How to Avoid a Judgment?

Stop Bill CollectorsIf you default on debt then you can usually expect a couple of things to happen.  First, you are going to get many nasty telephone calls and letters from the bill collector.  If the debt is high enough and the collector motivated, then your phone may ring constantly.  If you avoid these calls then they may call you at work, call your family, neighbors, and friends.  The reason for all these phone calls is simple economics.  It is cheaper to call you and harass you until you pay than it is to sue you and collect in the courts.

If you avoid these creditors long enough then eventually they may sue.  In Texas the statute of limitations on debt collection is four years so many creditors will wait until about three and a half years after the last payment before suing.  This allows the debt an opportunity to grow.  The default interest rates for many credit cards are about 30% so during this time period the debt is growing a lot.

Once you are sued you have few options.  You can hire an attorney and fight the lawsuit.  However, if you know you owe the debt then you are probably wasting time and money in defending a lawsuit for collection of a debt you owe.  You may be able to settle the debt for a smaller amount but the savings may be offset by the cost of defending the suit and future tax liability on cancelled debt.  You can also try to settle the debt yourself.  Most debt collectors will want a lump sum payment in exchange for a release.

Finally, you can just ignore the lawsuit.  If you ignore the lawsuit then the plaintiff will get a judgment against you.  In truth, even if you fought the lawsuit the creditor was most likely going to get a judgment.  If you borrowed money and signed a contract accepting credit then you are legally responsible for paying the debt.  The bottom line is that if you owe the money and can’t pay it back then there are very few ways to avoid a judgment.  After the judgment is in place, the next step is to determine whether that judgment can be collected against you.