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Collectors seizing debtor assets through litigation

New Hampshire residents who are struggling with debt should be aware of a practice that appears to have grown substantially among debt collection agencies in recent years. This disturbing trend involves filing lawsuits against debtors with what experts believe is often a presumption that the debtors will never appear in court. Many consumers have reported to attorneys that they have been sued and received default judgments that froze their bank accounts, garnished their wages and set liens on their homes without ever having received notice that legal actions were in progress.

On occasion, collection agencies may even initiate lawsuits without a means to prove the validity of the suit. This could lead to situations where a person receives a surprise notice of a default judgment regarding a debt that doesn't even belong to that person. Consumer lawyers say that many judges have excessive workloads and often lack the time to give such cases adequate scrutiny, causing further headaches for affected consumers.

Those who are falsely accused of defaulting on debts by debt collectors who fail to keep facts in order may eventually manage to have those debts vacated without further incident. Many debts are legitimate, however, and a person who has accumulated such a debt may feel especially trapped upon making the sudden discovery that a judge has ruled against him or her.

Filing for bankruptcy under either Chapter 7 or Chapter 13 may carry the least negative consequences for a person in such a situation. Many factors may affect the handling of debts included in default judgments during the bankruptcy process, so a debtor may wish to consult with a bankruptcy attorney who can suggest an appropriate course of action for a client's unique situation.

Source: The Huffington Post, "Debt Collectors Have Figured Out A Way To Seize Your Wages And Savings", Hunter Stuart, June 03, 2014

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