Should I Answer a Summons or File Bankruptcy if I Am Judgment Proof?
Full Question:
Answer:
It is important to file a proper response and/or motion after receiving a summons to avoid having a default judgment entered on your records. A "default judgment" may be rendered against a party if it is the result of a party's failure to take a necessary step in the action within the proper time; this generally means a failure to plead or otherwise defend within the time allowed. Since, under rules of procedure, allegations not specifically denied are deemed admitted, failure to file a responsive pleading will generally result in the entry of a default judgment against the defendant. When a complaint is filed and the defendant fails to file an answer within the applicable time period, a default judgment may be entered against the defendant.
An answer is a legally sufficient response to the allegations that have been alleged against you in the complaint. The answer will generally either admit or deny each claim made by paragraph, or state an inability to admit or deny for lack of knowledge. Defenses may also be raised. A counterclaim or cross claim may also be asserted.
Once a judgment is obtained, the creditor will likely be unwilling to negotiate a settlement and may place liens on property, such as bank accounts, or garnish wages. In some cases, a debtor may be able to negotiate a settlement with the creditor, although this is more difficult once a suit has been filed. In some cases, the creditor may settle for a lesser amount if the debtor is insolvent, since a promise to pay something is better than collecting nothing. These types of agreements are called an accord and satisfaction. If it is possible, a debtor should get a release included in such an agreement so that the creditor may not pursue the full balance of the debt claimed.
For further discussion, please see:
http://bankruptcy.findlaw.com/bankruptcy/bankruptcy-chapter-7/chapter-7-bankruptcy-inappropriate.html
http://debtor-creditor.lawyers.com/What-it-means-to-be-Judgment-Proof.html
http://money.howstuffworks.com/personal-finance/debt-management/bankruptcy3.htm
