Collection Defense vs NJ Bankruptcy

If you have been sued by a collections company or “debt collector,” and the debt truly belongs to you, the most important piece of advice is: Do not ignore the lawsuit.

With that being said, people in your position naturally wonder if they have options. Being sued for a debt that perhaps you thought had been forgiven, or that had reached its statute of limitations, can come as a surprise. Many times we put these things out of our minds because it is easier than focusing on it and worrying about it.

Unfortunately, by putting a large debt that you failed to repay out of your mind, you are now faced with a lawsuit that asks you for the entire lump sum that you owe. This sum may even be larger than you remember due to late fees, attorney fees for the collections agency, and interest.

Is filing for bankruptcy your only option?

While it is impossible to give a blanket answer to this question (as everyone’s case will vary wildly) – the general answer is that no, bankruptcy is not your only option when you are being sued for an unpaid debt.

There are several things your NJ bankruptcy attorney will ask when you meet with him or her. Is this your only significant debt? What is your income? Can you repay this debt if it is broken down into payments?

If you have other debts along with the one in the lawsuit, and your income doesn’t allow you to get ahead on paying them back, it may be that bankruptcy is right for your situation.

Can you negotiate with the debt collector?

On the flip side, if the debt in this lawsuit is literally your only debt (outside of your mortgage and car payment), and your income is steady, you might want to have your bankruptcy/debt resolution attorney negotiate with the collection company.

For example, if your unpaid debt amount is $15,000, you may be able to talk the debt collector down several thousand if you pay in a lump sum. It is also possible to negotiate a payment schedule if you wish to avoid bankruptcy.

Is collection defense an option for you?

Collection defense is only appropriate if the debt in the lawsuit doesn’t belong to you, or if the lawsuit contains errors. So, if you are being sued in error, then collection defense is an option, but the reason many people opt for a different resolution is that collection defense representation can get expensive. Regardless of how much you pay your attorney, you can still end up losing the case, even if the debt collector is in the wrong. This is because NJ law doesn’t require strict proof of signed agreements when it comes to credit cards. Therefore, you may end up owing hefty attorney’s fees and still have to repay the debt in full when all is said and done if you go this route.

The only way to know for sure which direction you should go is to sit down with a NJ bankruptcy lawyer or debt resolution attorney. Often, bankruptcy attorneys also specialize in credit repair and debt resolution strategies other than bankruptcy, so look for an attorney who is well-versed in all areas in which you need assistance.

Advertisements

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s

%d bloggers like this: