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What will the courts do when a creditor sues you for nonpayment?

On Behalf of | Mar 16, 2022 | Bankruptcy

People fall behind financially for all sorts of issues. Maybe you were hurt in a car crash and the other driver didn’t have insurance. You know you can sue them, but you have bills piling up right now, and the hospital wants to take you to court because you haven’t made payments on your medical debt.

Perhaps you just slowly added to your balance on your credit card until there was no more usable credit. Now you don’t have the money to buy groceries reliably and have to make huge payments on the debt each month. When creditors lose their patience and decide to take action against you for non-payment, you will face a lawsuit in civil court.

What potentially happens when the courts side with your creditor?

The Florida courts will garnish your wages over a debt

You already have more bills than income and worry about your financial future. If a creditor sues you for falling behind on payments, the judge hearing the case might agree to garnish your wages. A wage garnishment can be a major hardship. It might mean the loss of up to 25% of your disposable income just to help repay the one debt.

You typically cannot argue against the garnishment unless you can prove that the creditor has misrepresented your payment history or the validity of the debt. Judges will potentially sympathize with you if you have a compelling reason for financial hardship, but they must ultimately uphold the law and the contract that you signed.

Unless you successfully defend against the creditor’s claims in court, the judge hearing the case will issue a judgment in the creditor’s favor and award them a garnishment. Your employer will have to cooperate with the garnishment, so the funds come out of your income before you ever receive your paycheck.

Bankruptcy can prevent a creditor lawsuit

When a business serves you with papers for a debt-related lawsuit, there is no need to panic. Yes, the lawsuit could lead to major financial consequences, but it doesn’t have to go to court. With a timely filing for personal bankruptcy, you can prevent creditors from garnishing your wages or even securing a judgment against you. When you file, you receive an automatic stay that will temporarily stop creditors from collecting on your debt, including through the civil courts.

Learning more about wage garnishment and bankruptcy can help prevent another financial hardship from complicating your circumstances.

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