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Frequently Asked Questions About Collections

Learn more about collections defense
What should I do if I receive a collection letter?

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 sending a disputing the debt. Finally, consider contacting an attorney to review the letter and discuss your options!

Why should I send a debt validation letter?

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 in order to 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.

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

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 to discuss your options and to determine an appropriate course of action.

What can a debt collector NOT do?

Under federal and state law, debt collectors cannot engage in abusive or harassing, false, or misleading, and/or unfair practices in the collection of consumer debts. For example, they cannot threaten criminal prosecution for a lawful activity, threaten harm you physically, call you repeatedly at odd hours of the night, contact you at work if you’ve informed them that your office does not permit such calls, or call family and friends and tell them that you owe a debt. Please note that this is not an exclusive list and each case should be evaluated on its particular circumstances. If you feel that you have been subjected to abusive or harassing, false, or misleading, and/or unfair practices in an attempt to collect a debt, please to schedule a free consultation.

Can my wages be garnished without a court order?

NO. Aside from certain student loan debt and federal debt, a debt collector must file a lawsuit and obtain a judgment before it is able to garnish wages. Even then, there are other hurdles a debt collector must face before obtaining a garnishment order. This includes filing for a hearing on proceedings supplemental, verifying your employment and income, and requesting a final order in garnishment.

What should I do if I receive a summons and complaint?

I can’t stress this enough. You only have a certain amount of time to act; either depending on whether you received the summons by sheriff or certified mail. Failure to respond within this time 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 for a free consultation to discuss your options.

What is a summons and complaint?

A summons is typically a one page document informing you that you have been sued, that you have 20 to 23 days to respond or else a default judgment may be entered against you, and providing the contact information for the person suing you or their attorney. A complaint is a document setting out the basis for the lawsuit, the claims asserted by the person suing you, and 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  for a free consultation to discuss your options.

What happens after I receive a summons and complaint?

Remember – depending on how you received the summons and complaint, you only have 20 or 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.

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

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

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

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 a knowledge of the rule of evidence and trial procedure. On the other hand, circuit and superior courts may hear claims of any amount. They are also more formal, follow the rules of evidence and trial procedure, and often take longer to process claims due to their handling more complex cases. In either event, it would be a good idea to have an attorney evaluate your case to determine whether you would benefit from representation in either court.

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

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 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, or else for a free consultation to discuss your options.

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

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. If you receive a judgment  for a free consultation to discuss your options.

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

Yes. Under state law judgments entered in the county in which you own real estate automatically “attach” or become a lien on 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. In many cases, judgment creditors will be content to sit on their lien, which is good for 10 years and can be renewed for another 10 years, while it continues to accrue interest at the statutory rate (currently 8% per year). When it comes time to sell your home, the judgment creditor can demand payment or else hold up the sale.

If you discover that there is a judgment lien on your home,  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.

Do judgments accrue interest?

Yes. Indiana law allows for judgments to accrue interest. This is from the time the judgment is entered to when it is paid or satisfied. Currently, the rate is 8% per year.

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

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.

How does a creditor collect or enforce a judgment in Indiana?

Assuming that that the judgment attached or 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 have to pay the judgment. The judgment creditor will also send to the debtor’s employer written questions 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.

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

If you’ve received this motion and/or an order to appear in court, then chances are a judgment was entered against you. A proceedings supplemental hearing is the judgment 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, and then an attorney to discuss your options.

What is a wage garnishment?

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 then send this money directly to the judgment creditor.

How much of my wages can be garnished?

Indiana law allows judgment creditors to garnish the lessor of 25% of your wages after taxes or your disposable earnings less 30x minium wage.

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 that 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.

What if I can't afford a wage garnishment?

There are some options. Indiana law allows for a reduction in the garnishment amount to as much as 10% of gross wages, but this is 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. If you are subject to a wage garnishment, please for a free consultation to discuss your options.

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