Creditors

• A creditor has various options for trying to recover funds from an unpaid debt. One of these options is to sue the debtor in court. Once sued, a debtor has the right to defend himself against the lawsuit. However, if the court grants a judgment in the creditor's favor, the creditor can then use this court order to seize a debtor's assets to satisfy the debt.
  
  

Freezing Accounts

• When creditors freeze your account, they use the court order to get your bank to hold the money in your account and pay them the amount awarded in the judgment. The creditor can then take all the money from your account it needs to satisfy the judgment. If, for example, you have $5,000 in your bank account but the creditor won a judgment for $6,000, it can take every last dime in your account.
  
  

Collection Attempts

• Short of suing you and levying your account after winning a judgment, a creditor also has the right to try to get you to pay back what you owe. However, creditors cannot threaten to sue you or levy your accounts if they are not legally allowed to do so or have no intention of doing so. Also, a creditor has to comply with a debtor's demand that it stop contacting the debtor. But the creditor can still sue to recover the funds, even if the debtor makes a no-contact demand.
  
  

Statutes Of Limitations

• Whenever you fall behind on your debt payments, your creditors have a limited amount of time in which to file a lawsuit against you. How long they have is determined by the statutes of limitations in your state. These statutes are laws that impose a limited number of years, ranging from three to 20 depending on the state, after which time a creditor can no longer sue the debtor to collect an unpaid debt. Even if the creditor does win a judgment, states also have statutes of limitations that apply to the judgment.