(Note: This is not legal advice, and it is about the "average" elderly or disabled person. Each case is different, so you should talk to an attorney to find out what the law says about your situation.
Debt settlement is a fairly new way to deal with your debt problems. It is also called debt negotiation or debt reduction. By negotiating with a creditor, a client in a debt settlement programme can reduce their debt by as much as 50% and be debt-free in as little as 12 months. To get these savings, however, a client must stop paying their creditors on their own. By doing this, a creditor is forced to ask, "How can I get the most money from this late-paying debtor with the least amount of work and the least cost to my company?" Most creditors think that the answer to this question is to accept a lump sum settlement for less than the full amount owed.
Even though this is how the vast majority of cases work out, it is impossible for a debt settlement company to guarantee that a client's creditors won't take legal action against them. Anyone who has read a debt negotiation contract can tell you this. After all, creditors always have the right to sue debtors to get money from an account that is past due, even if the consumer is taking steps to pay off the debt.
Even if a creditor sues an elderly or disabled person in court and wins a judgement, it is much harder to collect a debt from them than from the average American consumer. This is because state and federal laws are very kind to debtors.
Think about the next situation. Let's say a creditor has just won a court case against you. Now, they need to put the judgement into action so they can start collecting the debt. Wage garnishment is one way a creditor can carry out a court order. When a creditor garnishes someone's wages, they automatically (and legally) take a certain percentage of that person's pay out of each paycheck until the debt is paid off. In most states, this is 25% after taxes. Social Security, disability, and most pensions can't be taken by creditors, unless the "creditor" is the mother of your children who wants alimony. If this is the case, the creditor would probably try to get the money some other way. Taking money from a bank account is another common way to carry out a court order. Again, the elderly and disabled are protected, if the money in the bank account comes from Social Security, a pension, or disability benefits.
Even if the debtor is old or sick, the creditor always has the right to go to court to get the money they are owed. But it makes sense that they would rather settle for less than the full amount owed, especially if the debtor has no assets or lives in a state that is friendly to debtors, such as Texas, Iowa, Florida, Arkansas, Massachusetts, or Oklahoma.
