Threat of lawsuit

What is the name of your state? TX
I am at wits end! I have a combined credit card debt of approximately $40,000 that I have entered in to a debt consolidation program. One of the creditors has turned the account over to a collector and now I have received a letter from an attorney's office as notice of a lawsuit that will be filed against me if the balance is not paid. I have invested money in the consolidation program for four months instead of making monthly payments on the credit card account (since it is not feasible to do both) and therefore am that far behind with the credit card! I felt this was the only option I had outside of bankruptcy.
My question is: What can happen as a result of a lawsuit of this nature? Can wages be garnished, liens filed against home and cars? If this is the case would I be better off to remove this particular account from the program and see if the creditor will be willing to work with me to get this debt paid off?

[Ladynred]

You've run head-first into the biggest problem with these 'debt consolidation" companies !!! There is absolutely NOTHING that says any creditor MUST particpate in the 'program' and the will continue collection action as they normally would. The other problem with most of these, as you've found out, is that they let the accounts go into default on purpose to 'build up' money from you in order to then TRY and make a settlement with the creditor.

The answer to your questions is Yes.. to all of them. IF they do sue you, you will be served papers to appear in court. If you do NOT go to court they will win by default and garnishment, property siezures and liens are all possible. In every state there are exemptions to what can be siezed, just like bankruptcy, so its not just a free-for-all if you lose. If you at least go to court, you may be offered a settlement or a payment plan, but you have to go to have any chance of defending yourself.

Have you been served court papers ??? Its more likely that the letter you've gotten from the 'attorney' is just another Collection Agency, and they're trying to scare you with the threat of a lawsuit. Does the letter contain the mini-miranda " this is an attempt to collect a debt....." ??? If so, then its a collection agency.

You can try talking with the original creditor and arranging payments. At this point they've probably accelerated the account and will demand payment in full or they will demand large payments.

Read the Fair Debt Collections Practices Act and learn what your rights are in dealing with a collection agency. Got to [url]www.ftc.gov,[/url] Consumer Protection, then Credit and look for the FDCPA.

From Texas:
The attorney's letter I received is headed with "XXX & Associates, P.C. and states "I am an attorney engaged by Providian National Bank to make demand for payment of the account referenced in the heading of this letter." It tells me if I want to resolve this matter without a lawsuit I must either pay the balance in full or call the creditor to see if they would be willing to work out a payment schedule. I only have about a week or a little more to do this. Payment in full will be impossible for me.
The letter ends with "This is a communication from a debt collector, the purpose of which is to collect a debt."
Do I need to be concerned about the threat? Should I try to work with the creditor, if possible, or just leave it to the "program"?

[Ladynred]

I hate to say this, but the 'program' is only going to get you in deeper. However, if you feel that they *might* be able to help, call them and tell them about the collection agency and their threats and see if they can or will do anything on your behalf.

How long has it been, in total time, since this creditor was paid ? It may not have gone to charge-off yet if it hasn't been 180 days. Once the creditor charges-off the account, they sell it to a collection agency. If it hasn't been charged off, then they have 'assigned' the account to a collection agency in a last-ditch effort to get paid before they do charge it off.

So, you have a choice.. try talking to the original creditor and negotiating a hardship payment plan. Often they will offer to lower interest and re-age the account and lower your payment amount. BUT, if you don't pay them as agreed, they'll send it right back to collections.

From Texas:
Ladynred, thank you for information and advice. I have a decision to make now. I am running scared at this point and need to get something resolved so I can eat and sleep again! The account is not yet 180 days overdue but the lawsuit and liens, etc. have really concerned me. Thanks again!

[Ladynred]

If they haven't charged it off yet, then an actual lawsuit is probably some time away, they're just making ugly threats at this point to scare you into paying them.. typical tactic. They say all those nasty things.. and they are certainly possible, but they don't want to go to the expense of taking you to court, they'd rather you cave in and pay them anything as soon as possible.