(Note: this is not to be
considered legal advice, and it is dealing with the hypothetical
"average" elderly and/or disabled person. Each case is unique and to
determine the legal ramifications of your individual scenario you
should consult an attorney. Although every effort has been made to
make sure this information is not erroneous, FDR makes no guarantees
about the accuracy of anything contained herein. )
Debt settlement, also
known as debt negotiation or debt reduction, is a relatively new way
for dealing with your debt problems. In a debt settlement program,
by negotiating with a creditor, a client can settle their debts for
less than they owe, cutting down the time it takes on paying off the
accounts they enroll versus making the minimum payments. Although
the opportunity to save thousands off your balances is a great
potential benefit, one cannot make payments to their creditors and
must instead save money that will be used as a lump sum offer to be
made to their creditors. Since creditors are not receiving payments,
they are forced to confront this question: How can I collect the
most money from this past due debtor with the least amount of effort
and the least total expense to my company? Typically the answer to
this question in the minds' of creditors is accepting a lump sum
settlement for less than the full balance owed, but in other
situations, they determine that the best course of action is pursue
the client in court to collect the full balance. After all,
creditors are always reserved the right to sue debtors to collect a
past due account, regardless of whether the consumer is taking any
action to resolve the outstanding debt.
That being said, thanks to highly favorable state and federal debtor
laws, the elderly and the disabled are very difficult to collect a
past due debt from relative to the average American consumer, even
if a creditor has sued them in court and won a judgment.
Consider the following situation. Let's say a creditor has just sued
you and won a judgment in court. They now have to execute the
judgment in order to actually start collecting the debt. One way a
creditor executes a judgment is through wage garnishment. When a
creditor garnishes someone's wages, they automatically (and legally)
withdraw a certain percentage of that person's wages every paycheck
(at most 25% after taxes in most states) until the debt is paid off.
Fortunately, creditors cannot garnish Social Security, disability,
and some pensions (unless the "creditor" is the mother of your
children and she's collecting alimony). This being the case, the
creditor would probably look for another way to collect the debt.
Levying a bank account is another common method for executing a
judgment. Again the elderly and the disabled are protected,
presuming the bank account's funds are made up of the deposits from
social security, pension, and/or disability benefits. Please note
that a creditor may still be reserved the right to put a lien on an
elderly or disabled person’s property in the event they win a
judgment, however. This may depend on their state whether or not
they can do this.
A creditor is always reserved the right to pursue legal action to
collect a past due debt, even if the debtor is elderly or disabled.
However, it makes a lot more sense than in the typical situation for
them to accept settlements over legal action because of the
protections afforded to the disabled and seniors.
Franklin Debt Relief is
not a law firm and encourages people to rely on the advice of an
attorney about their situation.