Not that long ago, I had a client call me and a collection lawsuit had been filed against her. She did not know what to do. We discussed the debt and she admitted that she owed the debt. She did not know what would happen next. We discussed that it would be a waste of her limited money to pay me to defend a valid claim and so the Court, ultimately, issued a Judgment against her. Sound familiar? Well accept for the fact that an honest attorney admitted that there was no reason to waste money paying him to do something ineffective?
Similarly, I represent some clients in debt collections. These clients will come to me having gotten a Judgment against someone and want to know what to do next. So if you have a Judgment in your favor or if a Judgment is issued against you here is what should happen next.
First, the Judgment carries an interest at 8% per year according to the law in the State of Indiana. Laws in other states vary so check the state the judgment is issued to know what this is costing or gaining you.
If the Judgment is not paid within thirty (30) days then the case is eligible for a Motion for Proceeding Supplemental. This is a collection hearing that will include learning additional information about the person the judgment is issued against. At that Hearing, or the next hearing if the defendant’s employer and bank is learned during the first hearing, the attorney would likely ask to garnish wages at 25% of your gross wages and/or ask to freeze your bank account and have the court order the bank to give whatever funds are in the bank. As long as a defendant attends any hearing that is scheduled, there is no way for the attorney to have the defendant arrested or sent to jail.
If the defendant misses a Hearing, the Court will set another Hearing for Rule to Show Cause and the defendant may be held in contempt. If a defendant fails to appear for that hearing and it is shown the defendant had notice of the Hearing then the court can find the defendant in contempt of court. Then the attorney will have an arrest warrant issued for the defendant and will set a bond that must be paid to get out of jail. The money from the bond will go to pay off or toward the Judgment.
At this point in the proceedings, a defendant’s best option may be to file for bankruptcy after a Judgment is issued to clear this and any other debt that defendant has. Hiring an attorney to do much else is a waste of a defendant’s money. I am happy to defend a defendant in the case and ask the court to do something less than garnish the defendant’s wages, or freeze bank accounts. We can try to negotiate a payment plan, but funds spent on an attorney are probably better utilized to file bankruptcy or pay toward the debt. I know it is hard to believe that an attorney would say don’t hire an attorney, but I believe it is more important to be honest and part of the solution to a client’s problems then to simply charge money for the sake of charging money.
If a client does file for bankruptcy and you are the Plaintiff collecting the debt, all debt collection activities must stop pending a decision on the bankruptcy. If the Plaintiff files bankruptcy and there are no assets then the plaintiff must write off the debt upon receiving the discharge notice. If there are assets for distribution then a Proof of Claim can be filed to get a share of those funds.
Let me know what you want to do by calling Wischmeyer Law Office (317-429-0210) and we will get a meeting set up.