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Ely
Ely, Counselor at Law
Category: Legal
Satisfied Customers: 101607
Experience:  Private practice with focus on family, criminal, PI, consumer protection, and business consultation.
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I live in Michigan. I had to break a lease due to unemployment.

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I live in Michigan.

I had to break a lease due to unemployment. I owe roughly 7,000 dollars. I offered to pay back 150.00 a month. They want 300.00 a month. I can not afford this. Should I let it go to the collection agency and try to work with them on a lower repayment plan, or will this go straight to court with garnishment attempts? I do not think they can garnish unemployment? My question is how do I repay what I can actually afford without going to court or destroying my credit. I know I need a miracle!
Hello friend. My name is XXXXX XXXXX welcome to JustAnswer. Please note: (1) this is general information only, not legal advice, and, (2) there may be a slight delay between your follow ups and my replies.

I am very sorry for your situation.

Please understand that they cannot garnish anything until/unless they gave a court order. Ergo, the proper steps that a creditor takes are there:

1) Demand payment (optional, but most do);
2) Send it to a collection agency (optional, but most do);
3) If not paid, then, file a lawsuit (not all will, as litigation is expensive and time consuming and there is no guarantee of being paid on judgment);
4) Possibly win that lawsuit; and
5) Initiate post-judgment remedies to be paid by the losing party (very complex) if the losing party does not pay.

Ergo:

Should I let it go to the collection agency and try to work with them on a lower repayment plan, or will this go straight to court with garnishment attempts?

They cannot garnish it unless they have a court judgment in their favor. This can take months - even over a year - from the time they file. Negotiation with the collection agency is expected and encouraged.

I do not think they can garnish unemployment?

They cannot - unemployment compensation, workers’ compensation, state and federal civil service retirement benefits, and military retirement benefits are exempt from garnishment.

My question is how do I repay what I can actually afford without going to court or destroying my credit. I know I need a miracle!

Negotiating with a collection agency is a good idea if one believes that (1) they truly will file and (2) one may be found responsible for the debt.

Remember, the collection agency cares about getting paid. You have two powerful leverage tools:

1) Threatening bankruptcy, which often helps them to go into 'rescue' mode to ensure that you do not, because if you do, the debt is often voided; and

2) This is the end of the month - this is the time that the collectors want to reach their QUOTA and are much more susceptible to agreeing to a small monthly payment plan. They may prove more agreeable than you think.

While I cannot tell you what you should be agreeing for or how much you should be paying, keep in mind that collection companies often agree to $50 a month, etc.

Also, know that about 95% of threats are just that - threats. Litigation is expensive and time consuming - it is normally filed as the last resort. Some never even file, thinking that they can never collect.

Finally, know your rights as a debtor - see here. Do not allow them to bully you, or threaten you.

Good luck.

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