What to Do When a Collector is Trying to Sue You


One of the most common forms of debt that individuals struggle with is credit card debt. And the longer you fall behind on payments, the greater chance there is for collectors to come knocking at your door.

In this article, we will first discuss the basics of the collections process, and then delve into the three types of legal action that creditors can take on consumer debt. Finally, we will explore various options that consumers have to resolve their debts and provide a call to action for those in need of emergency debt relief.

Understanding the Collections Process

When you fall behind on credit card payments, your account may be sent to a collections agency. These agencies work on behalf of creditors to collect the debt owed. If the agency is unable to collect, they may then enlist the help of a collection law firm.

At this point, legal action may be taken against you as a consumer. This typically starts with letters and phone calls attempting to settle the debt. However, if these attempts are unsuccessful, the creditor may ultimately decide to file a lawsuit.

If no resolution is made after a lawsuit is filed, the collector may be awarded a judgment. After a judgment is reached, there are typically 3 options creditors can take.

Types of Legal Action

There are three main types of legal action that creditors can take on consumer debt:

  1. Garnishment: This is when a portion of your wages or bank account funds are taken to repay the debt. However, there are four states that do not allow wage garnishments for credit card debt (Pennsylvania, North Carolina, South Carolina, and Texas) 
  2. Lien on property: A lien on property is a legal claim that a creditor has on a debtor’s property as collateral for a debt.
  3. Bank Levy: A bank levy allows creditors to seize funds directly from the debtor’s bank account

In some states creditors can also file for a State Income Tax Refund Garnishment. The goal with this is if the consumer is due a State Income Tax Refund, the refund garnishment orders the State Tax agency to send the refund to the creditor.

Wage Garnishment

Here’s how wage garnishment typically works in the context of consumer credit card debt:

  1. Legal Action:
  • Before wage garnishment can occur, the creditor must first take legal action and obtain a judgment against the debtor. This usually follows a period during which the debtor has failed to make payments on their credit card debt, prompting the creditor to pursue legal remedies.


  1. Court Approval:
  • Once a judgment is obtained, the creditor may seek court approval for wage garnishment. The court will then determine the percentage of the debtor’s wages that can be garnished, typically within the limits set by federal and state laws.


  1. Notification to Employer:
  • The creditor, with the court’s approval, notifies the debtor’s employer about the wage garnishment order. The employer is legally obligated to withhold the specified amount from the debtor’s paycheck and send it directly to the creditor.


  1. Impact on Income:
  • Wage garnishment can significantly impact the debtor’s disposable income, making it more challenging to cover living expenses and other financial obligations. The amount that can be garnished is often limited by federal law to a certain percentage of disposable income.


  1. State Laws Vary:
  • It’s important to note that wage garnishment laws vary by state. Some states have additional restrictions on the amount that can be garnished, providing further protection for debtors.


  1. Possible Alternatives:
  • Debtors facing the prospect of wage garnishment may have alternatives to explore, such as negotiating a repayment plan with the creditor or exploring debt settlement options. Some debtors may also consider bankruptcy, which could provide relief from wage garnishment and other collection actions.


In summary, while wage garnishment is not the immediate consequence of falling behind on credit card payments, it can become a reality if legal action is taken, and a judgment is obtained. Debtors facing financial difficulties are encouraged to seek advice from financial counselors or legal professionals to explore viable options and potentially avoid the serious consequences of wage garnishment.

Bank Levy

A bank levy is another legal process that creditors may use to collect consumer credit card debt. Unlike wage garnishment, which involves deducting money directly from a debtor’s paycheck, a bank levy allows creditors to seize funds directly from the debtor’s bank account. Here’s an overview of how the bank levy process typically works:

  1. Legal Process:
  • Similar to wage garnishment, the creditor must first take legal action and obtain a court judgment against the debtor to initiate a bank levy.


  1. Court Order:
  • Once the creditor has a judgment, they can seek a court order to levy the debtor’s bank account. This court order gives the creditor the legal right to access funds in the debtor’s bank account.


  1. Notification to the Bank:
  • The court order is then sent to the debtor’s bank, instructing the bank to freeze the specified amount in the debtor’s account. The bank is legally obligated to comply with the court order.


  1. Funds Seizure:
  • The bank freezes the funds in the debtor’s account up to the amount specified in the court order. This frozen amount is then turned over to the creditor to satisfy the outstanding debt.


  1. Impact on the Debtor:
  • A bank levy can have a significant and immediate impact on the debtor’s financial situation. It may result in the freezing of necessary funds, making it difficult for the debtor to cover essential living expenses and other financial obligations.


  1. Exemptions and Limits:
  • Some funds may be exempt from a bank levy under federal and state laws. For example, certain Social Security benefits, unemployment benefits, and child support payments are often protected from being seized.


  1. Notification to the Debtor:
  • Debtors are typically notified before a bank levy occurs. This provides them with an opportunity to address the debt through negotiation, settlement, or other legal means before their bank account is frozen.


  1. Legal Assistance:
  • Debtors facing the possibility of a bank levy may seek legal advice to understand their rights, explore potential exemptions, and determine whether there are viable alternatives to satisfy the debt.


You might be asking “How do they find my bank account?” And often times, it’s the same bank account that was used and on file to pay the creditor in the past. In summary, a bank levy is a legal mechanism that allows creditors to collect consumer credit card debt by seizing funds directly from the debtor’s bank account. Like other debt collection methods, it is crucial for debtors facing financial difficulties to seek professional advice to understand their options and potential alternatives to a bank levy.

  1. Lien on property
  • A lien on property is a legal claim that a creditor has on a debtor’s property as collateral for a debt. While liens are more commonly associated with secured debts like mortgages, they can also be used in certain situations involving consumer credit card debt. Here’s how a lien on property may come into play:


  1. Secured Debt Conversion:
  • In some cases, unsecured consumer credit card debt may be converted into a secured debt by the creditor. This often happens when the debtor agrees to use specific property as collateral to secure the credit card debt.


  1. Voluntary Lien:
  • A lien on property in the context of consumer credit card debt is typically voluntary, meaning the debtor agrees to it as part of a negotiated agreement with the creditor. This could involve signing a document that grants the creditor a lien on a particular asset.


  1. Property Types:
  • The property subject to a lien could vary and might include real estate, vehicles, or other valuable assets. The specific terms of the lien would be outlined in the agreement between the debtor and the creditor.


  1. Legal Documentation:
  • To establish a lien on property, legal documentation is necessary. This documentation usually includes a written agreement specifying the terms of the lien, the property involved, and the conditions under which the property can be seized if the debtor fails to meet their obligations.


  1. Risk of Asset Seizure:
  • If the debtor defaults on the credit card debt, the creditor may have the legal right to seize the property specified in the lien agreement. The process for seizing the property would generally involve legal proceedings and adherence to applicable state and federal laws.


  1. Impact on Credit Score:
  • A lien on property, even if voluntary, can have implications for the debtor’s credit score. It may be reported to credit bureaus and could affect the debtor’s ability to obtain credit in the future.


  1. Legal Recourse:
  • Debtors who have agreed to a lien on their property should be aware of the legal recourse available to them. This may include negotiating with the creditor, seeking legal advice, or exploring options to satisfy the debt and release the lien.


Most credit card debt is unsecured, meaning there is no specific collateral attached to the debt. However a court awarded judgement changes the game and can actually put your property at risk. Debtors facing financial difficulties and potential liens on their property should seek legal advice to understand their rights, explore alternatives, and navigate the complexities of debt resolution.


Resolving Your Debt

If you find yourself in this situation, it is important to take action as soon as possible. Here are some options for resolving your debt:

  • Negotiate with the creditor: You may be able to work out a repayment plan or settle for a lower amount.
  • Filing for bankruptcy: This should be considered as a last resort, as it can have long-lasting effects on your credit.
  • Enroll in an emergency debt relief program: These programs offer assistance and support in managing and paying off your debt. Not all debt relief companies take accounts at this stage and if a judgement is already awarded, chances are extremely low the debt would be eligible for any debt consolidation program.


Don’t Wait, Take Action

If you are facing a potential lawsuit from a creditor, don’t wait until it’s too late. Contact us to learn about your options and find out how an emergency debt relief program can help you get back on track financially. Our team is dedicated to helping individuals in difficult financial situations find the best solutions for their needs. Reach out to us today for a free consultation and take the first step towards resolving your debt. Don’t let a lawsuit add to your financial burden – we’re here to help. So don’t wait, take action now before it’s too late.