Unsecured creditors (like credit cards and medical bills) have little legal ability to actually collect on their debts. Outside of going to court, they can only send you a bill or call you on the phone to ask for payment. The only way to increase their ability to collect is to file a lawsuit. The creditor’s purpose in filing a lawsuit is to get a judgment. Once the creditor obtains a judgment, it becomes what attorneys like to call a “judgment creditor.”
As a judgment creditor, the creditor has more legal abilities to attempt to collect the debt, including placing a lien on real estate, garnishing wages, or seizing bank accounts. These days, it is uncommon that a creditor will place a lien on a house given that most homes don’t have the equity to support a lien. Most judgment creditors elect to garnish paychecks or bank accounts.
Aside from a few key exceptions, these judgments obtained by creditors can and are routinely discharged in bankruptcy. Bankruptcy can also prevent or stop a garnishment that may have already started.
If a lawsuit has been filed against you, don’t just stick your head in the sand. Contact an experienced Arizona bankruptcy attorney at (480) 648-8975 to schedule a FREE consultation. You need to know your options.