Originally published: April 19, 2017 -- Updated: May 15, 2023

Update: As described below, there are options available for creditors who need to collect debts from debtors who have limited income that may be recovered through wage garnishment. However, it is important to understand what limits may apply to the amounts that can be garnished from a debtor’s wages. This may help creditors determine what avenues to pursue when collecting debts following a legal judgment against a debtor.

Illinois law states that one of the following methods may be used to determine the amount that can be deducted from a debtor’s wages:

There are a variety of situations where creditors may need to deal with borrowers who have defaulted on loans or are struggling to make payments. While there are many debt collection options available to creditors, it can sometimes be beneficial to work with a debtor to find solutions that will allow them to continue making ongoing payments. Loan modifications may involve changes to a lending agreement that will make it easier for the debtor to adhere to the terms of repayment. By understanding the different types of loan modifications that may be available, creditors can take steps to protect their financial interests.

Options for Modifying Loans

To address delinquent loans or defaults, creditors may reach agreements with debtors that may include:

• Forbearance - A creditor may agree to suspend or reduce a debtor's monthly payments for a specific time period. This can be a good option for borrowers who are experiencing temporary financial difficulties due to unexpected changes in their lives, such as health issues, job loss, or divorce. However, forbearance is not a long-term solution, because the debtor will be required to resume payments at some point in the future. The missed payments may be added on to the end of the loan term, or future payments may be temporarily increased, and this may mean that the borrower will owe more in the long run.

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When debtors default on mortgage payments and fail to pay what is owed to a lender, foreclosure proceedings may be necessary. The foreclosure process can be lengthy and confusing, and it is important for mortgage lenders or other creditors to understand their rights and responsibilities. By taking steps to protect these rights and resolve any issues that may arise during a foreclosure, a creditor will be able to minimize their losses and recover as much of what is owed to them as possible.

Issues to Address as a Creditor During a Foreclosure

Creditors, including primary mortgage lenders, mortgage servicers, and second mortgagees, can protect themselves during foreclosures by doing the following:

• Follow the law - It is important for creditors to follow all applicable laws and regulations throughout the foreclosure process. Depending on the type of loan, there may be specific notice and filing requirements, mediation procedures, and other legal requirements under state law. Failure to follow these requirements can result in delays or even dismissal of the foreclosure. An attorney can provide guidance on the laws that apply in a specific situation, and they can help address any legal issues that may arise during a foreclosure.

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Creditors have certain rights when it comes to collecting debts owed by debtors. While there are a variety of debt collection options available, there are some situations where it may be beneficial for both creditors and debtors to negotiate settlements that allow a debtor to pay less than the full amount owed to a creditor. In these situations, it is important for creditors to know how to protect their rights and ensure that any settlements reached with debtors are fair while protecting the creditor's best interests. By understanding the potential strategies that may be used when negotiating settlements with debtors, creditors can take steps to minimize their financial losses and ensure that settlements can be completed successfully.

Staying Up-to-Date on the Law

Creditors must be sure to understand all applicable laws and regulations that apply to debt collection. This includes staying aware of changes in local, state, and federal laws that may affect the way creditors can collect debts owed to them. Creditors should also be sure to understand the legal limits regarding how much a debtor can be required to pay, as well as any regulations that may play a role in the negotiation process. Understanding these laws can give a creditor an advantage during negotiations and help ensure that they are not taken advantage of.

The Fair Credit Reporting Act (FCRA) is a federal law that establishes rules and regulations for the collection, maintenance, and use of consumer credit information. This law was designed to protect the privacy of consumers and their credit information. It requires creditors to treat consumer credit information with care, accuracy, and responsibility. If a creditor fails to abide by these laws when collecting debts or taking other actions, they may face serious legal consequences.

Understanding Creditor Requirements Under the FCRA

The FCRA governs how creditors must handle consumer credit reports, as well as any other information related to a consumer’s creditworthiness. For example, it requires that any creditor who obtains a consumer’s credit report must have a “permissible purpose”—which means they must be able to show that there is a legitimate business reason for obtaining the report. It also restricts creditors from reporting inaccurate or outdated information about consumers and requires them to provide consumers with access to their own files if requested.

Repossession of a vehicle is an effective way for auto lenders to recoup losses in the event that a customer has not been able to meet their contractual payment obligations. However, when a creditor repossesses a vehicle from a borrower, it can be a tricky and uncertain process. Creditors need to be aware of their legal rights and the options available to them in these situations.

Due Process Requirements

The first step for any creditor is to familiarize themselves with the due process requirements in their state. Creditors may have certain duties they are required to fulfill before they can legally repossess a vehicle. In some states, a creditor may be required to provide written notice to the borrower, informing them of their right to cure the default. However, Illinois law does not require a creditor to notify a debtor prior to proceeding with a repossession. If necessary, creditors may still contact debtors to notify them of missed payments and inform them of the consequences of defaulting on a debt.

When repossessing a vehicle, creditors will often work with a licensed repossession agency. This agency must purchase a recovery ticket from the Illinois Commerce Commission for each vehicle that is repossessed. The recovery ticket will specify the date and time the repossession took place, the Vehicle Identification Number (VIN), the name of the repossession agency, and the name of the law enforcement official who was informed about the repossession. The recovery ticket must be kept in the vehicle until it is sold or returned to the debtor, and it must also be kept on file for two years.

Creditors have a right to take all reasonable measures to recover debts owed to them. However, debtors are also afforded with certain protections, and they may take steps to eliminate the requirement to pay certain debts by filing for bankruptcy. When a debtor declares bankruptcy, creditors should take the appropriate steps to protect their rights and determine how they can minimize their losses. The steps creditors can take in these situations include understanding the relevant provisions of the U.S. Bankruptcy Code, determining how different types of bankruptcy will affect creditors’ rights, contacting a bankruptcy trustee to discuss their rights as a creditor, paying close attention to any documents they receive from court officials or trustees, taking full advantage of all available remedies under state and federal law for recovery of their claims, and remaining in contact with their attorney throughout the bankruptcy process.

Understanding the Relevant Bankruptcy Laws

The U.S. Bankruptcy Code is divided into several core sections known as chapters. Each chapter provides guidance on different aspects of bankruptcy, including eligibility requirements, filing procedures, dischargeable debts, and more. In order for creditors to understand their rights when dealing with a bankrupt debtor, it is essential that they become familiar with the relevant provisions within these chapters. For example, creditors should be aware of the ways they can challenge a bankruptcy filing as well as their rights to file a proof of claim with the court.

With the changing laws and regulations surrounding debt collection rights, keeping up with the latest developments can be a challenge for creditors. At Dimand Walinski Law Offices, P.C., we are dedicated to representing creditors in debt collection matters, and we also regularly publish blogs to help keep creditors informed of the relevant issues that may affect them. We wanted to highlight the top 10 blogs that visitors to our site read in 2022:

1. What Are the Statutes of Limitation for Debts in Illinois? - This blog looks at the time limits that apply to creditors who are seeking to collect unpaid debts. We updated this blog in 2022 to provide more information about the procedures that creditors will need to follow to pursue judgments against delinquent debtors.

2. Illinois Suspends Vehicle Repossession by Auto Lenders - In 2020, the state of Illinois took action in response to the COVID-19 pandemic to prevent creditors from repossessing vehicles from delinquent debtors. We provide information about how this order affected creditors, including updates about the options that may be available after the order expired.

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Originally published: July 30, 2020 -- Updated: January 5, 2023

Update: When a debtor is judgment-proof, a creditor may have limited options for collecting debts. If a debtor's assets are exempt, they may not be seized and liquidated if the debtor files for bankruptcy. If a debtor's income is below a certain amount, it may not be possible to garnish the debtor's wages. However, creditors may have other options, including negotiating loan modifications with the debtor. This may be a good solution in situations where a debtor has secured debts and does not want to turn over the property they have used as collateral.

A mechanic's lien is a legal way for creditors to secure payment for work that has been done on a property. It is typically used by construction companies, subcontractors, suppliers, and other professionals whose services are used in the building or improvement of real estate, although finance companies may also need to address mechanic's liens as they take steps to collect debts. If a person or company is not properly paid for work that was performed or materials that were supplied, they may file a claim against the property that will require a lien to be paid before the property can be sold or ownership can be transferred in the future. To ensure that a mechanic’s lien will be valid and enforceable in court, there are certain steps that must be taken.

Filing the Lien

In order for a mechanic’s lien to be valid, it will need to be filed with the appropriate government office within strict timeframes. In Illinois, a claim can be filed with the recorder of deeds in the county where the property in question is located. This claim must be filed within four months after a construction project was completed, the date that materials were delivered, or when work was last performed. A claim must state the balance that is due, provide a description of the property, and include details about the contract to perform work or provide materials.

Providing Notice of a Mechanic's Lien

Notice of a mechanic's lien must also be provided to certain parties in order for it to be valid. Generally speaking, this will include sending notices directly to the property owner and any other parties involved in the underlying transaction (i.e., mortgage lenders). For liens against single-family residences that are occupied by the property owner, notice must be provided to the property owner within 10 days after the lien is recorded.

There are numerous situations where creditors may need to take legal action to collect debts, including by filing a lawsuit against a debtor and obtaining a legal judgment. After receiving a judgment, a creditor will then need to enforce the judgment, and they may be able to collect what is owed by seizing a debtor's assets or garnishing their wages. However, before doing so, a creditor may need to use a citation to discover assets to determine the financial resources available to the debtor that may be used to pay the amount owed. 

While citations can be served on multiple parties, including a financial institution or a debtor's employer, a Citation to Discover Assets to Debtor may be served to the debtor themselves, and it will require them to appear in court and answer questions about their assets and income. By understanding the procedures followed in these types of citations, creditors can ensure that they will be able to uncover the necessary information and compel a debtor to make payments or turn over assets.

Step 1: File the Citation in Court 

A creditor will first need to file a Citation to Discover Assets to Debtor form in the circuit court of the county where the judgment was entered. This form will include the debtor's name and address and information about what is owed. This information may include the date the judgment was entered, the amount of the judgment, and the remaining amount that needs to be paid, including the creditor's court costs and any interest that has been applied after the judgment was entered. 

As a creditor, it is important to be aware of the laws regarding debt collection in order to avoid any potential claims of harassment. The Fair Debt Collection Practices Act (FDCPA) protects consumers from debt collectors who engage in abusive or unfair practices. These provisions apply to any person or entity that collects debts, including creditors and collection agencies. By understanding the applicable laws and taking steps to protect creditors' rights, a company that is seeking to collect debts can avoid actions that could potentially result in penalties.

What Constitutes Creditor Harassment?

There are many different types of behavior that could be considered harassment when collecting debts. These include:

• Making repeated phone calls to a debtor in a manner that could be considered annoying or abusive
• Using obscene or threatening language during phone calls or other communication or correspondence
• Making public accusations or posting private information about the debtor in a location where it may be visible to the public, including information about a person's debts that is printed on postcards or the outside of envelopes
• Publishing lists of debtors who are delinquent in their payments
• Contacting a debtor's friends, family, or employer in an attempt to collect the debt
• Sending unwanted correspondence, such as text messages, emails, or letters, after a debtor has asked for communication to cease
• Calling a debtor outside of reasonable hours (generally before 8 am or after 9 pm)
• Contacting a debtor without identifying oneself as a creditor or debt collector

How to Avoid Harassment Claims

To ensure that they are following the provisions of the FDCPA, creditors can do the following:

If you are a creditor and are owed money by a debtor, you may have several options for collecting on a judgment that you have obtained in court. While wage garnishment is a common way to collect judgments, other options may be available, including using non-wage garnishments to seize money from a person's bank accounts. In these situations, it is important to follow the correct steps to ensure that the money owed can be collected.

How Does a Creditor Seize Funds From a Debtor's Bank Accounts?

To collect money from a debtor's bank accounts, a creditor must serve a garnishment summons to the garnishee (the bank or financial institution). The garnishment summons and a garnishment notice will also be served to the debtor. The summons will include interrogatories asking the garnishee to provide information about the debtor's assets. After receiving the summons, the bank will be required to freeze the debtor's accounts, preventing them from withdrawing any funds until the case has been resolved. The summons will specify a "return date" by which the bank will be required to submit answers to the interrogatories. The bank must file an answer by this date unless they received the summons within 10 days before the return date, in which case they will have 14 days after the return date to respond.

The garnishment notice will specify the amount of the judgment against the debtor, and it will inform the debtor that they have the right to request a hearing to dispute the garnishment. The debtor must request a hearing before the return date specified on the summons.

When a debtor files for Chapter 7 bankruptcy, creditors may be concerned about their ability to collect what is owed to them. In some situations, a creditor may be able to pursue an objection and challenge the debtor's right to a discharge of debts in a Chapter 7 bankruptcy. If the objection is successful, the debt owed to that creditor will not be discharged in the bankruptcy, and the creditor can continue to collect the debt from the debtor.

What Are the Grounds for Objecting to a Chapter 7 Bankruptcy Discharge?

Section 727 of the Bankruptcy Code details several reasons that creditors can object to a Chapter 7 discharge. Reasons that a creditor may object include:

• Fraud - Attempts by a debtor to defraud a creditor may result in the dismissal of a bankruptcy case. These may include attempts to conceal assets that could be seized by the bankruptcy trustee and liquidated to repay creditors, as well as improper transfers of assets to other parties within one year before filing for bankruptcy.
• Failure to preserve records - A bankruptcy case requires the debtor to provide documentation and keep records pertaining to their financial situation. If a debtor has failed to keep proper records, or if they have destroyed relevant information, a creditor may object to the discharge of debts or ask for the case to be dismissed.
• Perjury - If a debtor has lied under oath, including during bankruptcy proceedings or in written statements and schedules provided to the bankruptcy court, a creditor may object to the discharge of debts. These objections may be based on claims that a debtor has provided false records, made false claims, withheld documents or other financial information, or gave or received money or property in exchange for taking illegal actions or failing to act properly.
• Failure to explain losses - A bankruptcy filing will require the debtor to provide information on their assets and liabilities, as well as their income and expenses. If a creditor believes that the debtor has not adequately explained the loss of assets or other large financial transactions, they may object to the discharge of debts.
• Violation of court orders - Failure to comply with bankruptcy court orders, such as failing to attend mandatory debtor education courses, refusing to answer questions asked by the court, or not providing requested documents, can also lead to a discharge being denied.
• Previous debt discharge - If the debtor previously filed for bankruptcy and was granted a discharge of debts, a creditor may object to a subsequent bankruptcy filing that has been made before sufficient time has passed since the previous discharge.

Creditors who believe that one of these grounds applies to a debtor's bankruptcy case must file an objection with the court. The objection must be in writing, and it must state the specific grounds on which the creditor is objecting. The creditor must also file a proof of claim if they have not already done so.

Creditors have multiple options for collecting the debts owed to them, and one of the most powerful ways of doing so is through wage garnishment. This is a legal process whereby a creditor can require an employer to withhold a portion of a debtor’s wages and pay that money directly to the creditor. Wage garnishment can be a very effective way of collecting a debt following a legal judgment, but there are certain steps that creditors need to follow in order to make wage garnishment happen.

Wage Deduction Proceedings

A creditor may seek to garnish a debtor's wages after obtaining a legal judgment against the debtor. This judgment will show that the debtor owes a certain amount to the creditor and that the creditor has the right to collect the debt. To begin the wage garnishment process, a creditor must first provide a Wage Deduction Notice to the debtor. This notice will state the name and address of the debtor, the name and address of their employer, the amount of the judgment, and the return date. If the debtor wishes to dispute the wage deduction because they believe their income is exempt, they must request a hearing prior to the return date. The Wage Deduction Notice can be sent to the debtor through first-class mail.

After the Wage Deduction Notice has been sent to the debtor, the creditor will file a Wage Deduction Affidavit with the court stating that they have the right to collect debts from the debtor's employer. A copy of the affidavit will be sent to the employer along with interrogatories that will be used to establish the wages the debtor earns and the amount that can be deducted from their pay.

It is estimated that bankruptcy fraud costs creditors billions of dollars each year. Bankruptcy fraud is a serious offense that can come with harsh penalties. However, creditors may be less worried about the laws that debtors have violated than about the losses they experience due to these actions. It is important for creditors to be able to identify instances of bankruptcy fraud so that they can take appropriate legal action. In some cases, creditors may be able to request that a bankruptcy case be dismissed, or they may be able to have the automatic stay lifted so that they will be able to proceed with the collection of debts.

Forms of Bankruptcy Fraud That Creditors May Address

Creditors may be able to show that debtors have committed bankruptcy fraud in one or more of the following ways:

• Material misstatements on bankruptcy petitions or schedules - If a debtor provides incorrect information on the forms submitted when they file for bankruptcy—such as listing false information about their assets or income—creditors may be able to show that the debtor committed bankruptcy fraud. To do this, creditors will need to obtain copies of the debtor's original bankruptcy petition and schedules as well as any amended versions of these documents. Creditors should then review these documents closely to look for any discrepancies between what was originally stated and what is true.
• Destruction, concealment, or falsification of records - If a debtor takes illegal actions related to the records in their bankruptcy case—such as financial records or asset records—creditors may be able to show that the debtor committed bankruptcy fraud. To do this, creditors will need to obtain copies of all records related to the debtor's bankruptcy case, both before and after the filing date. Creditors should then review these records closely to look for any evidence of destruction, concealment, or falsification.
• Transfer, sale, or concealment of property within one year before filing for bankruptcy - If a debtor disposes of property prior to filing for bankruptcy—such as by transferring ownership of a car or selling jewelry—creditors may be able to show that the debtor committed bankruptcy fraud. To do this, creditors will need to obtain copies of all documents related to the transfer or sale of property within one year before the filing date. Creditors should then review these documents closely to look for any evidence of fraudulent activity.
• Untruthfulness under oath during bankruptcy proceedings - If a debtor lies under oath during their bankruptcy case—for example, by making false statements to the bankruptcy trustee—creditors may be able to show that the debtor committed perjury and therefore committed bankruptcy fraud. To do this, creditors will need to obtain transcripts or recordings of all statements made by the debtor during their deposition or hearing. Creditors should then review these statements closely to look for any evidence of untruthfulness.

Contact Our Cook County Creditors' Rights Lawyers

Creditors should be on the lookout for signs of bankruptcy fraud so that they can take appropriate legal action. If you suspect that a debtor has committed bankruptcy fraud, you should consult with an attorney to discuss your legal options. At Dimand Walinski Law Offices, P.C., our Chicago bankruptcy defense attorneys can provide you with representation during bankruptcy cases, assist with debt collection, and help you minimize your losses. Call 312-704-0771 to set up a consultation today.

No creditor wants to deal with debtor delinquency, but it is an unfortunate reality of doing business. For banks, credit card companies, and other creditors who are facing debtor delinquency, there are steps that can be taken to mitigate the situation. By taking action at the first sign of debtor delinquency, including when payments are made late, creditors can work with debtors to find solutions that will ensure that debts can be repaid, and they can take steps to protect their interests and minimize potential losses.

Responding to Signs of Delinquency

When a creditor sees indicators that a debtor may be struggling to make payments, they can take multiple steps to address the issue, avoid future delinquency, and ensure that they can recover what is owed. These steps include:

• Communicate with the debtor. It is important for a creditor to open the lines of communication with the debtor as soon as possible. In some cases, delinquency may have been the result of an honest mistake or misunderstanding, and a simple conversation can help resolve the issue. By communicating with the debtor, a creditor can discuss the delinquent debt and come up with a plan to repay it. Additionally, regular communication will help build trust between the creditor and the debtor, which is important in maintaining a good working relationship.
• Explore repayment options. There are a number of different options for repayment that creditors can explore with debtors. These options include installment payments, lump sum payments, or even negotiating a lower balance owed. It is important to evaluate each option carefully and choose one that will protect the rights of the creditor while ensuring that the debtor can make affordable ongoing payments.
• Send a demand letter. If attempts to establish communication are unsuccessful, the next step is to send a formal notice that states the amount owed, the grace period for payment, and any late fees or penalties that may apply. A demand letter will also give the debtor a deadline for payment, and it will detail what will happen if they do not comply. After sending the demand letter, the creditor should give the debtor a reasonable amount of time to respond before taking further action.
• Utilize debt collection agencies or attorneys. If a debtor fails to respond to communications or is unwilling to work with a creditor to find solutions, the creditor may need to take steps to collect the debt. In these situations, it is a good idea for a creditor to consider using the services of a debt collection agency or attorney. These professionals have experience collecting delinquent debts, and they may be able to get results in situations where a creditor has been unsuccessful.
• Consider charging off the debt. In some cases, it may be more beneficial for a creditor to charge off the debt as opposed to continuing to try to collect on it. This is typically only done as a last resort after all other options have been exhausted. When a debt is charged off, it will be written off as bad debt when filing taxes, and this can provide some financial relief for a creditor.

Contact a Chicago Debt Collection Lawyer

No creditor wants to deal with debtor delinquency, but it is an unfortunate reality of doing business, and it is important to take proactive steps to address the issue if it does occur. At Dimand Walinski Law Offices, P.C., our Cook County creditors' rights attorneys provide representation for creditors who are seeking to address delinquency and collect debts. We can ensure that creditors take the correct steps to resolve issues proactively while protecting their financial interests. To set up a consultation, call us today at 312-704-0771.

Creditors need to be able to collect debts that are owed to them, and there are a number of options available in situations where debtors fail to make payments as required. However, there may be some situations where a debtor may be judgment proof or collection proof, which will affect a creditor's ability to recover the amount owed. By understanding the criteria that must be met for a debtor to be considered judgment proof, creditors can determine their best options for collecting debts.

Factors That Determine Whether a Debtor Is Judgment Proof

The income a debtor earns and the assets they own will determine whether they are judgment-proof. Generally, if a person does not earn enough to make payments toward their debts while also meeting their ongoing needs, and they do not have any non-exempt assets that may be seized and liquidated, they will be collection proof.

Wage garnishment limits may be considered when determining whether a debtor has disposable income that may be used to pay debts. Federal law states that the maximum amount that can be garnished is 25 percent of a person's or the amount they earn that is above 30 times the federal minimum wage. If a person earns a weekly after-tax income of $217.50 or less, none of their wages may be garnished. Also, only certain types of income are eligible for garnishment, and income earned through Social Security, unemployment benefits, other public benefits, or child support cannot be garnished.

A creditor's business model is reliant on its ability to receive payments from debtors. When debtors fail to make payments as required, creditors will need to determine the most financially beneficial methods for collecting what is owed. If a debtor has defaulted on a loan, a creditor may pursue a number of different debt collection actions. However, there may be some situations where agreeing to loan modifications with the debtor will allow ongoing payments to resume, and a creditor may be able to avoid the financial losses and complications related to collecting debts.

Benefits and Drawbacks of Different Debt Collection Methods

Following a default, creditors may have a number of different options for collecting debts, including:

• Using a debt collection agency - Sending a debt to collections may allow a creditor to receive payments, but this can take time as debt collectors attempt to contact debtors and set up payment arrangements. A debt may also be sold to a collection agency or another company, although this will often result in a loss.
• Foreclosure - If a debtor has defaulted on a home mortgage, a creditor may be able to take possession of the home and sell it through an auction. This may allow a creditor to be repaid for a significant portion of the loan, but it can be a lengthy and complicated process.
• Repossession - A debtor's failure to make payments on an auto loan or other types of loans may allow a creditor to take possession of property and sell it. This may allow a creditor to recover some of the loan amount, but it can be difficult to sell the property for its full value, especially if depreciation has occurred.
• Pursuing a legal judgment - A creditor may pursue litigation against a debtor, and a civil court may allow for multiple methods of collecting what is owed, such as wage garnishment, liens on property, or seizing a debtor's bank account. However, this process will involve legal fees and other expenses, and if a debtor files for bankruptcy, the ability to pursue a judgment may no longer be possible.

Options for Loan Modifications

To avoid the losses that may be associated with collecting debts, creditors may allow for modifications to a debtor's loan. These modifications may include:

Originally published: October 30, 2019 -- Updated: July 28, 2022

Update: In addition to understanding the time limits that apply in debt collection cases, creditors will need to know about the procedures they will need to follow to take legal action against a debtor within the applicable statute of limitations. By pursuing a legal judgment against a delinquent debtor, a creditor can ask the court to order debts to be repaid, and different methods may be available for collecting what is owed, including wage garnishment or liens against a debtor’s property.

To initiate a lawsuit against a debtor, a creditor will need to file a complaint in the applicable circuit court, which will typically be the court in the county where the debtor lives. This complaint will detail the amounts owed by the debtor, and it will ask the court to enforce the debtor’s obligations. The creditor will then need to serve a summons to the debtor. This document, which notifies the debtor of the lawsuit and informs them of when they will need to appear in court, may be served to the debtor by a sheriff or process server. After receiving the summons, the debtor must file an appearance with the court and an answer either confirming or denying the claims made in the complaint. If the debtor fails to respond correctly within 30 days, the creditor may receive a default judgment, which will allow them to take action to collect the debts owed.