Legal Question in Credit and Debt Law in California

The procedure is going to be something like this. Understand, however, that each lender takes it's own approach to collecting debts, and so it is virtually impossible to predict exactly what they will do.

When you default on repayment of a debt, the creditor (the lender) will usually expend some time and energy trying to collect the debt without going to Court. They often threaten Court and lawsuits when they may in fact be months away from actually filing a lawsuit. During this time, you should make every effort to work out an arrangement to allow you to repay the debt over time, and avoid Court. Once a lawsuit is filed, the expense of collecting the debt goes up and so will the amount they expect you to repay. This will take a lot of persistence, however, if you can get them to agree to a settlement without going to Court, it will be very beneficial to you in the long run.

If you are not able to resolve the debt with them, eventually they will file a collections lawsuit, and you will be served with a "Summons and Complaint." You will generally have 30 days to file a written response to that Complaint with the Court. The types of responses you can file are too complex and long to list here, however, most people file an "Answer" denying the claim made by the creditor, and list "affirmative defenses." Again, there are too many variables to explain in a short post like this, but when the time comes and you must file a response, you should consult with an attorney. If you do not file a response, the creditor will get a judgment against you for the money you owe plus fees, costs, attorneys fees, etc...

Once a judgment has been entered against you, the creditor may garnish your wages, levy your bank account, and lien your assets. An unpaid judgment will also further wreck your credit. In short, you don't want this to happen. Throughout this process, you want to attempt to negotiate a settlement. You can also go to an attorney, or a non-profit credit counseling agency and hire someone to try and work the debt out for you. If all else fails, you may be eligible for bankruptcy, which would potentially discharge the entire debt.

*Due to the limitations of the LawGuru Forums, The Gibbs Law Firm, APC's (the "Firm") participation in responding to questions posted herein does not constitute legal advice, nor legal representation of the person or entity posting a question. No Attorney/Client relationship is or shall be construed to be created hereby. The information provided is general and requires that the poster obtain specific legal advice from an attorney. The poster shall not rely upon the information provided herein as legal advice nor as the basis for making any decisions of legal consequence. As required by 11 U.S.C. �528, we must now disclose that, "We are a debt relief agency. We help people file for bankruptcy relief under the Bankruptcy Code. Assistance we provide with respect to Debt Relief may involve bankruptcy relief under the Bankruptcy Code."