pawnbroker
Thanks for the greeting. I am a general practice lawyer, kindof a jack of all trades-master of a few...I recently returned to the law after running a venture backed software company in Europe, now that the days of multi-million dollar venture capital investments is over I am back to doing something more like honest work......
. So I have a lot of experience with the law surrounding start up companies.
As for the pawnbroker. The bottom line in most collection cases is that there are only four principle ways of getting people to pay for debts under 10,000.
1. Foreclose on the collateral for the loan- This is the case in car loans, title loans,mortgages. Collateral is the security you gave when taking the loan,These are called "secured" loans. When there is no security the loan is often called a "signature loan" and have no collateral, the borrower simply promises to pay the money back, with interest. A lender can repossess or foreclose on the property used as collateral when the loan isn't paid. Most "secured" loans also have a "signature" element so the lender can sue you personally and/or take the collatoral you gave as security.
2. Threaten to screw up their credit- This works for any kind of loan, but it is only effective when the person has credit to screw up. If you have no credit than this is not too effective.
3. Sue in small claims court-This option is not usually available unless the debtor lives in the same state (or sometimes the same judicial district) as the one who loaned the money. Suing in "real" court is usually not an option unless more than 5,000 is involved since it costs too much. this is, of course, not a hard and fast rule since some collection agencies can sue people relatively cheaply. Even then, if the borrower is out of state, they have to track that person down and serve them with the summons informing them of a lawsuit. This often is too expensive and difficult to find the person.
4.
Place liens on property or garnish wages - Once a creditor gets a judgment against you in court, they can place a lien on some of your property, which is a legal right to have some of the value of a piece of property, This is kind of like getting turning an unsecured loan into a secured loan after the fact. in some cases they can "foreclose" on the property and force a sale, in other cases they can repossess (a car, not a house) and in others they simply wait until the property is sold and they get a share of the proceeds.
Similarly, a lender can sometimes have the court garnish the borrower's wages, which means taking a certain amount out each month. This is much more difficult to do if the borrower is out of state.
These options are only available AFTER the lender takes the borrower to court and wins. The exception to this is when the person to whom the money is owed is a mechanic, lawyer, plumber or other service professional. They can file for "mechanics" liens or "attorneys liens" on the property by law, without going to court. So try not to stiff these guys
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Any threat to throw you in jail is pretty hollow. We don't have debtors prison anymore and police don't give a damn about things like that. Collectors will say a lot of things to get you to pay the money because they get a big piece of whatever you pay.
Bottom line is that if you have the money it is usually better to pay. But if you are out of state, and the amount is small, and you don't care about your credit, you don't have a lot to worry about.
Good luck