If you have ever missed a payment on a credit card or loan, you have likely painfully experienced some part of the debt collection process. It starts with calls from the nice people, then calls from the not-so-nice people, then calls from the mean people. Debt collectors and the harassment they inflict on our clients are the number-one reason people come talk to us – they want protection. They want relief from the telephone calls and letters and the fear that a lawsuit or garnishment is coming soon. Thankfully, filing bankruptcy puts a stop to all of this.  

Once you’ve missed a payment, these people have one job: to get money out of you. Your creditor likely knows your credit score, how much you make, how many other debts you have, and how many other payments you may have missed to other creditors. They know that the sooner they collect money, the better – if your credit starts sinking, or you have missed other payments, then they know they are not likely to get any money out of you. Their one hope is to make you so miserable that you will pay them something just to get them to leave you alone.  

There are rules that debt collectors are supposed to follow, and you can learn more about those rules here. But there are many ways they can make you miserable just following the rules.  

The collections process can last anywhere from 3-to-9 months after your first missed payment. It begins with telephone calls, letters, and bills. After several months, your original creditor may send you a notice or report to your credit report that your debt has been “charged off.” This does NOT mean that the debt has been forgiven or is gone. All it means is that it has been taken off of your creditor’s roll of performing assets, and is being sent to a collections agency. A collections agency will try to collect from you for another several months before the debt is turned over to an attorney’s office. Sometimes the debt collector and attorney’s office are one and the same.  

No matter when you file bankruptcy, once you file, the harassment stops, the phone calls stop, and the bills and letters stop. 

LAWSUITS IN MINNESOTA

Once the debt is turned over to an attorney, the attorney’s job is to sue you so that the debt can become a judgment. A judgment is simply a court order that is entered which declares that a person owes a certain amount of money to someone else. In Minnesota, the sole way that a lawsuit can be started is by serving the defendant with a summons and a complaint. A summons is a legal notice that you are being sued in court; a complaint is the legal document that tells you why you are being sued and by whom.  

There does not need to be a court date listed in the summons or complaint in Minnesota. Minnesota’s court rules allow a creditor to sue someone else without setting a court date first. In such a case, the summons must clearly state that “You are being sued” and that “You must reply within 20 days to protect your rights.” If you do not respond, then the creditor can get a judgment without having a hearing. Often, a summons and complaint will be the only notice you receive that you have been sued.  

Once you receive a summons and complaint, you have 20 days to respond. A formal written response, not a phone call, is required. Your attorney can respond on your behalf. In the written response, you should assert a valid defense to the lawsuit – such as the creditor is suing the wrong person, is suing for the wrong amount, or the debt is too old and has passed the statute of limitations (typically 6 years since the last payment was made). In addition, if you settled the debt previously, your creditor should not be suing you. Valid defenses can stop the lawsuit, but frivolous answers will not. If you do not file a written response, a default judgment will be entered against you.  

Sometimes, bankruptcy is the only valid response to a summons and complaint. Filing bankruptcy stops the lawsuit, prevents the judgment, and prevents a garnishment or bank levy.