The creditor may very well sue for a $7000 debt. If they served you with a Complaint tomorrow (which would start the lawsuit), it would still take at least two months, and probably more than that, to get a final judgment.

If they succesfully sue you and get a judgment, that means they can place a lien upon your property. Then they can foreclose on it or execute on it. That means they can have the sheriff come and take your property and sell it off to pay for the debt.

Whether somebody with a judgment against you will actually do that is another question. Since you have no real assets, it is unlikely that they would do that. Your mobile home would be subject to the mortgage (technically a UCC-1), and if they foreclosed on that they wouldn't get anything probably. As for wage garnishment, some states don't allow it and other states do. Generally, the states that allow it limit how much they can take in wages. Often 15% to 25% of your discretionary income (total income minus taxes and sometimes housing, food, and other necessary expenses, depending on your states laws). If you are making $25,000 a year, they wouldn't be able to take much, if anything from that. Maybe 100 or 200 a month at most, if that. (I know that can be a lot though.)

You are pretty much "judgment proof." i.e. it would generally cost more to collect a judgment against you than they could expect to get out of you. Creditors usually don't want to spend $10,000 to get $7,000.

While it is questionable that the Mortgage company wants you to hurry up the application, it is true that you would be better off doing it sooner than later. If there is a judgment against you when you apply for a mortgage, you will either not get the mortgage or pay a lot more for it in interest and closing costs.

What I would suggest you do is to discuss this with somebody you know and trust who may have more knowledge about this than you. Your parents, a close friend, your pastor or minister, for example.

Its hard to really get a grasp for your situation due to the limitations of communicating in this way. And it is also hard to give good information concerning your situation for the same reason. But stay calm and seek out advice from people you know and trust. While a $7000 debt and a potential lawsuit are not pleasant matters, things could be a whole lot worse than they are.

Please keep posting and let us know how things proceed. And keep the CAPS to a minimum ;)

poor lawyer, esq.

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