What To Do Next
You need to develop a clear, sensible, workable, realistic strategy for dealing with any debt collection or foreclosure lawsuit that has been filed against you.
strategy: a careful plan or method; the art of devising or employing plans toward a goal
Just remember that you don't have much time to decide what to do, and if you stick your head in the sand and deny how serious your situation is, the people who are suing you will decide your fate. The earlier you take control of this situation, the better.
Let's Review Your Options
When all is said and done, there are really only seven general approaches to resolving a lawsuit. Some are better than others. We refer to these seven methods as The Seven Strategies. Here they are:
1. Do nothing.
2. Pay the debt in full.
3. Negotiate and settle the debt, with a reduced lump sum or a payment plan.
4 Fight back and defend.
5. Consolidate your debt and reorganize your finances with a Chapter 13.
6. Get a fresh start with a Chapter 7.
7. Run and hide.
Let's take a look at each strategy.
Strategy No. 1: Do nothing.
Doing nothing is seldom a good choice for most people. You surrender your rights, and you leave yourself to the mercy of mortgage servicers, debt scavengers, collection agencies, and credit card companies. When you do nothing, the creditor may get a money judgment against you that could result in a lien being placed against your house, your wages garnished, and your bank account.
The only time that doing nothing might be the right thing is when you are what is called “judgment proof” and if there is never any hope for your financial situation to improve.
If you own or are buying a home or other real estate, if you ever have a chance of inheriting any property, if you have a job or hope to get one, if you have or hope to have one day a checking or savings account or any property of value --- then you cannot afford to ignore a lawsuit.
Strategy No. 2: Pay the debt in full.
If you had the money to pay the debt, they wouldn’t have had to sue you. But you know you don’t. Sure, you can beg from friends and relatives, borrow from a finance company, sell something you worked hard to buy, pull the money out of your 401(k) and have adverse tax consequences and a 20% penalty, or win the Powerball.
Strategy No. 3: Try to negotiate and settle the debt.
There are two ways to settle: either pay the creditor a lump sum for less than the full amount of the debt, or work out a payment plan in which they continue to run up interest and attorneys fees and you just pay, pay, pay every month for a long, long time.
The problem with this strategy is that the creditor usually wants too much, and has no incentive to negotiate with you if you own a house or have a job.
Strategy No. 4: Fight back and defend.
A lawsuit by itself is just a bunch of allegations may or may not be true. Even if the allegations are true, they must be proven. If you file a formal response to the lawsuit, there must be a trial before a judge, who will decide the case according to the law and the evidence.
Many debt collectors cannot win their case if you force them to go to court because they can’t prove that they own the debt or they don’t have the necessary records to prove the amount owed or the debt is past the statute of limitations. The dirty little secret of the collection industry is that they sometimes file lawsuits to intimidate the debtor into calling them working out a payment arrangement. Some collectors have no intention of ever going to court if the debtor hires a lawyer and puts up a fight.
Strategy No. 5: Consolidate debt and reorganize with a Chapter 13.
A Chapter 13 proceeding is basically a bill consolidation plan. If you qualify, it puts an end to the lawsuit and gives you up to five years to work out a payment plan with all of your creditors. You pay what you can, and the creditor is required by federal law to give you the opportunity to pay back your debt over time.
Strategy No. 6: Get a fresh start with a Chapter 7.
Chapter 7 bankruptcy eliminates most of your debts and gives you a chance to get back on your feet. It is a drastic step, but it is usually better than a wage garnishment or a bank account seizure. It damages your credit but you’ve already been sued, your credit is probably already pretty bad. In some cases filing a Chapter 7 bankruptcy can actually increase your credit score after two years because the credit bureaus are required to zero out the balance due on all the debts owed on the date you file bankruptcy.
Strategy No. 7: Run and hide.
You can run, but you can’t hide. In this day and age, with computers and internet and Google, they WILL find you.
Need Help Deciding? Call Us at 504-309-3304 for a Free Consultation
About Our Law Firm
We are a private, for-profit law firm located the metropolitan New Orleans area. The name of our firm is William G. Cherbonnier Attorney at Law LLC. We have two convenient offices, one on the Eastbank on Causeway Boulevard in Metairie close to Lakeside Shopping Center, and the other on the Westbank in Gretna about a mile off the Expressway.
Who We Are
We are consumer defense attorneys. We represent individuals and small businesses who have be sued by banks, mortgage servicers, credit unions, debt buyers, finance companies, payday loan companies, and other lenders. We represent consumers only, and never the businesses who sue consumers.
We believe that no one should try to represent himself in a debt collection or foreclosure lawsuit, and we produced this website to try to explain the lawsuit process and help Louisiana consumers find a lawyer that will represent them for a fair and reasonable price (or for free if they qualify for legal assistance).
How To Reach Us
To schedule a free telephone consultation or an in-person appointment at one of our New Orleans area offices, please call us at 504 309-3304 from 8:30 a.m. to 5:00 p.m. weekdays.
If it's after hours, you can send us an email to info@LawsuitQA.com.
You can also fill out our contact form.
Directions and Map
Find directions and a map to our Eastbank and Westbank offices on our Contact page.