What steps can I take to avoid a lawsuit from a collection agency?

I’ve already been sued by one recently and spent nearly a grand to settle it. I don’t have a job and I don’t want to part with any more money. Are there any steps I can take to prevent them from suing me? With the last case, they sent me a letter to disclose assets and I didn’t respond. If I were to respond to that letter explaining my income/asset situation would a debt collector still be likely to sue? And if they did sue me, how could I protect my exempt assets?

Asked on July 20, 2012 under Bankruptcy Law, Massachusetts

Answers:

S.L,. Member, California Bar / FreeAdvice Contributing Attorney

Answered 8 years ago | Contributor

If the case was settled and there was a settlement agreement and release of claims signed by the parties, then that ended the matter and no lawsuit will be filed.  If there wasn't a settlement and you were to disclose assets in response to the letter, the creditor / collection agency would file a lawsuit to go after your assets.  If there was a settlement, that ended the matter and there is no reason to respond to the letter and disclose assets.  If there was a settlement, the lawsuit should be dismissed with prejudice which means it cannot be reinstated. 

If you are concerned about being sued by other creditors / collection agencies, you might want to consider filing bankruptcy.  Chapter 7 bankruptcy is straight liquidation which eliminates certain types of debts.  In the bankruptcy, there are exemptions which will protect various categories of assets; for example, car, clothing, household goods and furnishings, etc.  These are only a few of the exemption categories.


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