What Should You Do
When You Have Creditors You Can't Pay?
Richard Fonfrias, J.D.
Chicago's Financial Rescue & Bankruptcy Lawyer
Fonfrias Law Group, LLC
Is it OK to ignore your creditors?
I know how you feel. When you owe money that you can't pay, you often feel there's little you can do. Then your phone starts ringing when creditors call, asking you to pay the balance in full. Next, creditors threaten to send your account to a collection agency or to sue you if you don't pay.
The answer to your question is no, you should not ignore your creditors. This just makes matters worse. Here's what you should do:
Consider Filing For Bankruptcy
Call an experienced bankruptcy lawyer and find out whether bankruptcy is a good option for you in your situation. Many people have misconceptions about bankruptcy. They think it will ruin their lives and that they will never again be able to have good credit. This isn't true.
In fact, bankruptcy can erase most of your debts and give you the fresh start you want and deserve. Plus, you will be able to take on new debts and rebuild good credit in the months and years ahead.
Still, there is the downside because bankruptcy will remain on your credit report for a number of years. But in most cases, the drawbacks of filing bankruptcy are not nearly as bad as ignoring your creditors. This is why you need to talk with a qualified bankruptcy lawyer who can give you accurate information. In some cases, bankruptcy may be a very good option for you.
If You Ignore Your Creditors Completely...
... you can expect your creditor to file a lawsuit and get a judgment against you. Then the creditor will get a Citation to Discover Assets, when you must answer questions under oath about your finances and assets.
If you don't respond to these questions, your creditor will ask the court for a show-cause hearing. At this hearing, the judge will ask you to provide a good reason why you did not answer the creditor's questions.
If you appear at the show-cause hearing,
(1) the court can put you in jail, fine you, or both, for not answering the creditor's financial questions after you were ordered to by the court; OR
(2) if you give the court a good reason for not responding to the creditor's questions, the court can extend the period for you to respond.
If you don't appear at the show-cause hearing, the creditor will complete a sworn affidavit telling the court (1) that there was a hearing scheduled, (2) that you were told of the hearing, and (3) that you failed to appear, and the court will issue an arrest warrant for you.
Bankruptcy Might Solve Your Problem
But don't make the decision yourself. On this website, you'll find dozens of educational articles that will help you understand the many benefits and misconceptions about bankruptcy.
In addition, you're always welcome to call me with your questions. Bankruptcy might be right for you - and there could be better solutions for you that don't require bankruptcy. I'll be happy to discuss the options with you, no cost or obligation of any kind.