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Legal Actions by Debt Collectors

Some debt collectors may threaten you with dire consequences to force you to pay your debts. However in reality, if those collectors are trying to collect unsecured debts (money owing without collateral), such as a small personal loan, medical bill, or credit card debt, they only have limited legal actions. This is an important fact to know when you’re deciding on how to best answer to a debt collector’s threats.

If your debt is secured, the whole story can be different. A secured debt uses your asset as collateral, like your car loan and your mortgage; you might lose that asset if you don’t make the payments on time.

If the amount is relatively small, a collector may give up trying to collect what you owe. Most debt collectors are compensated based on the amount of debt they collect. When it becomes clear that collecting the debt from you may take too much time and effort, they will move on to greener pastures. Even so, you won’t get off scot-free.

Your small debts will be sent to collections, and if remained unpaid will further damage your credit score and your credit history. Debt collectors usually go to considerable lengths when collecting large debts. As a matter of fact, they may sue you when collecting the debt. If a debt collector decides to sue you, you’ll be notified about the lawsuit through a summons, which informs you who sued you, why you are being sued, and on what date you must appear in court.

Communicate with your consumer law attorney when you get the summons. The attorney will negotiate a settlement with your debt collector, which might bring the lawsuit to an end and it means you can avoid the costly trial. If your negotiations fail, the attorney will represent you in court. Attempting to defend yourself is absolutely foolhardy.