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Credit card debt and protection from creditors

| Apr 22, 2020 | Firm News

Florida consumers who are confronted with significant debt they are unable to pay will have many concerns. Along with the fear of constant calls and the negative impact on daily life, some might be under the impression they can be put in jail. It is important to understand the truth behind this implication. Often, knowing about the law can be key to being protected.

Creditors might contact a debtor and say they could be jailed if they do not pay. This is inaccurate, but it is used as a threat to get debtors to pay. In the past, there were in fact debtors’ prisons. That, however, stopped nearly 200 years ago. To further protect consumers, the Fair Debt Collection Practices Act was implemented in 1977. This prevents various behaviors on the part of creditors.

Debt collectors can take legal steps to collect unpaid debt. A lawsuit is the most common way in which they accomplish this. If the debtor does not respond or attend the hearing, there can be a default judgment. When there is a default judgment, the creditor will likely receive what it asks for due to the debtor not lodging a defense. Wages can be garnished, bank accounts levied or personal property liquidated.

While there are alternatives to clearing debt like negotiating a payment plan, consolidating bills, and reducing the interest rates, bankruptcy might be preferable. This is true whether it is a Chapter 7 liquidation or a Chapter 13 in which payments will be made for a defined amount of time. The individual’s financial situation will dictate which type of bankruptcy to use. What may be critical is having legal advice. An attorney experienced in bankruptcy law might be able to help.

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