Creditors with unsecured loans.

An unsecured creditor can file suit and obtain a judgment. Whether that judgment is collectible is a separate issue. The creditor can attach no-exempt income and assets. Social Security income is exempt, but the debtor must affirmatively defend the exemption. For the precise advice you deserve, consult with an experienced bankruptcy practitioner. Many find bankruptcy attorneys will do an initial consultation/case review on a no-cost/no-obligation basis. Best wishes for an outcome you can accept, and please remember to designate a best answer.

In order to collect any debt, a creditor must first sue the debtor and obtain a legal judgment that confirms that the debt is owed. The debtor should have an opportunity to respond and to try to argue that the debt is not really theirs, or some other defense. The statute of limitations on contracts and other debts in Oregon is six years - that means that, if the debt was incurred more than six years prior to the suit, or if the debtor's final payment was more than six years before the suit was filed, then the creditor is too late. However, inability to pay is not a defense to a debt. Once a judgment is obtained, it lasts for ten years (and can be renewed for another ten years after that). If a creditor obtains a judgment, they can use it to garnish a debtor's income and bank accounts. Social Security money is immune to garnishment for most debts. However, if the money is deposited into a bank account that contains other money from garnishable sources, then all the money in the account can be garnished. A judgment also allows the creditor to place a lien on any real property, or other substantial property, that the debtor owns. To effectuate these remedies, the creditor has the right to demand that the debtor appear for a 'judgment debtor examination.' This can happen at a courthouse, or an attorney's office. The debtor is required to answer, under oath, questions about their assets and income. The creditor can use the answers to try to attack the debtor's assets. These examinations are a lot of trouble for everybody, and many creditors' representatives prefer to do interrogatories by mail - they ask the same questions, but demand written answers. If the debtor fails to comply or answer truthfully, they can be charged with contempt of court or false swearing. So the creditor can do a fair bit to make a debtor's life unpleasant, but they can't actually extract money from someone who has none to take. Not paying a debt is not a crime, you can't be sent to jail for it or anything like that. If you have a lot of unresolved debts, you may want to consult with an attorney about personal bankruptcy. More information on this issue is available here: http://www.northwestlawoffice.com/bankruptcy.html