If your obligations are past due, dealing with daily phone calls and other correspondences is an extremely troubling experience. But if you’re sued, that’s a whole other level of stress and anxiety. It’s a serious situation, and you aren’t sure what to do. First, don’t panic. There are remedial steps you can take. In fact, here is how to win a debt collection case.
What Does it Mean When You’re Sued by a Creditor?
If you’re sued by a creditor to whom you owe money, there is a process. The stages include:
- Filing a complaint. You’ll be cited as the defendant in a complaint filed with a state civil court. You’re “served” when you receive a copy of the complaint plus a summons to appear in court.
- Validation. The company or person suing you may not be the one to whom you originally owed cash. Not only may the debt have been sold several times, often leading to mistakes, but the debt may not even be yours. Examine the validation letter you got, or request one if you don’t have it. Also check your state for the statute of limitations for debts.
- The hearing. This is your opportunity to speak up for yourself or make payment arrangements.
- The judgement. You must pay the debt if the judge rules against you.
Here’s How You Can Win
Respond to the Lawsuit
If a creditor is suing you, the worst thing you can do is to ignore the situation in hopes it’ll go away. It won’t. In fact, shrugging off the lawsuit will get you into worse trouble, in the form of a default judgment. A judgment can result in garnishment of your wages and bank account, liens placed on your assets, and your bank account being frozen.People are increasingly grappling with this in Las Vegas, for example, where residents are dealing with joblessness that’s higher than the national average, along with debt that accompanies what is a high cost of living.
Also, there may be delays, so don’t wait until the last minute to respond. The summons will have a date by which you must respond with a legal brief known as an “Answer,” which is filed with the court clerk. In your response, do not admit liability. The onus is on the collectors. Make sure you ask the court for a stamped copy of your Answer, which you should mail to the collection agency.
Make the Collection Agency Prove the Debt
Ask the collector for documentation that shows the original agreement that you signed, in addition to communications from the original creditor to the debt collection agency. If the plaintiff can’t prove that you owe the debt, they’re in dubious shape, in terms of moving forward.
Also, you may think it will help you if you make a small payment to the collection agency. It won’t. In fact, it restarts the clock on your state’s statute of limitations, which is the period during which the debt can be collected (typically between four and six years).
Retain a Lawyer
Sure, you can defend yourself against a lawsuit, but a debt attorney knows all about the court system and has experience working with debt collection agencies. If the agency engaged in some activity that’s prohibited, you can countersue. At the very least, you can use the free consultation that many lawyers offer to gain some idea of how to move forward.
There’s a law called the Fair Debt Collection and Practices Act that is crafted to protect you. If you can prove that the collection agency engaged in some illegal behavior, there’s chance you can get your legal fees paid plus payment from the agency.
You may want to propose settling out of court. The collector is usually amenable since lawsuits can be expensive and time consuming. The idea is to get the collector to settle for less than what you owe, in the form of monthly payments or a one-time payment in full.
If there’s no way you can pay the debt, either over time or all at once, then bankruptcy may be your best move. A filing will prompt an automatic “stay,” meaning the agency can’t go after you while the bankruptcy is in process. Proceed with caution here, since depending on the type of bankruptcy you choose, the filing can live on your credit report for up to a decade. You also may be required to sell off assets.
In summary, if you know how to win a debt collection case, you can deal with the situation head on ifthe time comes. You do have rights, after all. An understanding of the process of filing a lawsuit can also go a long way, and it’s a good idea to at least take advantage of a free consultation with an attorney.