If you cannot keep up with the minimum payments due on your credit cards, a creditor or debt collector may decide to file a CLAIM against you!
If this happens, you will receive a SUMMONS.
The summons will show who the PLAINTIFF is.
This is the creditor or Debt Collector.
You will be named as the DEFENDENT.
The summons will state the particulars:
How much the debt is, etc.
It will also say something like...
You have 30 days to APPEAR and give an ANSWER.
This DOES NOT mean that you have to go to court in 30 days!
It means that if you have WRITTEN PROOF why you do not owe this CLAIM/DEBT, you have 30 days to submit your ANSWER to the court.
This ANSWER must be in the proper legal form and often requires an attorney to prepare and deliver to the court.
Not only will you have to pay the attorney, you will also have to pay a FILING FEE!
If you know you owe the debt, there is no use wasting your time and money.
NOW WHAT HAPPENS?
This is where a lot of people get themselves into trouble by ignoring the summons!
- YOU CANNOT IGNORE THE SUMMONS!
- IT WILL NOT JUST "GO AWAY"!
If you ignore the summons and the court awards the PLAINTIFF a DEFAULT JUDGMENT, then the PLAINTIFF has options to collect on the judgment:
1) If you have earned income (mainly W-2 income), they can apply for a WRIT OF GARNISHMENT on your wages.
In most states, this is 25% of your AFTER TAX/TAKE HOME income!
Let's say you earn $5,000/month and your over-all tax rate is 30%.
That means your after tax/take home is about $3,500.
If you are garnished, your employer has NO CHOICE but to comply with the WRIT OF GARNISHMENT or face legal action.
That means that your employer would have to send 25% of the $3,500 to the PLAINTIFF! THAT'S $875, leaving you only $2,625 to live on!
OR...
2) The Plaintiff could apply for a BANK GARNISHMENT!
If awarded, a notice is sent to your bank and any funds you have in your checking and/or savings would be frozen and sent to the plaintiff!
That would be devasting!
Yes, there are EXEMPTIONS on what "TYPE" of income deposited in your account can be garnished such as income from:
- Social Security benefits
- Supplemental Security Income benefits (Disability)
- public assistance benefits
- unemployment benefits
- veteran's benefits
- child support, and
- federal employee and civil service retirement benefits.
But, the problem is twofold:
Even if your bank account SHOULD BE exempt, many times the bank does not protect you and your funds are FROZEN FOR A LONG TIME!
The bank account is NOT PROTECTED from garnishment if you CO-MINGLE exempt funds with NON-EXEMPT FUNDS.
Let's say you have your Social Security and Retirement checks deposited automatically in your bank.
You do a little "side job" or even earn a few dollars part-time and deposit that money in the same account.
You just CO-MINGLED funds and now all of those funds are open for garnishment!
Starting to get the picture?
There are several options on how to deal with a SUMMONS that can prevent all the above, but you have to be PRO-ACTIVE.
In most cases, a STIPULATED AGREEMENT negotiated.
This is a basically an agreement saying as long as you pay such-in-such, the Plaintiff will not apply for garnishments.
The Stipulated Agreement is filed with the court and once it is completed or "satisfied", it is removed.
It is also possible to negotiate a SETTLEMENT for less than the balance claimed in the summons.
This is usually about 70%-80% of the balance and usually must be paid in a lump sum or in some cases, over a period of time.
To summarize...
If you receive a SUMMONS, you need to take care of it as soon as possible to prevent a judgment and potential garnishment or bank levies.
If you receive a SUMMONS, it usually means you have more debt than you can handle. We can help:
Living in Texas (I grew up in Dallas) has a lot of advantages, but none as important as protection from debt collectors.
