I have seen a recent spike in aggressive collection practices. This isn’t surprising. In fact, it is something of an annual rite of passage. Collection firms tend to be more aggressive early in the year because they know debtors may be receiving Federal tax refunds. This makes it more likely debtors will have money to repay… or seize.
While this spike in creditor actions is not surprising, there has been a clear, abnormal increase in creditors taking the next step… going after property. This generally occurs in the following manner. The creditor will file an action at the magistrate level. When the debtor does not respond, the creditor gets a default judgment against them. The creditor then files a motion in the Court of Common Pleas to execute on the judgment from the lower court.
Once the Court of Common Pleas issues a judgment, the creditor may execute on the judgment. In short, this means “go after your property”. Recently, creditors have been executing by issuing interrogatories on debtors, or scheduling depositions for the creditor to testify. Interrogatories are formal demands for information regarding your property and its location. You will be asked to list bank accounts, real estate, cars, retirement accounts, investments, and other property.
Depositions are similar demands for information, except the information is taken in person, under oath. The purpose of both interrogatories and depositions is to gather information about your property in order to seize some of it to satisfy the judgment, for instance, by putting a lien on a home or freezing a bank account.
It is important to note that if you do not respond to these demands for information, you may be found in contempt of court. Unlike the initial lawsuit where a judgment is entered against you if you do not respond, but there are no other penalties, you can not ignore these demands. Even if you do not have an attorney, you should respond.
What should you do if you receive an interrogatory or deposition in aid of execution? Call an attorney. As an experienced bankruptcy attorney and debtor’s rights attorney, I may be able to discharge the underlying debt before you need to answer. In some cases, an arrangement can be made to satisfy the debt. It is actually best to speak with an attorney as soon as the original lawsuit is served on you, but it is not too late once you reach this stage. The sooner you contact an attorney, the sooner you will be protected.
Contact us if you are the target of aggressive collection practices such as these, or aggressive phone calls and notices. You don’t need to lose you property or be harassed. If the creditors get aggressive, you need to be prepared to be aggressive yourself!