Creditor Negotiations May Still Be Possible after the Default Judgment

chalk board reading "financial trouble?"

Consumer debt just continues to grow in the US, with recent news pointing to second quarter numbers that show an increase of $454 billion from one year ago. Examining results from the cited New York Fed survey, economists see that delinquencies were still at 2.3 percent—same as the first quarter—and student loans declined ever so slightly in delinquencies from a rate of 8.9 to 8.6 percent. Auto debt increased by $48 billion from one year ago, credit card debt by $45 billion, and mortgages by $308 billion.

Such spending is great for the economy, if most consumers can pay their bills; unfortunately, that is not always the case, and many financial analysts are waiting for the consumer debt bubble to burst as lenders keep lending and consumers keep spending. On a national level all it takes is a slowing economy and more borrowers who can’t keep up with the debts they have incurred—for your personal economy, however, today’s numbers and projections for the future (whether good or bad) may mean very little if you are already struggling.

Troublesome debt is usually signaled by aggressive collections activity. A bevy of phone calls and threatening mail (as well as continued offers for settlement) may be directed at you after you miss the first couple of payments. And while you may have just lost track of your budget or given into temptation and spent too much on vacations, eating out, or retail items, for most consumers there is a defining moment as a personal issue takes hold and makes a significant financial impact. This could be unemployment or a large decrease in hours, sickness or an accident, divorce, or even just hitting rock bottom due to massive student loan payments (which today are over $350 a month for borrowers in the 20- to 30-year-old range).

While it is in your best interest to consult with a debt protection attorney from a firm like Fitzgerald & Campbell, APLC as soon as you realize you are in financial distress and cannot pay your creditors, if you have already been served with a collections lawsuit, act quickly. Work with your attorney to see that response is filed within the allotted 20 to 30 days. You may choose to fight the lawsuit (and this may be much easier than you think!) and win, simply by asking the debt collection company to prove that they bought your account.

If you do not want to fight the lawsuit, the creditor will likely still be very amenable to a settlement at a discounted rate; however, without a response to the lawsuit at all (check with your attorney to see if you might still be allowed to file a late response), the judge will probably grant a default judgment against you, and quickly. Although delinquencies and a collections lawsuit are detrimental to your credit, the default judgment allows the creditor to take much more serious action against you in cutting into your wages (up to 25 percent of your disposable income), or seeing the debt satisfied through freezing your bank accounts or seizing property.

Speak with your attorney before repercussions from the default judgment occur. While they may want to file a motion to vacate and go on to fight the initial case, there is still a good chance for negotiation—and again, at a discounted rate. Credit card companies and debt collectors realize that they could spend a lot of time and money trying to collect, even with a judgment, and because of that they are usually willing to settle—even at the last hour.

If you are concerned about impending creditor lawsuits or fighting a default judgment, consult with an experienced law firm like Fitzgerald & Campbell, APLC as soon as possible. A solution can be found to help you through any of these issues, even if a judgment has already been granted.

Speak with an attorney from Fitzgerald & Campbell, APLC as soon as possible to examine your options. Our attorneys have decades of experience in serving clients as they navigate through challenging financial situations, to include student loan issues, bankruptcy, and other debt management processes. We are here to help! Click here to schedule a free 30-minute consultation, call us at (844) 431-3851, or email us at info@debtorprotectors.com.