Steps to Take When You are Unable to Pay a Debt or it Goes to Collection 10.13

Circumstances such as a job loss or other financial hardship may arise causing you to default on your debt. When this situation occurs, there are some steps you can take to avoid a debt from going to collection in the first place such as calling, emailing or writing to the creditor and making payment arrangements. The creditor may be able to allow you to skip a full payment or two and just pay the interest or make a partial payment and then catch up later, lower the interest or re-adjust your payments making them more affordable for you.  It does not hurt to ask. If they won’t work with you, then you should speak with an Indiana credit counseling attorney for legal assistance.


Collection Practices 

A debt typically goes to collection after you fail to pay the creditor within 60 to 90 days after the initial due date. Once the debt has gone to collection, under the Fair Debt Collections Practices Act, the creditor must send you written notice of the attempt to collect the debt. You then have 30 days to respond from the time you receive the notice to dispute the debt, pay or settle the debt and request that they remove the debt from your credit. You can also dispute the debt with the three major credit agencies, Equifax, Experience and TransUnion, and they will contact the creditor. If the creditor does not respond to the creditor bureaus within 30 days, then the creditor bureaus must remove the debt from your credit report permanently. However, this does not relieve you of the liability to pay the creditor or collection agency if you owe the debt.


What Happens if You Ignore a Collection Notice or Lawsuit Against You?

If you ignore the collection notice, the collection agency can sue you and get a judgment against you if you do not respond to the collection notice within the 30 day time period. Under Indiana law, a creditor can sue you for any oral or written contract concerning the payment of money or a promissory note within 6 years from the time you incurred the debt. If you make a promise to pay, the the statute of limitations starts running from the date of your promise. The collection agency can obtain a default judgment against you if you do not respond to the lawsuit. Or if you lose the case in court and obtain a judgment against you, they can also put a lien on your home or other property or attempt to garnish your wages or bank account to collect the debt.

A judgment can be enforced for 10 years under Indiana law, unless your creditor renews the judgment for an additional 10 years. It is much harder to get judgments removed, and you will need the assistance of an Indiana credit counseling attorney to help you. The attorney may be able to file a motion to vacate the judgment during the statutory time allowed to do so if you can prove you were sued by mistake, or you paid the debt and have a cancelled check or other receipt to reflect the payment was received by the original creditor or collection agency.


Indiana Credit Counseling Attorney

An Indiana credit counseling attorney can help you negotiate debt settlement with your creditors or help you fight an attempt to collect a debt against you such as judgments and garnishment orders. The attorney can represent you in court and assist with other debt matters, including filing for bankruptcy if you have a lot of debt and are unable to pay your creditors.