Attorney Placement Pending: What Should You Do?

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If you receive a collection letter from American Express or Discover Card saying, "Attorney Placement Pending" ...

Are they bluffing about sending your account to an attorney ... or should you take this seriously?

In our experience, they are not bluffing and they really do intend on sending your past due account to an attorney for possible litigation against you.

To understand what you're up against, here's a crash course on the debt collection process ...

The Debt Collection Complex

Debt collection is a very linear, regimented process:

When a credit card account becomes delinquent, collection efforts begin in-house with the actual creditor such as American Express, Discover, Chase, etc.
If the creditor is unsuccessful at collecting the past due balance, the next step is to escalate their collection efforts against you:

Some creditors send your account to a collection agency whose collection tactics may be a bit more abrasive and painful.
Some creditors go right for the jugular and send your account to a collection law firm with instructions to proceed with litigation against you if arrangements can not be made to promptly resolve your past due account.

FAQ: Debt Collection Law Firm

So what exactly happens when your account is transferred to a collection law firm?

If your account is referred to a collection law firm, does it mean you're definitely getting sued? No. Usually a law firm will give you a small window of opportunity to work things out voluntarily. But if an agreement cannot be reached relatively quickly, litigation is usually the next step.
Can a collection law firm garnish your wages or seize funds your bank account? Maybe. The answer is not a simple yes or no. It depends where you're at on the litigation "timeline".

Before your wages can be garnished or funds seized from your bank account or liens put on your property, the creditor must be awarded a court judgment against you.
But before a court judgment can be awarded against you, the law firm must file a lawsuit against you.
And before lawsuit can become active, you must be served with the lawsuit by a process server. Once you are served with the lawsuit, the court clock starts ticking and you have a limited time in which to answer the lawsuit (21 days is common, but it varies from court to court).
However, if you do not answer the lawsuit by the specified deadline after you are served with the lawsuit, the creditor will be awarded a default judgment against you.

The good news is there are mechanisms in place and well-defined steps that must be taken before creditors can begin seizing your assets. But if you're sued, you must respond in a timely manner, otherwise you will lose the lawsuit by default. (Hence, the term default judgment.)

Now the bad news.

Once a creditor receives a judgment against you, that judgment can remain valid for 3-20 years, collecting interest all the while. It's not going away. You'll need to check the statute of limitations for your state to see how long judgments remain valid.

What if a creditor gets a judgment against me, but I'm currently unemployed? You might be judgment-proof today, but remember that judgments do not expire for years. Therefore, a creditor with a valid judgment against you could seize money or assets from you down the road ... when you least expect it. So it's best to try and resolve past due accounts before they go to litigation.

PRO TIP: The deeper you get into the collection process, the less likely you are to reach a favorable agreement because you've forced the creditor, collection agency or collection law firm to commit time and resources attempting to collect the past due balance. Therefore, taking action to resolve a past due balance sooner rather than later usually results in the most favorable outcome for you.

If I receive a letter stating "Attorney Placement Pending" is there still time to work something out and avoid litigation? Many times, yes, but you must act quickly if you want to avoid a lawsuit and reach a mutually acceptable agreement while you still can. We have years of experience negotiating out-of-court settlements for our clients. Request a free phone consultation today and we'll see what we can do to help.

* Donaldson Williams is not a law firm and we do not provide legal advice. If you seek legal advice, you must consult with a competent attorney in your state.

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