People in debt have a lot of stress: the phone calls, the letters, and the cost of living are going up but never going down. They live in a state of fear. Debt collectors know this and use it to their advantage all the time. Their other biggest weapon is ignorance. They count on you not understanding how the collection process works or how to protect your rights.

The good news, however, is that you can understand your legal rights and rebuild your financial life. As a New Jersey debt collection lawyer, I want to share some essential things with you below.

Debt Collectors Lie to You!

Debt collectors are at you constantly with threats of imminent imprisonment, wage attachment, bank levy, and seizure of personal property. The biggest thing to remember here is that if a collection agency (as opposed to a law firm) is telling you this, it is a lie! They are just playing on your ignorance of the law and your fear.

There is no such thing as a debtor's prison. You cannot go to jail for failure to pay the debt collector. As for the rest, in New Jersey, things like wage executions and bank levies only happen once a lawsuit has been brought against you and a judgment has been entered.

Here's the Truth About How Debt Collection Lawsuits Work

First, the Debt Collector Has to Give Up

The collection agency has to throw in the towel on trying to collect it themselves and refer the claim to a lawyer for suit. This is something they are reluctant to do because it means that they get less of a fee (they have to share it with the law firm). However, if they do not do this, all those nasty consequences they are threatening you will not happen.

This can take up to 30 days to happen (send out the claim, the law firm receives and reviews, then opens a file). If the law firm sends out a demand letter before suit, that can mean up to 30 days more.

Second, the Lawyer Sues You

Next, the lawyer files a lawsuit against you. Contrary to what many people may believe, if you are sued, you will know it (unless you throw out your mail without opening it or never answer the door).

Once you receive a document called a "summons and complaint," you have 35 days in which to file an answer with the court and copy the creditor's attorney. At this point, you should consult with a New Jersey debt collection lawyer since you may have defenses to this lawsuit that would either void the debt if successful or drastically reduce the amount owed.

Third, a Judgment Is Entered

If you do not file an answer within that time, the lawyer will enter a judgment against you. It is this judgment that allows for the levies and such, and if the proper paperwork is filed, it can also act as a lien against your home, requiring payment if you go to refinance or sell it.

The process of entering that judgment, depending on the speed and efficiency of the law firm and the court clerk's office, can take another 30 days or so.

What Happens Once They Get a Judgment Against Me?

Well, that depends on how much the creditor knows about your assets. Do they know where you work? Do they know where your bank accounts are?

As to the latter, if you sent checks for payment in the last few months, then they do. As to the former, if the debt collectors have called you at work or you put your current job on a loan or credit card application, they also know that.

If they do not, they will send you an information subpoena to find out. You must answer this within 14 days or be held in contempt of court. You can go to jail for not answering that, but complying keeps you out of a cell.

If you provide this information, and it includes a bank account or job information,  the bank levy or wage execution will go through.

As you can see, all the threats of imminent doom by debt collectors are a lot of hot air. Please do not allow them to play on your fears in order to get your money.

So, How Do I Learn More Truths?

Now that you know about the lies, you need to know more about the truth to protect your rights and reduce your stress. Want more information on how to fight back with your creditors and not fall victim to their fear tactics? Then download my free book, The Biggest Secrets Your Creditors Don't Want You to Know. Are you a visual learner rather than a reader? Do you enjoy watching YouTube to learn new things? Then check out my 3-part video series on how creditors use lawsuits in New Jersey to collect debts. Just click here for more information on how to get the links! Become empowered and protect your rights!

Steven J. Richardson
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Bankruptcy, Collections, Student Loan, DUI and Traffic Court attorney in Woodbury, NJ.