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Threatened with a Lawsuit?

If you’ve received mail from a law firm who is threatening to sue you over a debt, you’re probably scared of what might happen to you going forward. Frankly, there is cause for concern. A creditor’s law firm has the power to file several types of lawsuits including:

Foreclosures

Foreclosure is a lawsuit that could take your home from you. In Kentucky, a successful foreclosure suit allows the Master Commissioner’s office in your county to sell your real estate on the courthouse steps to any interested buyer, while in Ohio the County Sheriff’s office fulfills this function. The mortgage company filing the foreclosure is often the one that ultimately buys the property! The money from the sale is usually far less than the real estate is worth, because state law only requires the buyer to pay two-thirds of the property’s value. Any money collected by the Master Commissioner goes to pay back due property taxes, then mortgages, and then any judgment liens against the property. The homeowner only gets money if all the liens are paid and if the mortgage company’s attorney fees and the Master Commissioner’s (or Sheriff’s) fees are paid in full. Few homes have so much equity, and generally, homeowners don’t see a dime from the sale. Worse, any portion of a mortgage or lien that is unpaid remains on your credit report, and they can even file a second lawsuit against you to collect it! That’s why most people choose to file a Chapter 13 bankruptcy instead – in the bankruptcy, you can catch up the payment arrearage on your real estate, or you can sell it to a buyer for fair market value and maximize your chances of seeing money from the sale.

Repossession

A car can be repossessed by anyone with a lien against the title, without the lienholder even going to court! A repossessed car is typically sold at auction within a few days to two weeks. The lienholder is paid in full first, including the cost of a repossession, and then any additional money is paid to the owner. If your car is being repossessed, don’t count on seeing any money from the auction, however. Buyers at auction typically try to buy far below fair market value, and without a lot of equity, you’ll get nothing. Similar to foreclosures, if the lien isn’t paid off from the auction, the balance remains on your credit report and the lender can sue you to recover the balance. The best option for keeping the car and avoiding a lawsuit is to file Chapter 13 bankruptcy because you can catch up your payments and pay off the car, usually at a lower interest rate and sometimes even for less than the balance owed.

Garnishment

Anyone you owe a debt to can sue you to garnish your wages or your bank account. In order to garnish you, the lender has to prove to the judge that you signed paperwork promising to repay the money, and has to submit a sworn testimony that you have failed to make the scheduled payments. Upon granting judgment, the lender submits a form to the Court that the judge signs, and which tells your employer or bank that they are required to turn over money to the lender from your paycheck or account. This is a simple type of lawsuit that can be, and is, mass-produced by some law firms. Filing a bankruptcy not only stops a garnishment but can sometimes get the garnished funds returned to you, if you file bankruptcy fast enough after the garnishment starts.

It’s possible to fight these suits in state court if you have proof that you don’t really owe the debt, or that you didn’t really miss payments. But state court judges aren’t interested in hard luck stories that explain why you missed a payment. To them, it is a black and white issue, and missing a payment that was due means you get a judgment against you, period. If you want to fight a foreclosure, repossession, or garnishment lawsuit, the best place to do it is in bankruptcy court.

Who are You Up Against?

There are several law firms that make their living by representing no one but creditors, and by filing tens of thousands of lawsuits every year against people just like you. In no particular order, some of these law firms are:

  • Lerner, Sampson & Rothfuss – on its website, this law firm calls foreclosures the foundation of their legal practice but also represents creditors in evictions and in several other areas. Always working for big banks and mortgage company and against the ownership rights of everyday people, Lerner, Sampson & Rothfuss won’t hesitate to file a foreclosure action against you and take your real estate for the benefit of the bank.
  • Gerner Kearns – this firm has a dozen attorneys right here in the Cincinnati area, and the firm “represents a wide variety of lenders, financiers and loan servicers.” Their website advertises services such as “serving occupants with eviction notices” and “pursuing debtors who default on what they owe.” Gerner Kearns will file foreclosure actions against real estate and will file lawsuits to repossess other kinds of property as well.
  • Lloyd & McDaniel – this firm lists nineteen attorneys on its website, all of whom represent banks, mortgage companies, and other lending companies. Their website provides very little information about the firm. There is no physical address and no email addresses for the individual attorneys. Anyone who has practiced bankruptcy law for more than a few months knows that Lloyd & McDaniel is a prolific filer of lawsuits for debts in default, from small credit card balances to large mortgages.
  • Eberly, McMahon Copetas – this small Cincinnati law firm boasts on its website that it represents “only creditors in bankruptcy court,” and they brag that they “know how to obtain and execute on judgments by locating and identifying a debtor’s assets, garnishing wages, putting liens on property, [and] executing on bank and investment accounts….” If you get a letter from this firm, don’t delay – anyone openly saying these things won’t hesitate to take the home and rainy day fund you’ve worked so hard to build, and filing bankruptcy may be the only way to stop them.
  • Weltman, Weinberg & Reis – this is a large law firm with dozens of attorneys. While their website offers to handle demands for payment, they also say they’ll “move it directly to litigation” if that is what their client wants. If you get a letter from this law firm, it may be the only warning you ever get before a complaint filed against you. Don’t hesitate to consult a qualified bankruptcy attorney to stop the lawsuit before it happens!
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