Stopping Collection and Harassment by Collection Agencies

When debts are owed and unpaid, creditors begin to explore remedies for collection. Creditors may hire collection agencies, which often harass people until they pay. It may be helpful to inform a creditor if you are thinking about bankruptcy. If your debt to the creditor can be negotiated and you no longer have to file bankruptcy, everyone may win.

Steps Creditors Take to Collect Debts When No Bankruptcy Has Yet Been Filed

After obtaining a judgment and docketing the judgment, a creditor will need to find out your ability to pay the judgment, or the creditor’s ability to collect on the judgment. The creditor will want to know bank accounts, earnings, or other assets you

Learning the Debtor’s Assets

In order to learn the financial status of a debtor and a debtor’s particular assets, a creditor may file a Request for Order of Disclosure motion with the court.

The creditor files a Request for Order of Disclosure with the same court that docketed the judgment, with the same case number. The creditor will need to fill out the information about the debtor and the debtor’s address.

A creditor may only submit this form when the creditor can truthfully state the following::

  1. the creditor won a judgment in the lawsuit against the debtor,
  2. the case began in district court and the court administrator docketed the judgment more than 30 days prior to the creditor filing this form, or the case began in conciliation court and the court administrator docketed the judgment,
  3. the debtor has not paid the creditor all money owed to the creditor,
  4. the debtor and the creditor have not agreed to some other way to settle the debt.

If the creditor can truthfully state all of these things, the creditor may seek this order from the court, in order to learn of a debtor’s assets.

Financial Disclosure Form

There is a standard form, approved by the Minnesota Supreme Court, the creditor and the court will provide to the debtor if the court orders disclosure by the debtor to the creditor. This form seeks information from the debtor about the nature of the debtor’s assets and liabilities, the amount of the debtor’s assets and liabilities, the identity of the debtor’s assets liabilities, and the location of the debtor’s assets and liabilities.

The creditor pays a minimal fee to file this request with the court. The creditor must provide the court with the debtor’s address in order for the court to inform the debtor of the order.

Civil contempt is the consequence of failing to comply with the court’s order to disclose information to a creditor. However, if the debtor has no knowledge of the order, the debtor cannot be held in contempt.

If the court receives the order returned undeliverable at the address provided by the creditor for the debtor, the court will inform the creditor the order did not reach the debtor.

The Financial Disclosure Form also provides an ability for the debtor to claim some assets as exempt from garnishment or attachment.

After a debtor receives an Order for Disclosure, completes the Financial Disclosure Form, and returns it to the creditor, the creditor may challenge the debtor’s determination of exempt assets. If there are assets of the debtor ultimately determined to be nonexempt, the creditor may begin attempting to garnish wages, etc.

Negotiating With the Creditor in Lieu of Bankruptcy

However, creditors who know that a debtor is considering a bankruptcy filing may be willing to work with the debtor to reach a different agreement regarding the debt, in order to obtain some money rather than none.

Therefore, if you are a debtor and are have been ordered to disclose financial information to the debtor, you must comply with the court’s orders. You should also contact an attorney, discuss your bankruptcy options and the benefits of bankruptcy, and possibly attempt to negotiate the debt with the creditor.