When you have fallen behind on your payments to the average creditor (credit card, personal loan, medical/utility bill…), the creditor will begin to take action against you to collect the debt. First, the creditor will send friendly notices in the mail and telephone your home with pleasant reminders. When the reminders do not yield any results, the creditor will send more strongly worded letters and make more aggressive phone calls. If the creditor still does not receive payment, it may send your account to its internal collection department or to an outside collection agency. After that point, the creditor will make a decision as to whether to file a lawsuit against you. The amount of the outstanding obligation does not necessarily determine whether a creditor will choose to sue you. Every creditor has its own policies with regard to collection activity. Some creditors will sue you over a very small balance, while others with larger balances may choose not to sue.
If a creditor has sued you and obtained a judgment, it can attempt to collect on the judgment. With judgment in hand, the creditor can levy on your bank account or seek to garnish your wages. Although you will receive notice of a creditor’s attempts to garnish your wages, you will not know that it is taking money out of your bank account. You will only find out that your account has been levied upon AFTER it has been done.
Another tool available to creditors is the use of an Information Subpoena. An Information Subpoena is a legal demand for you to disclose the location of your assets and to reveal personal information, such as your driver’s license number and bank account information. If you are served with an Information Subpoena, you are required to complete it and return it to the creditor. If you fail to return the completed subpoena, the creditor may file a motion against you, seeking a court order directing you to comply. If you still do not cooperate, the creditor can apply for a court order to have you arrested.
Most creditors will try a combination of methods to obtain payment from you and such a strategy is permitted by law. Yet, there are some creditors who become so aggressive, their actions cross over into harassment. There have been examples of creditors making phone calls late into the night or very early in the morning, repeatedly calling neighbors, relatives or friends or making constant calls to a person’s place of employment. Some creditors have resorted to threats, name calling and making false statements about involving police or the criminal process. Fortunately, these types of actions are prohibited by law. Specifically, there is a federal statute called The Fair Debt Collection Practices Act (FDCPA), which prohibits abusive and deceptive creditor actions. The law prohibits creditors from engaging in collection activity that is abusive and/or deceptive. Creditors must be careful not to violate the FDCPA or they can be sued and forced to pay damages.