Collection Lawsuits in the Face of Unemployment During COVID 19

woman rubbing face under glasses

If you have lost your job and all forms of income due to COVID-19, it is probably little consolation to hear that tens of millions of Americans are in the same boat. As unemployment benefits begin to diminish from what was initially available in 2020, you may be concerned about what to do in terms of paying the basic bills (utilities, rent, mortgage, car, prescriptions, groceries, etc.), not to mention debt that was already hanging around.

For most Americans, there was already significant debt load to worry about; in fact, you may be well aware that debt in 2020 was already reaching historical highs on both the consumer and household levels. On the personal level, this could mean that you were already losing sleep at night and worrying about what would happen next.

While the terror of a potentially fatal virus invaded the US (and the world) in 2020, some strange benefits arrived for debtors too. Some student loans could be deferred, creditors and debt collections agencies were forced into sympathy, and suddenly process servers delivering collection lawsuits were put on hold as courts closed in most counties until summer and even thereafter. Evictions have been put on hold as well through March of 2021.

Now, if you have been served with a collection lawsuit, you may be wondering what strategy to take in light of unemployment or significant loss of hours. In speaking with a skilled collection lawsuit attorney from Fitzgerald & Campbell, APLC, you may find that replying to the lawsuit and working to launch a defense are the best options—or this may be the time to negotiate and try to pay off the debt at a highly discounted rate in one lump sum (not always easy to do for those who have no existing income).

Ultimately, this is not the time to go it alone. With proper legal attention, you should be able to deal with debt overall or work out different agreements with creditors who may just be happy to see any funds coming in at all these days. Another strange perk of living amidst a viral pandemic: creditors are much more willing to work with account holders who may be in delinquency or are in the process of being sued.

While you may think that the goal is to avoid being sued, it goes further than that: a collection lawsuit is undeniably a headache to deal with, but living with a default judgment can be exponentially worse. Fending off such action may mean taking on the creditor in court—but winning against them in many cases is as easy as showing that you are going to put up a fight, and asking them to prove they have standing to sue you in the first place.

Debt collection agencies often have very shoddy documentation to show, and may back down as soon as they realize you are going to cost them time and money. On the other hand, if you don’t show (and surprisingly, this is what most defendants choose) up at all, a default judgment could be granted almost automatically. This means that if you have a job, your employer will not only be apprised of the lawsuit, but they could be garnishing up to 25 percent of your deductible income.

If you are not employed, there is the potential for levying of your bank account (with funds frozen until you satisfy the debt), along with loss of assets in seizure by local law enforcement. Act before such negative repercussions occur.

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.

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