What Should I Do if My Elderly Mother Can't Pay Her Debts?
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. A certificate or proof of service is attached to show a copy was served to the other party(ies).
When a court judgment is obtained the winning party is called a judgment creditor and the party ordered to pay is called the judgment debtor. If the judgment remains unpaid, it is possible to conduct an examination of the judgment debtor to determine what assets exist in order to place a lien against assets that may be sold to satisfy the judgment. Wages and other income may also be levied upon.
Anyone considering filing bankruptcy should first evaluate all of the potential alternatives, and then make an informed decision regarding whether bankruptcy is the best choice. It should be stressed that this is a personal decision for each individual. There is no one answer that is right for everyone. Only by carefully exploring all of the alternatives may a person truly know whether bankruptcy is the best solution to their debt problems.
Prior to making a decision to file bankruptcy, each individual should first attempt to contact his or her creditors and determine whether it is possible to obtain their cooperation in working out a different payment schedule. Most people would be surprised to learn that creditors often are willing to make reasonable modifications to assist the debtor in repayment. Communication and honesty are the key words here. In exploring this option, the creditor should be honest and forthright with the creditor regarding one's financial situation. If your mother has no assets or income, she may be judgment proof, meaning unable to collect payment from. Bankruptcy filing may be unproductive when a person is judgment proof. The automatic stay is one of the most valuable functions of a bankruptcy proceeding for the debtor seeking relief from creditors. The automatic stay immediately stops any lawsuit filed against you and virtually all actions against your property by a creditor, collection agency or government entity and provides an injunction against the continuance of any action by any creditor against the debtor or the debtor's property. After filing for bankruptcy, the automatic stay will prevent creditors from calling and harassing the debtor in any way. In fact, should a creditor continue to attempt to contact the debtor during the automatic stay, that creditor could be held liable for damages.
I suggest attempting to settle the debt before they obtain a court judgment. Hospitals often have credit counselors available who can work with you on reducing the bill or working out a payment plan. 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.
You have probably heard of debt relief companies. There are also some companies, even credit card companies, that will work out a compromise settlement or reduced monthly payment. Family and friends are also sometimes options. There is really no good answer to your problem, a problem that many people face. Thus options include, but are not limited to, bankruptcy, debt relief company, compromise you do yourself, friends, family, loans. I suggest you resolve the charges before a lawsuit is filed to collect the money owed, which may further damage your credit history.
Another option to examine is Consumer Credit Counseling Service. CCC is a nationwide nonprofit organization that attempts to work with both the debtor and his or her creditors to devise a more manageable repayment plan. This service very often results in revised payment plans which are acceptable to both the debtor and the creditor, thereby eliminating the need to file bankruptcy.
If you need help negotiating with your creditors, consider contacting a nonprofit debt counseling organization. You can find a list of counseling agencies by location at the website of the U.S. Trustee, www.usdoj.gov/ust (select "Credit Counseling and Debtor Education.") The federal government has authorized the agencies on this list to provide counseling to debtors considering bankruptcy. However, don't pay anyone to "fix" your credit.
The following link allows you to search by area for financial counselors recomended by Dave Ramsey:
Please read the tips from the Better Business Bureau on selecting a credit counselor :
The following organization is a referral from the Better Business Bureau: