How to Handle Debt Collection Lawsuits and Bankruptcy Questions

TL;DR

When facing a debt collection lawsuit, it's crucial to respond to summons to avoid default judgments that can lead to wage garnishment or bank levies. You can file for bankruptcy even if you're not behind on payments, which may help your financial situation. Remember that certain funds, like VA disability payments, are exempt from garnishment.

Transcript

hey everybody welcome to our thursday night live john skiba here from the consumer warrior youtube channel and each and every week like we do on thursday night i do a live q a to answer questions uh answer your questions over debt collection lawsuits bankruptcy how to deal with uh serious debt problems that's what we do here i am a consumer protect... Read More

Key Insights

• 🥺 Default judgments can lead to wage garnishment, bank levies, and liens on real estate, making it risky to ignore debt collection lawsuits.
• 👻 The amount that can be garnished from a paycheck varies from state to state, with some states not allowing wage garnishment at all.
• 🥺 Amended complaints require a response, and failing to answer them can lead to a default judgment.
• 💯 It is possible to file for bankruptcy even if you are current on payments, as it can help address future financial difficulties and potentially improve your credit score.
• 😒 Debt collectors can use information from one lawsuit in other legal proceedings against you.
• 🔒 Private arbitration can be costly for corporations, but filing a motion to compel private arbitration may lead to settlement negotiations.
• 🔒 Wage garnishment cannot be applied to certain funds, such as social security disability and VA disability payments.

Questions & Answers

Q: If I have no assets and am getting laid off, how much of my paycheck can debt collectors garnish if they win the lawsuit?

If you are not employed, debt collectors cannot garnish anything from your paycheck. In Arizona, they can garnish up to 25% of each check if you have a job. Wage garnishment can be stopped immediately by filing for bankruptcy.

Q: Do I need to answer an amended complaint if I have already answered the original complaint?

Yes, if the complaint is amended, you have the same amount of time to respond as you did with the original complaint. Failing to respond to an amended complaint can result in a default judgment.

Q: Can I file for Chapter 7 or 13 bankruptcy before falling behind on payments?

Yes, you can file for bankruptcy even if you are current on your payments. This can be a proactive measure to address future financial difficulties and may even help improve your credit score.

Q: Can debt collectors use information from a federal lawsuit in a state lawsuit?

Yes, if the information is part of the lawsuit, it is likely discoverable and can be used in other legal proceedings against you. Court rulings in one case can also be used against you in another.

Summary & Key Takeaways

• John Skiba hosts a live Q&A session to answer questions about debt collection lawsuits, bankruptcy, and managing debt problems.

• He advises against doing nothing when served with a summons and complaint, as default judgments can lead to wage garnishment, bank levies, and liens on real estate.

• Skiba explains that the amount that can be garnished from a paycheck varies from state to state, with Arizona allowing up to 25% of each check to be garnished.