Full disclosure: In my practice, I represent creditors in debt collection lawsuits. Obviously, I am interested in a quick resolution on behalf of my client. The fact remains, however, that Colorado law requires you to have a legal defense to a claimed debt. If you come to court with one of the defenses below, I am going to get judgment.
I CAN’T PAY
Whether or not you can repay your debt does not answer the question of whether a contract exists. If you don’t deny that there is a contract, but just can’t pay, judgment will enter against you.
MY EX SAID HE WOULD PAY IN THE DIVORCE
A divorce decree dividing debts does not modify the contract between you and a creditor. If both you and your former spouse signed the contract, the creditor is going to pursue collection against both of you. You could, however, sue your former spouse to collect the money that you pay the creditor.
If you find yourself in the position where you have no defense to the lawsuit, you have two options. You can either allow default judgment to enter against you, which means the creditor is then going to be able to garnish your wages and bank accounts and file liens against any real estate you own. A garnishment in Colorado will allow the creditor to take up to 25% of your take home pay. But attempting to defend a collection lawsuit with these defenses will only put off the inevitable and allow the creditor to add up considerable legal fees.
Your second, and better, option is to call the attorney as soon as you receive your summons and see if you can settle the lawsuit. You might be able to negotiate a reduction in the amount owed, a reduction in attorney fees, or a payment plan that will be more workable than having 25% of your take home pay taken.
Finally, while the above two scenarios are not defenses to a debt, if you honestly believe that you never asked for the loan, you may have a legal defense. Also, the creditor has to make a complete accounting of the amount owed to make sure he is not seeking more than he is due.
Peter Mullison is a bankruptcy attorney at Colorado Bankruptcy Law Group, LLC. If you are considering Chapter 7 or Chapter 13 personal bankruptcy, schedule your free, confidential bankruptcy consultation with a Colorado bankruptcy attorney today. Our online scheduling system allows you to schedule a bankruptcy consultation at a time that is convenient for you.
Colorado Bankruptcy Law Group, LLC is a personal bankruptcy firm serving clients in the greater Denver area.
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Wed, Jan 13, 2010
Debt Collection, Represent Yourself in Court