Don’t Ignore a Lawsuit – Here’s What to Do If a Debt Collector Sues You

Every year, countless Americans face the reality of unmanageable debt when a debt collector files a lawsuit. Many people shrug off the warning signs of a debt collection lawsuit, and debt collection companies count on the fact that you won’t take the initial notice seriously or forge talking to a lawyer.

But avoiding the issue will make things worse. If you are served with a lawsuit for a debt, it’s crucial to respond and work with a consumer lawyer. You have rights regarding debt collectors and legal options that could help.

The Danger of Ignoring Debt Collection Lawsuits

The most immediate danger of ignoring a lawsuit from a creditor is the potential of a default judgment. Imagine a basketball game where one team doesn’t show up, so the other wins by default. That’s how a default judgment works.

If you don’t respond to the lawsuit, the court might automatically decide to favor the creditor. This can lead to wage garnishments, bank account levies, and liens on assets like your house or car.

Facing a Debt Collection Lawsuit

Being sued by a debt collector is daunting, but the situation is easier when you know what to look for. Here’s what generally happens when a debt collector sues you.

The Debt Collection Lawsuit Process

• Step 1- The Initial Notification: You’ll be notified when your debt reaches around 180 days past its due date. This is either through a phone call or a letter.
• Step 2 – Debt Validation Letter: Within five days of the initial contact, you should receive a letter detailing the owed amount, the creditor’s name, and the method to dispute the debt.
• Step 3- Verification Letter: If you dispute the debt, the collection agency should send a verification letter within 30 days of the validation notice.
• Step 4- Addressing the Debt: If the debt is legitimate, you must create a repayment plan. This could be a full payment, a negotiated settlement, or a payment plan.
• Step 5 – Lawsuit Notification: If you don’t settle the debt, the debt collector may decide to sue you. You’ll then receive a court summons and complaint.
• Step 6- Responding to the Lawsuit: It’s crucial to respond to the lawsuit by either filing the appropriate motion or an “answer.” Always pay heed to the deadlines.

Act Fast If A Debt Collector Sues You

If a debt collector files a lawsuit, taking the situation seriously and being proactive is essential. Here are a few things to consider when responding to a debt collection lawsuit:

• Stay Calm: While it’s natural to feel stressed, panicking can lead to rash decisions. Avoid making spontaneous statements to the debt collection company, as these could be used against you later.
• Acknowledge the Lawsuit: Refrain from ignoring any lawsuit papers. Take the time to go through them meticulously, ensuring you comprehend the claims made against you.
• Seek Legal Counsel: Engage with an attorney who focuses on debtor defense and consumer actions. They can provide insights tailored to your circumstances, helping you weigh the pros and cons of every decision.
• Understand Your Rights: The Fair Debt Collection Practices Act (FDCPA) protects consumers from abusive debt collection practices. Understanding your rights can be a powerful tool.
• Verify the Debt: Before making any moves, ensure the debt belongs to you. Ask the debt collector for written proof of the debt detailing the amount and their right to collect it.
• Check the Statute of Limitations: Some debts may be too old to collect, depending on your state’s laws. If the debt is older than the statute of limitations, the collector might be unable to enforce it through a lawsuit.
• Respond Promptly: If you contest the lawsuit, you must file a formal response, known as an “answer,” with the court. This is a crucial step in ensuring your voice is heard.
• Document Everything: Maintain a record of all interactions with the debt collector. This includes dates, conversations, names, and any other relevant information. This could be invaluable in court.
• Be Open to Negotiation: Even if you owe the debt, most debt collectors will consider a reduced settlement amount to avoid the legal process.
• Keep Up with Court Dates: Attend all the scheduled hearings should your case proceed to court. Ensure you’re well-prepared with any necessary documentation or evidence.
• Speak Out if You Suspect Abuse: If the debt collector violated any regulations, you can file a complaint with CFPB or your state’s attorney general. An attorney can assist with this or advise you about filing a lawsuit against an unscrupulous debt collector.

Don’t Acknowledge the Debt or Sign Anything

If a debt collector calls, be cautious about what you say. Admitting to the debt or promising to pay can potentially restart the statute of limitations. You should ask for written communications and review them with your attorney.

Many debt collectors may threaten a lawsuit to pressure you into accepting a settlement or payment plan. Don’t jump at any offer to resolve an alleged debt without understanding the terms. Remember, it usually becomes binding once you commit or sign an agreement.

Evaluate All Your Options to Deal with a Debt Lawsuit

You aren’t out of options if you’re served with a lawsuit. Many debt collectors file debt lawsuits in mass to scare consumers into paying.

The burden of proof in a debtor lawsuit lies with the debt collector. They must show that they own your debt and have the legal right to collect. In many cases, especially with older debts, collectors may not have the necessary paperwork.

With the right approach, you can effectively navigate this situation.

• First, Consult a Lawyer: One of the most crucial steps you can take is seeking professional guidance. A consumer protection attorney can offer tailored advice, guide you on responding, and may even find inconsistencies or mistakes in the creditor’s claim that can be used in your defense.
• Consider Bankruptcy: For some, filing for bankruptcy might be a viable solution. This can halt most debt collectors in their tracks and provide an opportunity to start anew. However, discussing this option with an attorney is essential, as it’s a significant decision with its own challenges and consequences.

Isn’t Hiring an Attorney Just Another Expense?

It’s a misconception that involving an attorney always results in hefty bills. Many attorneys offer flexible payment plans or even take cases on a contingency basis, meaning they only get paid if you win. Some consumer protection lawyers even provide free consultations to discuss your situation.

Essentially, the cost of doing nothing or mismanaging the situation can far exceed the potential expense of hiring professional help.

Ways a Lawyer Can Assist You in a Debt Lawsuit

• Respond Timely: An experienced attorney can help you respond to the lawsuit within the official timeframe, ensuring you don’t default by missing deadlines.
• Thorough Debt Review: Your lawyer can scrutinize the debt information to identify any inconsistencies or errors that may be grounds for disputing the claim. This can include verifying the amount owed, the name on the debt, or even whether the statute of limitations has expired.
• Negotiate a Favorable Result: A skilled lawyer can negotiate with your creditor or debt collection agency. They can often secure a more advantageous settlement agreement through mediation or arbitration, sometimes reducing the amount you owe or setting up a manageable payment plan instead of proceeding with a lawsuit.
• File Your Own Lawsuit: If the debt collector violated laws like the Fair Debt Collection Practices Act (FDCPA), your attorney could file a lawsuit against them. This could not only dismiss the debt case against you but may also entitle you to damages.
• Strategic Planning: Whether it’s deciding if bankruptcy is a viable option or outlining other paths to manage or resolve your debt, a lawyer can offer tailored advice and long-term strategies.

Contact an Ohio Debt Lawyer at LHA

Being served with a debt collection lawsuit is scary, but facing the situation head-on is vital. Remember, ignoring the problem can lead to even more severe financial repercussions. You can work towards the best possible outcome with a direct approach, the correct information, and professional guidance. Don’t let fear or uncertainty paralyze you; act now and consult with a debtor defense lawyer about your case.

As a founding partner of Luftman, Heck & Associate, consumer attorney Jeremiah E. Heck is dedicated to helping people manage their financial situations. He isn’t afraid to fight back against unfair debt collection practices.

Contact LHA for a 100% free one-on-one consultation.