I was fired from my firm few months ago and according to my contract I had to return the full amount ~12k $, to my employer if I was fired/resigned within 2 years. However, I have been very sick since then and unable to work for 4-5 months now. Employer offered payment plans, etc but problem is I am broke and don't have any money. My questions are - 1- If employer sues me and wins, will it affect my credit score? Can I hold off until they threaten to sue/sue, then pay the debt and have them withdraw the suit? 2- In your experience, do employers sometimes waive off the debt in situations like mine? 3- Will getting a lawyer help as it's pretty much a breach of contract at my end?
If your former employer sues and wins the judgment against will be reported to the credit reporting agencies and will have very significant negative impact on your credit scores for as long as it remains unpaid.
If your employer decides to forgive the debt, it will be reported to the IRS as your unearned income and your will have to pay taxes on the reported amount.
If you can't pay now, negotiation would be useless. The statutes of limitations for the litigation of debt or breach of contract in Texas are 4 years.
Keep in mind that Texas is an extremely debtor friendly state. Nobody gets your house except the lender and the IRS. Nobody gets your car except the lender and the IRS. Nobody gets your wages except the IRS and child support. Nobody gets your Social Security/disability/ pension/retirement/401k/IRA except the IRS. Most people don't have any thing more than that, so there is nothing to get to satisfy a judgment. HOWEVER, a judgment is good for 10 years and can be renewed. Also, the judgment is accruing interest and is being reported to the credit bureaus. The creditor is hoping that one day you will have some money saved for a large credit-based purchase (car or house). When you apply for that loan, the judgment creditor will learn you have cash and will then try again to get you to pay. Luxury items such as motorcycles and boats and cash on deposit in banks are not protected. Even then it is possible to file bankruptcy to avoid payment.
Because a homestead can't be taken to satisfy a judgment unrelated to the mortgage or taxes, the judgment creditor must give a partial release with respect to the home if you request it in writing. This is necessary if you plan to buy, sell, refinance, or take a home equity loan. If the creditor will not release on request, there is a statutory process to go around the judgment lien. This does not mean you don't owe the money, just that the house can't be held hostage to the judgment.
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