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One of the most difficult issues a customer can face is the concern that their creditors will file suit against them. When you are not paying your debts, including after you enroll in a settlement plan, creditors may escalate collection activities and even file lawsuits.
When necessary, we can refer customers to attorneys so the customer is able to receive help navigating through a lawsuit. We are not lawyers and don't give legal advice - only your attorney will be able to explain the complete process for your state and give you a thorough analysis of your rights.
If allowed, creditors and collection firms may try to intimidate you into doing things that are not necessarily in your overall financial best interest by threatening lawsuits, so it's important to understand the process.
A customer's vulnerability to a lawsuit is based on certain factors. Were your accounts already delinquent when you enrolled in settlement? If so, how delinquent? How much do you owe the creditor? If the accounts have already been charged off then this may bring about more aggressive creditor activity sooner. Do you have any assets that a creditor might be able to attach? If so, you need to consider the likelihood that a creditor might try to use your assets for collecting their debt. For example, equity available in a home might be attractive to a creditor as a way of getting repaid. But don't panic unnecessarily, even equity positions in personal residences may be protected in some states. Your attorney can help navigate the best course of action if a creditor files a lawsuit and makes threats against any of your assets.
Keep lawsuits in perspective. You joined a debt settlement program because you didn't have many other options. If you're in default on your credit, a lawsuit could occur whether you are enrolled in a settlement plan or not. By enrolling in CareOne's Debt Settlement Plan (DSP), you have a strategy for dealing with your financial situation, because you are accumulating money to negotiate a settlement. In addition, many creditors hold off on collection activities pending a potential settlement. Therefore, the threat of a lawsuit must be viewed in this context. We have had great success in getting creditors to understand our client's circumstances even after a lawsuit has been filed. With some creditors this is the most appropriate time to settle. Here are some things to know:
When you're behind on your payments, it should be no surprise that lawsuits can happen. It's important to be prepared, and know what your options are, if you are faced with that situation.
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