When a creditor obtains a default judgment, it gives them the legal right to collect debt in a variety of ways. They are authorized to garnish and freeze bank accounts. They can put a cloud on property titles so that it becomes next to impossible to sell, refinance, or otherwise use the property as a financial asset in any manner.
Faced with such draconian measures, debtors often feel the need to get hold of an attorney. The exact legal recourse available may differ based on the state. The state laws governing lending practices and debt recovery vary a lot. Generally speaking, relief can be obtained in some way directly from the courts. At the very least, recovery actions can be stalled long enough to facilitate a settlement.
Homesteads in some states including Texas are protected from a forced sale initiated by creditors. They can still put a cloud on title. A debtor's other non-exempt properties are fair game, and can be seized by lenders using a writ of execution.
The Lone Star State also protects wages from being garnished. The only allowable reasons for wage garnishment are government tax debts, unpaid student loans, alimony payments and child support. However, wages deposited into a garnished account can be taken by creditors. If a bank account has been garnished, debtors must be careful not to let wages go into it.
Creditors also have the power to initiate a post-judgment discovery process to find out what assets you have. This can include a sworn deposition wherein debtors have to list their assets under oath. There are many ways to get relief from all such recovery actions by lenders.
A Bill of Review can be used to get the court to vacate or reverse judgments if the lender has not properly informed and served a borrower in default. Just the fact that a debtor intends to fight back in court can sometimes be incentive enough for lenders to agree to a settlement. Work out a realistic repayment agreement which includes the release of garnished accounts and all claims on property.
Another possible and more comprehensive solution is a bankruptcy petition. A successful Chapter 7 filing will end the default judgment, with the lender having received only a small portion of the unpaid debt. Almost all assets can be protected during the bankruptcy by those who have a lot of debt with no other means to repay it.
Faced with such draconian measures, debtors often feel the need to get hold of an attorney. The exact legal recourse available may differ based on the state. The state laws governing lending practices and debt recovery vary a lot. Generally speaking, relief can be obtained in some way directly from the courts. At the very least, recovery actions can be stalled long enough to facilitate a settlement.
Homesteads in some states including Texas are protected from a forced sale initiated by creditors. They can still put a cloud on title. A debtor's other non-exempt properties are fair game, and can be seized by lenders using a writ of execution.
The Lone Star State also protects wages from being garnished. The only allowable reasons for wage garnishment are government tax debts, unpaid student loans, alimony payments and child support. However, wages deposited into a garnished account can be taken by creditors. If a bank account has been garnished, debtors must be careful not to let wages go into it.
Creditors also have the power to initiate a post-judgment discovery process to find out what assets you have. This can include a sworn deposition wherein debtors have to list their assets under oath. There are many ways to get relief from all such recovery actions by lenders.
A Bill of Review can be used to get the court to vacate or reverse judgments if the lender has not properly informed and served a borrower in default. Just the fact that a debtor intends to fight back in court can sometimes be incentive enough for lenders to agree to a settlement. Work out a realistic repayment agreement which includes the release of garnished accounts and all claims on property.
Another possible and more comprehensive solution is a bankruptcy petition. A successful Chapter 7 filing will end the default judgment, with the lender having received only a small portion of the unpaid debt. Almost all assets can be protected during the bankruptcy by those who have a lot of debt with no other means to repay it.