It is important to realize that changes may occur in this area of law. This information is not intended to be legal advice regarding your particular problem, and it is not intended to replace the work of an attorney.
A debtor is someone who owes money to someone else. Generally
it is not a crime to fail to pay a debt, although failure to pay some
court-ordered debts such as child support may lead to criminal charges.
Except in certain bankruptcy situations, a debtor can choose to pay
debts in any priority he or she chooses.
If you have failed to pay a debt, you have broken a contract or agreement
between you and a creditor. Most oral and written agreements for the
repayment of consumer debts (debts for personal, family or household
purposes, and debts secured primarily by a person’s residence)
are enforceable. However, most debts that are for business or commercial
purposes must be in writing to be enforceable. If the agreement requires
you to pay a certain amount of money, then the creditor does not have
to accept a lesser amount. Even if you have lost your job, become ill,
or just cannot afford to pay the bill, you still owe the amount stated
in the agreement. Also, if there was no actual agreement, but the creditor
has lent you money, performed services, or provided you with a product,
and you have kept the product or benefited from the services, you must
pay the creditor.
If you owe money, the creditor may assign the debt to a debt collector,
which is either a collection agency or an attorney. The debt collector
may send you a letter or other notice requesting payment. Federal law
requires that the first notice from a debt collector describe the debt
and additional charges, costs and expenses according to the agreement
between you and the creditor. If you orally dispute this debt, or any
portion of it, within 30 days after receiving the notice, the debt
collector cannot assume it is valid. If you dispute the debt in writing
within this 30 day period, the debt collector must stop any further
contact with you until the debt collector sends you proof of the debt.
The fact that you do not respond to the debt collector’s notice
cannot be used as evidence that you owe the debt.
Oregon law also controls how a creditor may try to collect a debt,
whether by letter or phone call. Unlawful debt collection practices
would include the use of obscene or abusive language. The creditor
cannot call your employer about the debt or call you at your place
of work if you have notified the creditor not to. The creditor may
call you at work only after he or she has in good faith, but unsuccessfully,
tried calling you at home during the day or between 6:00 p.m. and 9:00
p.m. A creditor can write to you at work only if your home address
is not available. In either case, the creditor may contact you at work
only once a week. A creditor who willfully violates this law may be
liable to you for minimum damages of $200, your legal fees, and in
some cases punitive damages.
A creditor may sell your debt to a collection agency. This means that
the collection agency buys the right to collect the debt. A collection
agency may be operated by one person, or it may be a nationwide business.
A collection agency has no greater rights than the original creditor
and cannot make you pay any fees that could not be charged by the original
creditor. Generally, however, the amount of your debt will be increased
because it has been assigned to a collection agency. Debt collectors — both
collection agencies and lawyers who try collecting debts — must
comply with the federal Fair Debt Collection Practices Act, as well
as Oregon state law. Federal laws prohibit a debt collector from communicating
with anyone about a debt, except for you, your spouse or your parents
if you are a minor. The debt collector cannot harass you or call you
at work if the debt collector knows that your employer prohibits that
type of communication. A debt collector is also subject to the same
collection rules as an original creditor. According to federal law,
you may prevent a debt collector from calling or writing to you by
notifying the agency in writing that you either will not pay the debt
or want to stop all further communication with them. You should keep
copies of any such communication, as well as any envelopes. If a debt
collector violates this federal law, it may be liable to you for all
actual damages you suffer and additional damages up to $1,000.
If you have purchased something on credit and signed an agreement called
a “security agreement,” and you have failed to pay the
debt for your purchase, the creditor may try to repossess or take it
back. This will usually only happen when you purchase a major item
like a car or furniture and agree to pay the price in installments.
Even though the creditor can repossess your property if you do not
pay your debt, the creditor cannot enter your house without permission,
assault you, or take your property if you object to the repossession.
If you have not signed a written “security agreement,” the
creditor does not have a right to take any of your property unless
the creditor has first obtained a judgment against you. In order to
get a judgment, the creditor must go to court. Either the original
creditor or a collection agency may sue you to collect a debt. If this
happens, you will be served with a summons and complaint. If you want
to dispute the existence or the amount of the debt, you must file a
timely response with the court. If you do not respond to the complaint,
or if you go to court and lose, the creditor will obtain a judgment.
This judgment will include the amount of debt and may include interest,
court costs and the creditor’s legal fees. It may also include
a lien upon any real property you own.
A judgment is not a court order that tells you that you have to pay
any money. Instead, it is a way for the court to confirm that you owe
the creditor a certain amount of money. If the creditor wants to collect
any money from you based on the judgment, further action must be taken.
The creditor may try to collect your debt by having the sheriff take
some of your real or personal property to sell at a public sale. The
proceeds of the sale would then be applied to pay the judgment. The
creditor may also take money from your savings and checking accounts,
or garnish your wages.
Oregon law protects some of the property you own or the equity you
have in certain property (also called “exemptions”) from
being taken by creditors if they obtain a judgment against you or if
you file a bankruptcy. For example, clothes and jewelry are protected
up to a maximum of $1,800 in value. Up to $2,150 in value for a vehicle
(cars, trucks, and other motor vehicles) is protected. Household goods
including furniture, a television set, and utensils are protected.
If two or more members of a household are judgment debtors, each person
is entitled to claim these exemptions in the same or different property.
A judgment debtor’s government benefits are normally totally
exempt from execution. There is also an Oregon exemption (sometimes
call the “homestead exemption”) available for the equity
a person has in his or her residence if the residence is located within
the state of Oregon.
The exemption amounts for different types of residences (i.e., mobile
homes on a rented pad, a mobile home on owned real property, or a traditional
residence built on a foundation) vary depending on the type of residence
you have, and are complex. You may want to consult with an attorney
to determine what exemption value (if any) you have in your home or
other property when faced with a judgment or the need to file bankruptcy.
In most cases, the judgment amount must exceed $3,000 before a judgment
creditor can force the sale of a judgment debtor’s residence.
The judgment remains a lien on the property, however.
Legal Editor: Richard Slottee, Lewis & Clark Legal Clinic,
November 2007.