I have seen an uptick so far this year in people who are getting sued by credit card companies and banks after a foreclosure sale (maybe it is a New Year’s resolution of creditors everywhere to sue more). The thing with unsecured debts like credit card debts, medical bills, etc. is that until they decide to sue you the most they can usually do is call you on the phone and lower your creditor score. They don’t have any collateral attached to the debt so they really can’t take anything from you. This all changes once they sue you and obtain a judgment.
In Arizona a creditor can sue you and get a default judgment against you in about 30-45 days. This is assuming that you do not contest the law suit. Once a creditor gets a court to enter a default judgment against you, the creditor can then file an application to the court to have a writ of garnishment entered. Not only can 25% of each paycheck be garnished but your bank accounts can be drained as well. Further, although less common, if you have non-exempt property such as a boat, cars, motorcycles, etc., armed with a judgment your creditors could seize your personal property.
For most, the thought of losing a full 25% of each paycheck is the final straw in making the decision to file bankruptcy. The filing of either a chapter 7 or chapter 13 bankruptcy will immediately stop any future garnishments. Even if your creditors have already sued you and obtained a judgment the filing of a bankruptcy case will stop all collections efforts against you and can discharge/eliminate the underlying debt.
If you have been sued and are facing a judgment and possibly garnishment of your wages or bank account, don’t delay meeting with an Arizona bankruptcy attorney to discuss your options and how much time you have before you risk losing a good chunk of your wages.
I offer a free bankrutpcy consultation where we can discuss your specific situation. I can be reached at (480) 648-8975.