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(Franklin Debt Relief is not a law firm and the following piece does not constitute legal advice. It is intended for information purposes and for information about your specific situaton, please contact an attorney licensed in your state.)
Acceleration Clause – Contractual provision that requires a debtor to pay the full balance owed immediately if he or she fails to meet a specific condition of the contract (i.e. late payments)
Answer - A formal response to a Complaint stating your defense to a lawsuit. If you do not file an Answer in time, the creditor is entitled to a default judgment (a ruling that the creditor is in fact entitled to the full balance owed). By filing an Answer, you are able to delay the legal process and buy time in order to accumulate more funds for settlement or set up a favorable payment arrangement with the creditor.
Arbitration – Arbitration is a forum to settle disputes without the formalities of a trial. Many credit card companies have mandatory arbitration clauses in their contracts. The National Arbitration Forum (NAF) is the venue for most credit card arbitration hearings. Also referred to as alternative dispute resolution (ADR).
Complaint – A legal document with information about why you are being sued, how much you owe, etc. Typically received with a summons to court.
Default judgment – If you are sued and fail to file an Answer to the Complaint, a default judgment is entered against you. A default judgment formalizes that the creditor won the case and is now allowed to garnish your wages, put a lien on your home or car, levy your bank account, or anything else that is permitted in your state to collect an outstanding debt.
Exemptions – The amount of property, savings, or wages that is protected should a creditor win a judgment against you. Exemptions differ from state to state, and many times you have to file specific papers in order exercise your exemptions.
Judgment – In the event you are sued and lose the case, the creditor wins a judgment, which allows them to garnish your wages, put a lien against your property, or levy your bank account depending on your state laws.
Garnishment – One way that creditor with a judgment is allowed to collect any amounts owed to them, depending on your state. A creditor can only garnish your wages after a judgment is won and specific papers are filed and in turn your employer or bank is notified. Most states protect 75% of your net earnings, but some states like Texas and Pennsylvania have 100% wage protection. It is also possible to have a garnishment lifted or reduced depending on your financial situation. Also referred to as an attachment.
Interrogatories – Very specific and typically long-winded questions sent to one party of the lawsuit by the other after an Answer has been filed. Failure to respond to the interrogatories may help the creditor win a summary judgment.
Lien – A legal notice attached to your property that you owe a creditor. A lien forces you to pay back the creditor if you sell or refinance your property.
Levy – One way for a creditor to collect on a judgment. Similar to garnishment, but applied specifically to bank accounts.
Summons – A formal notification in mail or by service processor (sometimes a sheriff) that you are to appear in court on a specific date.
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