Here are some fundamental principals to guide you. Be mindful that your local jurisdiction may have different laws, and you should always consult an attorney and explain the specifics of your case.
I'll use credit card debt as an example, as it's the type of debt most people incur today. When you """"apply"""" for a credit card, you actually execute a contract with the card issuer. This agreement stipulates that the credit card issuer will extend you credit to make purchases of products and services, and that you will repay the issuer with interest. There may be additional fine print, but this is the gist of the agreement. Your contract with the credit card issuer stipulates that if you fail to pay the money owed, you will be considered in default, and the credit card issuer will be able to file a lawsuit against you for breach of contract.
If the creditor wishes to sue you, it will do so on the basis of your breach of contract. If you believe that you are not in violation of your agreement or that you should not be held liable for other reasons, you have the same right to defend against this lawsuit as you do any other. A judgment can be entered against you if you fail to defend against the lawsuit or if the court does not recognize your defense. Nothing in this judgment will result in your imprisonment. It is merely a determination that you are responsible for the debt.
This portion is fairly straightforward. Typically, individuals find themselves in precarious circumstances due to what follows. Once a creditor has obtained a judgment, the law provides several collection options. Creditors may garnish a bank account, place a lien on your home, or petition the court to conduct an asset investigation. Which resources? How much? This depends on where you work, reside, and what you own. These are queries that the creditor may require you to answer in writing. Common names for this form include Financial Disclosure Form or Citation to Discover Assets. The court can order you to appear to answer your creditor's inquiries regarding your financial assets. If you disregard the writing, if your writing is unclear, or if you do not provide paystubs, bank statements, tax documents, etc., you may receive a letter informing you of a """"supplemental examination"""" in court. When the creditor employs the court's authority to compel your presence, you must appear; otherwise, you are in violation of a court order. Even if you have no money to pay the debt, the court is more concerned with your absence than with the debt itself. This conduct can lead to incarceration. You can be imprisoned for failing to comply with a court order to appear; in effect, you are held in contempt of court.
Thus, it is imperative that you always read and comprehend any court documents you receive regarding a debt. Even if you have no money to pay the debt, you must appear in court and explain your financial situation. You cannot be imprisoned for owing the money, but you can get into difficulty for disobeying the court's orders.""
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