Often the first sign that a debt is being collected
One of the questions I receive quite often from consumers in the debt collection context is:
“What is a default judgment?”
A default judgment is what the creditor gets if the consumer does not respond to a lawsuit within the time limit provided by the courts. In Oregon, if you have been sued in Small Claims, you have 14 days from the date you were served to respond. If you have been sued in Circuit Court, you have 30 days from the date you were served to respond to the complaint. If you don't respond to the lawsuit, the other side (the creditor) can get a default judgment against you. This simply means that you didn't respond or make any appearance on the case.
Other questions we often hear include: Are default judgments real? A creditor can't collect on a default judgment, can they? If I don't own any property, I'm safe, right?
A default judgment is a legitimate judgment and can be enforced against the consumer in multiple ways
A default judgment will be reported on your credit report. It will allow the creditor to garnish your wages and bank account. It could also allow the creditor to seize your property and/or vehicle. One of the more serious consequences of the default judgment is that the judgment automatically attaches to any real property you own in the county in which the case is filed. This has serious consequences in the bankruptcy context as well.
The bottom line is that you must respond to the lawsuit in time or the creditor will obtain a default judgment against you. You have to take it seriously. Sometimes, I hear a potential client say, "Well, I don't need to worry about this judgment because I don't own anything." However, within 5 to 10 years, the judgment amount can double or even triple from the original amount. The interest really starts adding up and creditors often employ collection attorneys who charge various fees on top of the principal and interest. A default judgment will follow you for many years, which can be problematic if you land a new, well-paying job, or inherit money, or now have equity in a home.
My suggestion is this: Do not allow your creditor to obtain a default judgment. It's one thing to go to trial and lose, but you shouldn't lose just because you didn't respond. If you respond to the lawsuit, you may be able to get a much more favorable outcome, including a reduction or elimination of the outstanding debt.
I frequently find that creditors or their debt collectors have violated the laws in their attempts to collect on a debt. And I have used those violations to obtain drastically reduced settlement amounts, outright forgiveness of the debt, and, in some cases, forgiveness of the debt and damages to my client.
If you have any questions, please don't hesitate to contact me. You can reach me at 503-505-0411 or fill out the contact form and I will get back to you as soon as possible.