If you are facing a lawsuit because of an outstanding credit card debt, you may be called into Debt Mediation. I recently observed several debt mediation cases in Florida, and here are some things they all had in common. I cannot offer specifics about the cases I witnessed, or give you legal advice – these are merely my observations and things to consider if you are facing a debt lawsuit that will go to mediation.
Debt Payment Plan:
You will likely be offered payment plan right off the bat by the bank’s lawyer. The lawyer there representing the bank probably has half a dozen other similar cases to get to for several other banks. If this plan is agreeable to you, you can take it and your debt mediation is then solved. Sometimes you can talk them down on the amount per month you can pay (if they offer $100, but you can only do $75 per month, that might work). I noticed no banks were willing to take less than $50 per month, no matter how small the debt was. But it could be worth a shot. It’s mediation, you might as well try!
It is very important only to agree to a payment plan you can definitely afford. If you are even a day late for one payment a judgement could be automatically entered against you for the full amount without your knowledge. When that happens your wages can be garnished and there can be a lien put on your house.
You may also be offered a lump sum debt settlement. If you have the money to pay them off right then and there, that’s an option you might want to try. The mediator will write up an agreement that both parties will sign, you’ll cut a check and then it will be over.
If You Can’t Make Payments:
If no payment plan is going to work for you because you are flat broke or your monthly expenses exceed your earnings then the lawyer would suggest a judgement. Now, a judgement can be detrimental if you have assets and money the collectors can come after. But if you don’t have any money, your credit is poor and you don’t own property (or the property is in foreclosure) than there isn’t much for the collectors to come after is there? That’s something you want to go over with your lawyer to be certain. If you are planning to file for bankruptcy, the judgement could possibly be included in the dischargable debts (meaning the judge can make them go away). Again, consult a lawyer. The upsides to a judgement: no more harassing phone calls, letters, etc. The downsides: hit to your credit (for up to 20 years in some cases), lien on your property, garnishment of your wages if the collectors can determine you’ve got more money in the future.
Go To Court:
If you cannot reach an agreement in debt mediation, you still have the option to go to court. Court is going to cost more money and there a decision is out of your hands and in the hands of the judge. If a judge determines you owe the money the bank says you do, than a judgement could be issued against you anyways. You should go to court only if you are prepare to hire an attorney. Remember that debt mediation is often a great opportunity for you to end this ordeal and work out a solution that both you and the attorney representing the bank can live with.
