Creditors have a number of tools at their disposal when it comes to collecting debts. Mostly, they rely on the contractual obligation that the debtor has to pay her bills. When debtors don’t pay, either because they can’t due to job loss or other financial adversity, or they just get tired of paying, creditors can turn to other means.
Creditors usually start by contacting the debtor to demand payment. At first, these are gentle reminders that a bill is past due. These reminders will most often be in the form of a letter, maybe something added to a bill. Typically, these don’t start until a debt is 30 or more days past due.
If these gentle efforts don’t bring results, creditors may start calling. Again, calls will be polite at first. Creditors know that they get better results from being friendly at the start. Eventually the calls will become more demanding and more frequent. Sometimes creditors will call several times a day. Usually, creditors don’t reach this point until 60-90 days after a debt is first past due.
It’s here that many creditors will turn their debt collection matters over to a collection agency. Collection agencies are businesses that attempt to collect debts on behalf of the original creditor. These agencies will start with a letter advising the debtor that the bill has been turned over to them. Under the Fair Debt Collection Practices Act, or FDCPA, a collection agency must give the debtor notice that it is trying to collect and allow the creditor 30 days to notify the agency that the debtor believes the debt is not valid.
Some collection agencies resort to questionable tactics, such as threatening to send the police to arrest the debtor. No creditor can send the police to arrest or attempt to collect a debt.
If demands don’t work, the next step for a creditor or collection agency is to hire a lawyer to sue the debtor on the debt. Lawyers will usually start with a demand letter advising the debtor that the law firm has been hired to collect the debt and making demand for payment, but the law firm doesn’t have to send a letter. It can file suit against the debtor immediately.
A lawsuit is started by the creditor filing a complaint with the court. The complaint and a summons must be served on the debtor. This is accomplished by a constable or deputy sheriff going to the debtor’s home to hand her a copy of the summons and complaint. The constable may leave the summons and complaint with a person “of suitable age and discretion” who lives at the debtor’s home. This means anyone over the age of 14. The summons cannot be left with anyone besides the debtor if it is served anywhere other than the debtor’s residence. While a debtor may be served at work or at a neighbor’s home, the constable must leave the summons and complaint with the debtor in that case.
The summons will advise the debtor that she has 21 days from the date she was served to answer the complaint. The day of service is not counted, so Day 1 is the day after service. Weekends and holidays are counted in the 21-day calculation. So, if someone is served on the 10th, she has until the 31st (or the 1st if the month has 30 days) to answer.
An answer is a written response to the summons. It isn’t a sufficient answer to say that a debtor can’t pay or explain why she hasn’t paid. The answer is for contesting either the existence of the debt, such as if the debtor doesn’t believe she owes the money for any reason; or contesting the amount of the debt. You can get help preparing an answer to a complaint on the Utah State Court’s website. If there is an issue over the existence of the debt or the amount of the debt, it’s best to talk to an attorney rather than try to represent yourself.
If an answer isn’t filed within 21 days, the creditor can get a judgment by default, meaning the court enters judgment because the debtor didn’t reply. If a debtor receives a summons and complaint, it’s imperative that she responds somehow.
Even if a debtor answers a complaint, a judgment might eventually be entered against her. If the court is convinced that the debt is legitimate, that no defenses exist, and the amount claimed by the creditor is the correct amount, it will enter judgment against the debtor. Judgment means that a court has determined that the debtor is liable for the debt and that the creditor is entitled to use other means to collect. These other means are called post-judgment remedies.
One powerful tool is garnishment. Garnishment is a court order that any money owed to the debtor, by an employer for wages, for example, is to be delivered to the creditor instead. If a creditor garnishes wages, the employer withholds 25% of the debtor’s net pay from the paychecks and sends that to the creditor. This can continue until the debt is paid in full.
Sometimes creditors don’t know where a debtor works or what assets she has that the creditor can seize. In that case, the creditor may have the debtor appear at a debtor’s examination, called a supplemental order or supp order in Utah. This is where the debtor must appear and answer questions about where she works and what she owns under oath. If a debtor doesn’t appear at the supp order, the court can issue a bench warrant to have the debtor arrested. This is not because the debtor owes the money; it’s because she disobeyed a court order to appear and is in contempt of court.
Once a creditor knows what property a debtor owns and where she works, the creditor can garnish wages and attach property. Attachment is a court order directing the sheriff to seize the debtor’s property and sell it. Not all of the debtor’s property can be attached and sold. The law allows debtors certain exemptions in their property.
Will Bankruptcy Stop This?
The short answer is YES, bankruptcy will stop all collection efforts, no matter what stage they are at. It’s never too late to file bankruptcy to stop future collection efforts. However, the longer a person waits, the more damage she might suffer. If the debtor has been garnished for three months before she files, she won’t get those wages back. The trustee can possibly recover them, but he’ll keep them for the bankruptcy. The same is true if the filing is after property has been attached and sold. It’s always best to discuss options earlier rather than later.
If you have debt issues and want help, contact us here or call or text (801) 413-3708, or email firstname.lastname@example.org.