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I’ve Been Sued!

Nothing makes one’s stomach tie up in knots faster than being served with a creditor lawsuit. It’s hardly ever a good thing when the sheriff or constable is looking for you to serve you with legal documents. So, you’ve been sued. Now what? There are basically three options you can choose:

  1. Respond to the lawsuit and defend yourself against it.
  2. Do nothing and wait and see what happens.
  3. File bankruptcy to stop the legal proceedings in their tracks.

Lawsuit Defense:

There are defenses to a creditor lawsuit. They include denying the debt is yours (maybe fraud or identity theft); the debt is too old to be collected under state law (statute of limitations defense); or that the suit is brought by a party that doesn’t have a right to collect on the debt (standing defense). While all of these may be worthwhile defenses and may help you out of that particular lawsuit, is there another one right behind it? You will need an attorney to help you with these strategies and that can be costly if you sit back and handle one case at time. Why handle one creditor at a time and pay attorney’s fees each time? This “pay-as-go” approach can be costly and nerve racking as you wait and see who is next to come looking for you in court!

Doing Nothing Approach:

If you choose to do nothing, then that lawsuit is likely to turn into a default judgment. That default judgment may then be collected a number of ways to include a garnishment on your non-exempt property that may include your cash accounts. It is also likely to be recorded in the county where you have property so that it can follow you around for 10 years, only to be renewed when that 10 year period is up. The default judgment will also show up on your credit report. A default judgment is a “head-in-sand” approach that doesn’t work very well and doesn’t provide any final resolution.

Filing Bankruptcy:

Two of the sweetest words in bankruptcy are “automatic stay.” This means just as soon as you can notify the court where the lawsuit is pending, the lawsuit proceeding stops in its tracks. The underlying debt is likely dischargeable in the bankruptcy and so the lawsuit is essentially resolved with the bankruptcy filing. Have more debt to file bankruptcy for? This is a “two (or more) birds, one stone” approach that could make more economical sense if you are looking to spend your legal dollars wisely. If you hire an attorney to handle that one lawsuit but you know you have so many other creditors out there looking for you, why not resolve all of it at once with a bankruptcy filing for the cost of what defending that one lawsuit would set you back?

Call us now at Bailey & Galyen for your free bankruptcy consultation to see if we can help you today. We have over 40 years combined legal experience. Remember, your choice in attorney matters. Please call our office TODAY at 800-234-9524 or use the online contact form to schedule a free consultation.

Leticia “Letty” Evans
Managing Attorney – Bankruptcy Department
Bailey & Galyen
levans@galyen.com

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How to Make The Most of Your Free Bankruptcy Consultation

It is a common practice in today’s legal market for bankruptcy attorneys to offer free consultations to potential new clients. Consumers looking for legal help have many law firms to choose from and a free consultation is an excellent opportunity for the potential client to meet the attorney and check out the firm to see if it’s a good fit for them. However, often a client can be overwhelmed with the entire process of finding an attorney to handle their case and may not be prepared to answer the attorney’s questions or they may not be able to ask questions because they can’t think of any at the time. We understand this dilemma and encourage clients to prepare in advance for the consultation. Following these few simple steps as outlined below will ensure that you and the attorney make the most of your time together and put you on the path to making the best decision for you and your family. The first step is to take a sheet of paper and separate the page into three columns:

1) In the First column, write your total income at the top (include your total Gross Income before taxes and other payroll deductions are taken out) and then list out your monthly expenses (first line will be your taxes and other payroll deductions). Include all sources of income and include all of your expenses. Do not forget to budget for expenses such as vehicle registration, car maintenance, doctor visits, dental checkups, new clothes, uniforms, school/sport/children’s activities, home maintenance, haircuts, dry cleaning and the like. Include your payment on all your debt. Even though you do not encounter these expenses every month, you should budget for them for when they do come up. For example, if you know you have vehicle repairs of about $500 a year, take that amount and divide by 12. That monthly expense would show up as about $40 a month. Once you completed this, subtract your expenses from your income at the bottom of the page and write it down in LARGE print. This is your net monthly income after all expenses.

2) In the Second column, make a list of all of your debts. Include all your creditors to the best of your knowledge to include mortgage, car, credit card, student loan, medical, pay day loan, repossession deficiency, charged-off debt, and personal loan or line of credit debt. Add the total up at the bottom of the page and write down in LARGE print.

3) In the third column, list the difficulties you are having with this debt/creditor. Example: “Big Bank Credit Card – Late on 6 months payments; calling me nonstop; threatened to sue me”, “Mortgage Creditor – Behind 3 months, referred to foreclosure department,” “Car Creditor – Late 30 days”, etc. so that you understand and can inform the attorney of the status or urgency of your situation with each creditor.

This is a “big picture” approach. Seeing all of this information in one place will provide a reality check that may be needed before you come in to see the attorney. If you prepare this before your consultation, you provide the attorney with the opportunity to see your financial picture as a whole and the attorney can then provide the best legal advice for your situation. It may also be a genuine wake-up call for you and your family. Communication is the key during the free bankruptcy consultation so take advantage of the attorney’s undivided attention and provide as much information as possible!

Even though you may have many attorneys to choose from, not all attorneys are the same. Your first clue should be how deep your attorney will dig into your situation. A good attorney will ask a lot of questions and a sincere client will be ready to address them. Your choice of attorney matters and we care enough about our clients to be sure they have all the information they need to make one of the most important decisions of their financial lives.

Leticia “Letty” Evans
Managing Attorney – Bankruptcy Department
Bailey & Galyen
levans@galyen.com