Creditors and collection agencies will take great steps to collect the money that is owed to them or their clients.  You have to put yourself in the creditors shoes and think how you would feel if someone owed you $500 or more for a service you provided.  Personally I’d be upset if someone owed me twenty bucks and didn’t pay me.  I think most people become upset when money is owed to them.

Money is energy that you have worked for.  You’ve expended your energy to earn it and deserve to be paid if you’ve done your job.  A lot of people end up in collections simply because something happened that set them back and they don’t know how to deal with that large debt.  Maybe your car broke down and you owe the mechanic for his services.  Maybe you became ill and owe the hospital money.  Regardless what happened there are steps you can take in advance to avoid this and there are steps you can take to make your situation better if you are being sued.

Owing money can be embarressing and many people will withdraw from society when faced with such a situation.  You get served with court papers and feel like hiding or avoiding the issue all together.  This won’t help.  You need to face your problems in order for the situation to improve.  if you don’t appear in court then the judge can issue a show cause hearing.  A show cause hearing is for you to explain to the judge why you did not appear.  If you do not appear for the show cause hearing the judge can issue a warrant for your arrest.  Collection agencies and creditors cannot have you arrested, but courts can.

If you have already been served you should contact your creditor and apologize for letting the situation get so far.  The creditor may tell you that they cannot talk to you since the account has been turned over to collections or an attorney.  That is simply false.  Creditors use attorneys and collection agencies to hide from you.  Your creditor doesn’t want to deal with the nasty side of their business so they turn it over to people who are accustomed to these situations. 

If you can get your creditor to have feelings about you, your family and situation then you’ve won half the battle.  A creditor has the ability to drop a lawsuit before judgement is taken.  The collection agency has no power over your account.  They are merely middle men who take orders from their creditors.  The attorney is also paid by the creditor and takes direct orders from them.

The problem you face when an account goes to an attorney or collections is the creditor is losing money.  For example if you owe Joe Bob’s Shop $500 for car repairs they might be paying as much as 50% of that $500 to the attorney or collection agency.  It’s best to handle these situations before they get this far.  A creditor doesn’t want to send you to collections but if you ignore the bill then they will.

If the creditor will not speak to you once the bill is in collections or with an attorney then you need to talk to the attorney’s office and get them to understand your situation.  Maybe you lost your job and have five kids.  If that’s the case then lay it all out there for them.  The attorney’s office may be compassionate and accept payment arrangements but you need to ask them if they will garnish your bank or any other money.  You will want to know if they plan on taking your car or placing a lien against your home. 

Communication is key when finances get to this point.  You certainly don’t want a judgement against you because you don’t want to have your bank account garnished.  If they garnish your bank account you’ll be bouncing checks all over town and that opens a whole new can of worms. 

If you have the ability to settle your debt then offer your creditor a settlement.  Keep in mind they already lost money sending the bill to collections.  Often people are able to negotiate a settlement that pleases the creditor and eliminates the debt.