What should do if I’m financially insolvent and being sued over a small debt?

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What should do if I’m financially insolvent and being sued over a small debt?

Debt, less than $2,000, was accrued before my marriage. I provide full-time care for my 4 year old. No employment prospects until she starts school.

Asked on May 9, 2012 under Bankruptcy Law, Maryland

Answers:

SJZ, Member, New York Bar / FreeAdvice Contributing Attorney

Answered 9 years ago | Contributor

If you acknowledge owing the debt (it's a legitimate debt), you may wish to talk to the creditor or their debt collector, explain your financial situation, and try to work out some payment plan or schedule--even if it's only $50 or $100 per month.

If you can't work out something mutually agreeable, then while you should answer the lawsuit and appear before the judge (not default)--since the judge may pressure the creditor to work out some realistic plan with you--you can't worry too much about it:

If it's a legitimate debt and they want to sue you, they can--and they'll almost certainly win; but

If you can't pay it and have no income and little or no assets, they can't get money from you.

If you have little or no income or assets, you may be effectively judgment proof; while it would be better to have worked out a settlement or payment plan, to avoid having a judgment agsint you on the public record, you can't pay what you don't have.


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