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What to do if a creditor sues you for debt

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When a creditor sues you - court and periodic payment hearings

Never ignore a lawsuit. Do not ignore mail received from a court. When you respond to a lawsuit (you file an "Appearance" form with the court), you may challenge the amount of the debt the creditor claims you owe, or the amount of attorney’s fees requested by the creditor. If you ignore the lawsuit, you will lose any rights you may have to challenge the debt.

If the judge decides that you owe the debt, this is called a judgment. If a judgment is entered against you, you will likely receive a notice to appear at a periodic payment hearing to set up a reasonable repayment plan. At the hearing, you will have a chance to show that you are unable to pay the debt by filling out a financial affidavit form. You must go to the "periodic payment hearing" to keep this right. If you do not attend the "periodic payment hearing," the court could issue a warrant for your arrest.

The court cannot order you to pay a judgment from certain types of income. For example, if you have certain types of income and limited assets you may be “judgment proof.” That means that even if a creditor sues you and wins a judgment against you, a court CANNOT order you to pay the debt.

The following types of income cannot be taken to pay a debt:

  • Social Security benefits, Supplemental.
  • Security Income (SSI), and Social Security Disability Insurance (SSDI). This federal law says that Social Security income cannot be taken to pay a debt 42 U.S.C. Section 407. This New Hampshire case says Social Security income cannot be taken to pay a debt Todd v. Romano.
  • Weekly wages of up to 50 times the minimum hourly wage ($362.50).  See the New Hampshire law NH RSA 512.21.
  • Unemployment compensation. See the New Hampshire law NH RSA 282-A:159.
  • NH Retirement System income. See the New Hampshire law NH RSA 100-A:26-a.
  • Armed Forces retirement pay. See the federal law 10 U.S.C. Section 1440.
  • Civil Service retirement benefits.  See the federal law 5 U.S.C. Section 8346(a).
  • IRAs, annuities, pension plans, 403(a) plans, and 403(b) plans, including any distributions from such funds up to $362.50 per week. See the New Hampshire laws NH RSA 511:2(XIX) and NH RSA 524:6-a, II.
  • Firemen’s Retirement System. See the New Hampshire law NH RSA 102:23.
  • Policeman’s Retirement System. See the New Hampshire law NH RSA 103:18.
  • Railroad Retirement Act annuities and pensions. See the federal law 45 U.S.C. Section 231m.
  • Worker’s Compensation. See the New Hampshire law NH RSA 281-A:52.
  • Public Assistance to the Blind, Aged, or Disabled Persons and Disabled Children. See the New Hampshire law NH RSA 167:25.

Many other types of income are also protected by state or federal laws and cannot be taken to pay debts.

Click the button below to create a letter telling a creditor or debt collector that you are judgment proof.
Create letter

New Hampshire Legal Assistance operates a Periodic Payment Hearing Clinic and may be able to help you at the hearing.

If you feel your rights have been violated regarding the collection of a debt, contact the State Attorney General Consumer Protection Bureau at 888-468-4454, or contact an attorney.

Low-income individuals may apply online for assitance from 603 Legal Aid or call 603 Legal Aid at 1-800-639-5290. If you are not low income, call the NH Bar's Lawyer Referral Service (LRS) at 603-229-0002 to get the name of an attorney. You may have to pay a small fee for the referral.

This information is based on the law in effect at the time of publication. It is issued as a public service for general information only, and is not a substitute for legal advice about the facts of your particular situation.

August 2014/Create letter April 2021
Legal Advice & Referral Center/NHLA

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