Sally Herigstad is a certified public accountant and the author of "Help! I Can't Pay My Bills: Surviving a Financial Crisis" (St. Martin's Press, 2006). She writes "To Her Credit," a weekly reader Q&A column about issues involving women, credit and debt, for CreditCards.com, and also writes regularly for MSN Money, Interest.com and Bankrate.com, and has guested on Martha Steward Radio and other programs. See her website SallyHerigstad.com for more personal finance tips and free budgeting worksheets. Ask Sally a question, or read her previous answers in the To Her Credit archive
Dear To Her Credit,
I am filing for Chapter 7 bankruptcy. I have retained a
lawyer, but have not finished all the paperwork yet.
Now I am being sued by a creditor through a local law firm.
I was served a default judgment order that needs to be answered by the end of this
week. I called my lawyer, but she is on vacation until the week after. I
contacted the attorney that is handling the credit card suit after I retained
my lawyer to let them know I was filing bankruptcy, but I am now faced with
wage garnishment. -- Marthina
Your lawyer should not have left you in the lurch while she
went on vacation. According to Professor Jason Kilborn at The John Marshall Law
School in Chicago, your lawyer should have either filed your case before she
left or put you in the hands of someone who could.
Having to fend off creditors while you get together the
paperwork to file for bankruptcy is an all-too-common problem. "This comes
up all the time," says Kilborn. "I would hazard to guess that the
great majorities of filings are emergencies."
Kilborn says, "There's not a heck of a lot you can do.
The only thing that's really going to stop this creditor is a bankruptcy
Once the papers are signed, the actual filing should only
take about two minutes. The lawyer doesn't even have to go to the courthouse.
Wherever your lawyer is, she should be able to do it from there or she should
have a colleague who can deal with emergencies while she is gone. Kilborn would
be surprised if your lawyer doesn't have a paralegal or someone who can take
care of it. In his opinion, it's outrageous for a lawyer to abandon his or her
clients and go on vacation without tying up loose ends first or making sure you
are taken care of.
In the meantime, nothing's stopping you from trying to
discourage creditors. "One thing she can do is call up whoever is
harassing her and explain, 'I have spoken to a lawyer and I have a bankruptcy
in progress; none of your efforts are going to be successful,'" says
Most creditors, if they hear that -- and believe it -- are
not going to pursue you anymore.
There are some, however, who may try even harder. If they
are far enough along that they think they can garnish your wages quickly --
before your bankruptcy is filed -- they may try. It's tricky, though. If they
take too much, the court may rule what they receive to be a
"preference" and make them return it. If they get less than $600 from
you, they'll probably be able to keep it. Kilborn says, "If the collections
agent knows what they are doing, they may well be able to grab $500 to $600,
and it's a lot more than they would get otherwise."
Be aware that when you talk to collectors, they'll say
anything to try to get in front of the line to get paid before you file for
bankruptcy. "It's going to be a game of chicken," says Kilborn.
My best advice is to severely limit any conversations with collectors. Other than telling them you are filing for bankruptcy, nothing you
say will help at this point. Collectors will say things that upset you, and
they may even get you to say things that are not in your best interest. If you
decide to call them, keep it short. Or write a letter instead.
Your situation shows the importance of getting the paperwork
in and filing once it is determined that bankruptcy is the only option. I hope
your lawyer or someone acting in her stead can get your case filed quickly so
you can be protected from further actions of creditors, and that you can soon
be on the road to financial recovery.
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