What happens when a debt goes to a lawyer for debt collection?

You’ll be getting letters and phone calls for a while from the lawyers seeking to collect. You can try paying a little at a time, even $5 a week or something, and that might help. Ultimately, however, the lawyer will take the debt to court and get a judgement against you. You will be notified ahead of time so you could appear and state your side of the case if you want. After judgement is entered they have the ability to garnish any wages you make in the future or place a lien on any property you own. It will go on your credit rating and lower your rating a LOT. I don’t know if they can garnish any unemployment you get.

They will attempt to contact you to work out a payment plan. If you do not cooperate with them, they will eventually take the case to court and get a judgment against you. The judgment will allow them to garnish your wages and/or place a lien on any property that you own (your personal residence would be exempt). The judgment will last for 10 years, so when you do get a job they can start garnishing your wages. It will also show up on your credit report. Most banks would never lend you any money with an outstanding judgment, so you could forget about borrowing money again.

I would suggest when the law firm contacts you, you explain to them that you are out of work and you start paying them once you get a job. Maybe even, as a sign of good faith, sell something you own and reduce the debt.

I am a loan officer, and part of my job is collecting on past due payments. I am willing to work with people as long as they keep in communication with me. Too many people just bury their heads in the sand and think the problem will go away. So if you are upfront and forthcoming with the law firm, I’m sure they’ll work with you while you look for a job.

To answer one of the questions above, no they can not garnish unemployment.

give them a patient hearing and work out any programme suitable to you with the resources available. you have to start making payment in installments at least to avoid legal action. buy some time after discussing with them.

A “lawyer” is no more than a collection agent who is trying to collect from you. Sometimes collection agencies work under the license of an attorney. They might just be scaring you.

An attorney can sue, but only if he is licensed to practice law in your state. Will he? That would depend on the size of the debt and their ability to collect from you.

For starters, send the collection agency a “Debt Validation Letter”. Make them verify that the debt is yours and that they have legal right to collect.

Include a paragraph stating that they cannot contact you again until the debt is validated. Send the letter by certified mail and keep copies for your records.

The law firm is acting as a collection agency. Read up on the Fair Debt Collection Practices Act. Send the law firm a letter stating, “I dispute the validity of this debt. Please send me written verification”.