Debt Collection: Understanding Your Rights

Submitted by dave mallon on Wed, 05/09/2012 - 19:08
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Wabanaki Legal News, Winter 2012

When a creditor is trying to collect a debt from you, the law gives the creditor ways to try to collect that money through court.  Even if you only co-signed a loan for another person, you are still responsible for that debt just as if you had taken out the loan yourself.  

When you receive any type of notice from tribal or state court about a debt that you owe or co-signed for, or notice that a creditor is trying to collect a debt, do not ignore it.  Call Pine Tree and plan to appear in court on time for your hearing.

If you have been served with a collection notice in the past, but have ignored it, not gone to court, or have not settled the debt, the creditor may have gotten a default judgment against you.  This means the court has decided that legally you owe the debt.  If there has been a default judgment against you, you will probably get a court subpoena to attend a disclosure hearing.  Do not ignore this notice.  Contact Pine Tree and plan to appear in court for your hearing. 

What is a disclosure hearing?   

Once you get a notice to appear in court for a disclosure hearing, it is too late for you to dispute the debt.  The time to dispute the debt is when you first get notice that a creditor is trying to collect from you.  If you do not respond to that notice and do not attend your first hearing, you have missed your chance to dispute the debt amount.

At the disclosure hearing, the judge will decide whether you have any income or property that the law allows the creditor to take.  By law, some or all of your income and property is protected from collection.  Exempt income includes:

  • TANF
  • Social Security and Supplemental Security Income (SSI)
  • Veteran's Benefits
  • Worker's Compensation
  • Maine State Retirement Benefits
  • Unemployment Compensation
  • Earned Income Tax Credit
  • Alimony or support necessary for the debtor or your dependents
  • Other forms of public aid 

Exempt property includes:

  • Between $47,500 - $95,000 of equity in your home 
  • Up to $5,000 of equity in one vehicle
  • Up to $5,000 of equity in “tools of the trade”- power tools, professional books, and materials necessary for carrying on your trade or business 
  • Up to $200 of clothing 
  • Up to $200 of equity in household furniture

If a creditor is trying to take any portion of your tribal per capita payments to satisfy your debt, you should contact Pine Tree Legal Assistance immediately.

Bring a list of all of your income and expenses, assets and debts to your court hearing. This will help the judge know what, if anything, you can afford to pay.  Remember, even if the judge decides that you cannot pay anything at this time, your debt will not go away.   However, the creditor will not be able to request another disclosure hearing for at least 6 months.  If it is clear that all of your income and assets are protected from collection and that your income is not likely to change, the creditor may give up trying to collect.  

The debt collection process can be complicated.  People often agree to make payments they cannot afford because they don't know their rights.  Exempt benefits like SSI, TANF, and General Assistance are already too low for people to live on.  Anyone who is on public assistance should not agree to a court order to make payments.  Before agreeing to any payments, please call Pine Tree for more information and assistance.