Collections FAQ Get back to the life you want to live. A life free from debt.

Frequently Asked Questions About Collections

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  • Q:What should I do if I receive a collection letter?

    A:First, take a deep breath. Second, carefully consider whether you may owe the debt and whether the balance appears to be accurate. Third, is it from a legitimate collection agency? Fourth, consider disputing the debt. Finally, consider contacting an attorney to review the letter and discuss your options!

  • Q:Why should I send a debt validation letter?

    A:First, it temporarily halts collection activity. By federal law, a debt collector may not continue attempts to collect a debt until it provides you with the current account balance, the name of the creditor, the name of the original creditor if the debt was sold or assigned, and a copy of the judgment giving rise to the debt (if there is one).


    Second, it gives you information you need to fully evaluate your options.  

    Finally, it triggers possible liability for the debt collector. If a debt collector does continue to contact you before providing this information, it may be liable for damages under the Fair Debt Collection Practices Act. Damages can include a $1,000 statutory award, your actual damages, and reasonable attorneys’ fees.

  • Q:What should I do if a debt collector continues to contact me after I send the debt validation letter?

    A:Keep a log of all contacts, noting the date, time, and substance of the call. Second, contact an attorney immediately, as the creditor may have violated federal and state law in its attempts to collect the debt. The debt collector may be liable for damages, which can include a $1,000 statutory award, your actual damages, and reasonable attorneys’ fees. We offer a free consultation to discuss your options and determine an appropriate course of action.

  • Q:What can a debt collector NOT do?

    A:Debt collection is legal, but creditor harassment is not. Under federal and state law, debt collectors cannot engage in abusive, harassing, false, misleading, and/or unfair practices in the collection of consumer debts. 


    For example, they cannot threaten criminal prosecution for a lawful activity, threaten to harm you physically, call you repeatedly at odd hours of the night, contact you at work if you’ve told them your office does not permit such calls, or call family and friends and tell them you owe a debt. 

    Please note this is not an exclusive list, and each case should be evaluated on its particular circumstances. If you feel you have been subjected to creditor harassment, please get in touch with us right away.

  • Q:Can my wages be garnished without a court order?

    A:No. Unless the debt collector is the federal government because you owe student loans or back taxes, they MUST file a lawsuit and obtain a judgment to garnish your wages. The collector will need to face several hurdles before obtaining the garnishment order. This includes filing for a hearing on proceedings supplemental, verifying your employment and income, and requesting a final order in garnishment.

  • Q:What should I do if I receive a summons and complaint?

    A:We cannot stress this enough: you only have a certain amount of time to act. Failure to respond within the indicated time frame can result in a default judgment being entered against you. At that point, your case will become more expensive and difficult to defend. If you’ve received a summons, you can call our firm and schedule a free consultation, where we will discuss all your options.

  • Q:What is a summons and complaint?

    A:A summons is typically a one-page document explaining that you have been sued. It informs you that you have 20-23 days to respond before a default judgment may be entered against you, and it provides the contact information for the person suing you or their attorney. 


    A complaint is a document setting out the basis for the lawsuit. It includes the claims asserted by the person suing you, as well as a request for relief (i.e. what the person suing you wants the court to do). If you’ve received a summons and complaint, please contact us immediately.

  • Q:What happens after I receive a summons and complaint?

    A:Depending on how you received the summons and complaint, you only have 20-23 days to respond in order to avoid a default judgment. Typically, an attorney will enter their appearance on your behalf, which is a way to let the court, the creditor, and the creditor’s attorney know that you are represented by counsel. The attorney will also file a motion for enlargement of time to respond to the complaint. In Marion County, a 30-day enlargement is automatically granted by filing a notice. In Johnson County and surrounding counties, the 30-day enlargement is customarily granted. In the meantime, the attorney may send out requests to the creditor to produce documents supporting the debt, investigate the basis for the debt, and discuss your options to resolve the matter.

  • Q:What is the difference between a notice of claim and a complaint?

    A:A notice of claim is filed in small claims or magistrate court, while a complaint is filed in circuit or superior court. A notice of claim serves the same purpose as the complaint, but it is typically only a page long, while a complaint is often several pages in length. In either event, they should not be ignored!

  • Q:What is the difference between small claims court and a circuit or superior court?

    A:The purpose of small claims courts is to resolve claims in an informal, speedy manner. They can hear claims with damages of $6,000 or less ($8,000 in Marion County) and eviction cases. The idea is to afford individuals with smaller claims an opportunity to quickly resolve their issues without requiring an attorney or knowledge of the rule of evidence and trial procedure. 


    Circuit and superior courts, on the other hand, are more formal and can hear claims of any amount. They follow the rules of evidence and trial procedure, and they often take longer to process claims because the cases are more complex. 

    In either event, it would be a good idea to have an attorney evaluate your case to determine whether you would benefit from representation.

  • Q:I received a notice stating that I must appear for an "initial" or "uncontested hearing" in small claims court. What is this?

    A:Most small claims courts operate on a two-hearing schedule. The first hearing is the “initial” or “uncontested” hearing. You will want to attend this hearing, as it is your opportunity to either admit or deny the amount claimed due or the basis of the claim. If you admit to the claim or fail to appear, the court may enter judgment at that time. 


    If you deny the claim, then the court will schedule the case for a second “contested” hearing roughly three months later. At that time, you will want to bring with you all documents, witnesses, and any other evidence to support your position. Be careful though – some claims courts, like the Perry Township Division in Marion County, will use the initial hearing as your one and only chance to present evidence. If you receive a notice of claim, be sure to contact the court to confirm their procedure.

  • Q:A judgment was entered against me. Is there anything that I can do?

    A:Yes. Depending on when the judgment was entered, you may be able to file a motion to correct error, appeal the decision, or request that it be set aside. The key is to act quickly, as any delay may jeopardize your chances of successfully reversing or vacating the court’s decision.

  • Q:Is it true that a judgment automatically becomes a lien on my home?

    A:Yes. Under state law, judgments entered in the county in which you own real estate automatically “attach” to that property to the extent that you have any equity in the property. If a judgment was entered in another county, the judgment creditor can docket the judgment in the county you reside so that it, too, becomes a lien. 


    If you discover a judgment lien on your home, call us for a free consultation to discuss your options. Depending on the amount of equity in your home, one such option may be to avoid or strip the lien off your home through bankruptcy.

  • Q:Do judgments accrue interest?

    A:Yes. Indiana law allows for judgments to accrue interest. The accrual period lasts from the time the judgment is entered to when it is paid or satisfied. Currently, the rate is 8% per year. When it comes time to sell your home, the judgment creditor can demand payment or else hold up the sale.

  • Q:How long does a creditor have to collect or enforce a judgment in Indiana?

    A:Under Indiana law, a judgment remains a lien on any real estate for a period of 10 years and may be renewed for another 10 years. That said, a money judgment may be collected from a person up to 20 years from the date of its entry.

  • Q:How does a creditor collect or enforce a judgment in Indiana?

    A:Assuming the judgment became a lien on real estate, the judgment creditor could foreclose its judgment. Foreclosing the judgment is done in the same manner as foreclosing a mortgage. The judgment creditor files a lawsuit, obtains a judgment, and sells the property via sheriff’s sale. 


    Alternatively, the judgment creditor could wait for the property to be sold by its owner, at which time the judgment would appear as a lien on the title. The judgment creditor could then demand that the judgment be paid prior to or at closing. A more common option is for the judgment creditor to obtain a wage garnishment. This is performed by filing for a proceedings supplemental. At the judgment creditor’s request, the court will schedule a hearing and order the debtor to appear to answer as to what assets and income they can use to pay the judgment. The judgment creditor will also send written questions to the debtor’s employer to be answered under oath, verifying the debtor’s employment. If there is sufficient income available, the court will then enter a final order of garnishment.

  • Q:What is a hearing on proceeding supplemental? Why am I being ordered to appear in court?

    A:If you’ve received this motion and/or an order to appear in court, chances are a judgment was entered against you. A proceedings supplemental hearing is the creditor’s opportunity to ask you questions under oath as to what assets and income you have to satisfy the judgment. The order to appear is to help ensure your compliance. While you can’t be put in jail for not paying a debt, you can be jailed for failing to follow a court order to appear. So it is very important that you contact the court to confirm the date and time of the hearing.

  • Q:What is a wage garnishment?

    A:A wage garnishment is an order from a court or a government agency that is sent to your employer. It requires your employer to withhold a certain amount of money from your paycheck and send this money directly to the judgment creditor.

  • Q:How much of my wages can be garnished?

    A:Indiana law allows judgment creditors to garnish whatever is less: 25% of your wages (after taxes) or your disposable earnings minus 30x the minimum wage. 


    For instance, let’s say you earn $800 per week, and your disposable earnings are $600 after taxes. Thirty times the current federal hourly minimum wage ($7.25) is $217.50. This means your wages can be garnished up to $150 (25% of $600) or $382.50 ($600 minus $217.50) per week. As a result, your wages may only be garnished up to $150 per week because that is less than $382.50.

  • Q:What if I can't afford a wage garnishment?

    A:There are some options. Indiana law allows for a reduction in the garnishment amount to as much as 10% of gross wages, but this requires a showing of “good cause.” Other options may include negotiating with the judgment creditor for lower, voluntary payments or an assignment of tax refund proceeds. Bankruptcy may also be an attractive option, as it immediately halts further garnishments and could eliminate the underlying judgment amount altogether.

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