| (Note: this is not to be considered legal | | | | average American consumer, even if a creditor |
| advice, and it is dealing with the | | | | has sued them in court and won a judgment. |
| hypothetical “average” elderly | | | | |
| and/or disabled person. Each case is unique | | | | Consider the following situation. |
| and to determine the legal ramifications of | | | | Let’s say a creditor has just sued you |
| your individual scenario you should consult | | | | and won a judgment in court. They now have |
| an attorney.) | | | | to execute the judgment in order to actually |
| | | | start collecting the debt. One way a |
| Debt settlement, also known as debt | | | | creditor executes a judgment is through wage |
| negotiation or debt reduction, is a | | | | garnishment. When a creditor garnishes |
| relatively new way for dealing with your debt | | | | someone’s wages, they automatically |
| problems. In a debt settlement program, by | | | | (and legally) withdraw a certain percentage |
| negotiating with a creditor, a client can | | | | of that person’s wages every paycheck |
| reduce their debt by as much as 50 percent | | | | (25% after taxes in most states) until the |
| and be debt free in as little as 12 to 30 | | | | debt is paid off. Fortunately, creditors |
| months. In order to accomplish these | | | | cannot garnish Social Security, disability, |
| savings, however, a client must voluntarily | | | | and most pensions (unless the |
| stop paying their creditors. By doing this, | | | | “creditor” is the mother of your |
| a creditor is forced to confront the | | | | children and she’s collecting alimony). |
| following question: How can I collect the | | | | This being the case, the creditor would |
| most money from this past due debtor with the | | | | probably look for another way to collect the |
| least amount of effort and the least total | | | | debt. Levying a bank account is another |
| expense to my company? Typically the answer | | | | common method for executing a judgment. |
| to this question in the minds’ of | | | | Again the elderly and the disabled are |
| creditors is accepting a lump sum settlement | | | | protected, presuming the bank account’s |
| for less than the full balance owed. | | | | funds are made up of the deposits from social |
| | | | security, pension, and/or disability |
| Although the vast majority of cases work out | | | | benefits. |
| according to this framework, as anyone who | | | | |
| has ever read a debt negotiation contract can | | | | A creditor is always reserved the right to |
| tell you---it’s impossible for a debt | | | | pursue legal action to collect a past due |
| settlement company to guarantee that a client | | | | debt, even if the debtor is elderly or |
| won’t be the target of any legal action | | | | disabled. However, it only makes sense that |
| by their creditors. After all, creditors are | | | | they’d prefer to accept a settlement |
| always reserved the right to sue debtors to | | | | for less than the balance, especially if the |
| collect a past due account, regardless of | | | | debtor has no assets or lives in a |
| whether the consumer is taking any action to | | | | debtor-friendly state like Texas, Florida, |
| resolve the outstanding debt. | | | | Iowa, Pennsylvania, Arkansas, or Oklahoma. |
| | | | It is for these reasons that credit card debt |
| That being said, thanks to highly favorable | | | | reduction makes a lot of sense for the |
| state and federal debtor laws, the elderly | | | | elderly and the disabled who are struggling |
| and the disabled are very difficult to | | | | to pay their minimum payments each month. |
| collect a past due debt from relative to the | | | | |