choose to start legal action in order to collect the debt.

A CLAIM will be filed in the county court where you reside.

Then, you will receive a SUMMONS. This is usually hand delivered.

The summons will state something to the effect that you have 20 or 30 days after receipt of the summons to APPEAR IN COURT TO ANSWER THE CLAIM.

An ANSWER is your side of the story if you feel you do not owe the amount of the claim.

Now, just because you don't like the additional interest, late fees and now court costs that have been added to the claim doesn't matter!

So, if you owe the debt, there is no reason to spend the time or money for an answer and NO, YOU DO NOT NEED TO GO TO COURT.

OK, THEN WHAT SHOULD YOU DO?

CONTACT THE CREDITOR OR COLLECTION ATTORNEY FOR THE CREDITOR!

If you are employed  and receive normal W-2 wages(not self-employed, we’ll  get to that later), then you should try to work out a repayment plan so that they don't proceed with legal action.

The Plaintiff is the Creditor and since the collection agency failed to get some kind of payment or repayment plan from you has decided to take the legal route in order to force your hand.

And, IT WORKS! You might have ignored the letters and calls up until now, but now they have your attention!

If a repayment plan cannot be agreed upon, then the creditor may decide to go ahead and apply for a court date.

They will win the judgment in favor of the plaintiff by default, as there is no need for you to show up as you have no defense…you owe the debt!

With a judgment entered in favor of the plaintiff, they can now seek to:

• Garnish your wages or
• Levy you bank account

But again, DON’T PANIC!

A wage garnishment is usually 25% of you net take-home pay, and your employer has no choice but to comply with the court order.

For most people, losing 25% more of your income would be devastating, and you would have to seek bankruptcy protection (Chapter 7 or 13).

But hold on… there is another option:

Most creditors will agree to a STIPULATED AGREEMENT.

It is an agreement (sometimes filed with the court) whereby you agree to pay $XXX.00 per  month until the entire balance (including court costs, attorney fees and back interest) is paid-in-full.

If you can and do get such an agreement, GET IN WRITING before sending any funds!

If you have a source of funds available (401(k), family, friends) so that you could get around 50% of the balance all at once, the creditor may accept that and close the claim.

Once again, GET IN WRITING before sending any funds!

BUT WHAT IF YOU ARE UNEMPLOYED, SELF EMPLOYED OR RETIRED?

Certain forms of income are exempt from wage garnishment:

• Unemployment income
• Social Security or Pension income
• Disability income
• Child support
• And in most states, net income

For more information about wage garnishment, visit: US DEPARTMENT OF LABOR.

If all of this is a little intimidating, you may need our help. We have been helping our clients settle accounts and avoid wage or bank garnishment for over 8 years and have the experience that you may need.

For a FREE, NO OBLIGATION review of your situation, click here.