It usually takes weeks or months of creditors' harassment through mail or telephone before they file a lawsuit.  Borrower usually gets notice of a lawsuit by service of a summons and complaints at home or work.

Creditors file lawsuits in order to collect on to the debt owed when borrower stop making payments.  Borrower has an opportunity to dispute the creditors' claim of debt by filing an answer and appearing in court.  Failure to respond to a lawsuit will result in a default judgment in favor of creditor.

Once creditor obtained a judgment, they can request the Sheriff's Department to issue a levy order at your bank and take all funds in the account at that time.  Or they can request the Sheriff's Department to issue a Wage Garnishment Order to your employer.  Your employer has no more than 10 days to start garnishing your paycheck.  Usually, the garnishment is 25% of your disposable income in the state of California.  Or they can record an Abstract of Judgment in the County you reside under the assumption that you own real estate there.  This acts as a lien on the real estate called judicial lien or judgment lien.

Chapter 7 or 13 Bankruptcy can prevent creditors' attempt to collect on the debt if you act quickly.  Delay rarely solves anything and can hurt you and limit your options.  Speak to a bankruptcy attorney to know your rights under the bankruptcy code and how it can protect your assets against creditors' collection practices.  Muoi Chea bankruptcy attorney has offices in Sacramento, Stockton, and Fairfield, California to protect your rights and properties.

However, there are a couple of creditors that do not need to go through the court process in order to collect on the debt.

For example, tax collectors like the Internal Revenue Services (IRS) and Franchise Tax Board (FTB) can levy your bank account or garnish your wages without filing a lawsuit.  The tax code requires them to give you notice of your tax debt and the intent to levy.

Another creditor that does not need to file a lawsuit to collect from you is your bank.  Your bank has a right of offset under California law.  Here's how it works.  You owe the bank a personal loan or credit card and the bank is holding your funds under a checking or savings account, so the bank owes you for your deposited funds.  The bank can offset what you owe from the funds in the checking or savings account held by the same bank.  The right to offset or set off mutual debts is often found in state law.  It is also found in your deposit agreement with the bank.