Collection of Debts Like Credit Card and Medical Debts
Authored By: Montana Legal Services Association (MLSA)
Credit card debts and medical debts are usually "unsecured debt." That means they are not secured or guaranteed by collateral. This article talks about how a creditor can collect unsecured debt like credit card and medical debt from you.
What is unsecured debt?
Unsecured debt is a debt that is not guaranteed by a piece of property. This property is called collateral. Credit card debt and medical loans are normally unsecured debt. The only way a creditor can collect on an unsecured debt from you is by taking you to court. This is different from secured debt. Secured debt could be a home equity loan, car loan, or title loan. If you have a secured debt then your creditor may be able to take your property from you without going to court. This article only deals with unsecured debt.
What can I do if I can't pay my unsecured debt?
You may want to call your creditor and try to set up an alternate payment plan. Going to court is expensive and time-consuming. Many creditors would rather set up an alternate payment plan that you can afford. This saves them the time and cost of going to court. If you do agree on an alternate payment plan make sure you get that plan in writing. Having the plan in writing will help you if you have future trouble with your creditor.
What if I am being sued by my creditor?
There may still be time to set up an alternate payment plan. Many creditors would rather set up an alternate payment plan and avoid court. If you create a new payment plan make sure you get that plan in writing. If you do not get an alternate payment then you will need to go to court. First you must file an answer.
What is an answer?
An answer is a response to the lawsuit your creditor has served you with. You will need to file an answer with the clerk of court. You will normally have 20 days after your creditor serves you with a lawsuit to file your answer. You may have more or less days to file an answer if you are appearing before a tribal court or a court in another state. To get help filing an answer on MontanaLawHelp.org click here. You may also want to set up an advice appointment with Montana Legal Services by calling the Helpline at 1-800-666-6899. You can also get help by visiting the state law library website by clicking here. Your clerk of court may also have sample answer forms that you can use.
What happens after I file an answer?
Next you will have a hearing in court. You should have a notice telling you when your court date will be. Be sure to show up at least 15 minutes early. If you skip your hearing or show up late, then the judge may issue a default judgment against you. If there is a default judgment against you, then your creditor may be able to take money out of your paycheck or bank account without even telling you first.
What should I bring to court?
You will need to bring your payment history, contract, and any documentation showing that you have tried to pay your debt. You can bring any other documents that you think might help. You may want to call the Montana Legal Services Helpline at 1-800-666-6899 to set up an advice appointment before going to court.
What if the judge rules against me?
The judge may rule for you or against you. If the judge rules against you then he may allow the creditor to take money out of your bank account. He may also allow your creditor to garnish your wages. This means that your creditor would get money directly from your paycheck. In a worst case scenario your creditor could take 25% of your wages.
What if I think my creditor is taking more money than he is supposed to?
This can happen. If you think your creditor is taking money that he is not supposed to you should call the Montana Legal Services Helpline at 1-800-666-6899.