The collection process is a slow escalation that takes several months to complete. The sooner you take action to address the problem, the better off you’ll be.
A creditor lawsuit follows a predictable pattern. Knowing that pattern will give you an idea of what to expect and how to prepare.
The first step in fighting a creditor lawsuit is to take it seriously. This problem will not go away, and ignoring it will only make it worse.
As long as you show up to your court dates, you won’t face jail time for losing your lawsuit. You will have to start making payments on your debt, though.
Getting sued by a debt collector is probably a sign that something is deeply wrong with your finances (unless someone is trying to scam you). You’re likely spending too much money, struggling to get by on an unlivable wage, or not paying any attention to your bills.
Judgments give debt collectors much stronger tools to collect the debt from you. Depending on your situation and your state’s laws, the creditor may be able to: 1 Garnish your wages 2 Place a lien against your property 3 Move to freeze or garnish all or part of the funds in your bank account
If you don’t respond, the court will likely issue a judgment against you as requested in the lawsuit. Warning: While you must be properly “served” with a lawsuit, you won’t be able to stop the lawsuit by refusing to accept delivery or “service” of the lawsuit.
All debt collectors must follow the Fair Debt Collection Practices Act (FDCPA). This can include lawyers who collect rent for landlords. Starting on May 3, 2021, a debt collector may be required to give you notice about the federal CDC eviction moratorium.
If you ignore a court action, it's likely that a judgment will be entered against you for the amount the creditor or debt collector claims you owe. Often the court also will award additional fees against you to cover collections costs, interest, and attorney fees.
A judgment is a court order. Only the court can change it. It's very difficult to get a judgment changed or set aside once the case is over. You have a much better chance to fight a collection in court if you defend the case than if you wait until a judgment is entered against you.
A judgment is a court order.
A debt collection lawsuit begins when the collection agency files a “complaint” (sometimes called a “petition”) in court. The complaint will explain why the collector is suing you and what it wants—usually, repayment of money you owe, plus interest, fees, and costs.
Most debt collection cases don’t get to trial; they settle, or the collector gets a default or summary judgment. Most collectors win their cases by default, without ever having to go to court. If you do go to trial, you—or your attorney, if you hire one—will have to present your case according to specific rules of procedure and evidence. At the end of the trial, the judge (or jury, if applicable) will make a decision. The judge or jury’s decision is then entered in the court records as a judgment, and it becomes official. (To learn about how the collector can use a judgment against you, read Types of Debt and Debt Collection Practices .)
Generally, you’ll get around 20 to 30 days to file a written answer to the lawsuit with the court. You’ll have to respond to the allegations in the complaint and raise any defenses you have, like that the statute of limitations (the law that sets a time limit on the right to file a lawsuit) has expired, or counterclaims against the collector, such as violations of the Fair Debt Collection Practices Act.
“ Discovery ” refers to the formal procedures that parties in a lawsuit use to get information and documents from each other to prepare for trial or settle the case. If you don’t raise any defenses or counterclaims, the collector probably won’t engage in discovery. But if you have a good defense or file a counterclaim, you and the collector might want to participate in discovery.
If the collector files its lawsuit in small claims court, you'll probably first get notification about the suit. Then, the parties go to court for a trial in front of a magistrate or other judicial officer. Typically, a written answer is optional and rules of evidence are inapplicable.
If the judge grants the motion, the court will enter a judgment against you without a trial.
Even if you don’t have a lot of money available, it's a good idea to talk to a lawyer who can point out defenses or legal violations that you didn’t notice. Usually, it’s best to answer the suit. Also, if you have some money available, you might want to consider settling the debt.
If you ignore a debt collection lawsuit and the debt collector’s attorney shows up, the court will likely rule in favor of the debt collector by default. If the court orders a default judgment against you, the debt collector can: Collect the amount you owe by garnishing your wages; Place a lien against your property;
The statute of limitationsis the amount of time that a debt collector can legally collect a debt from you. It can be anywhere from three to 20 years. The time frame depends on the state in which you’re being sued and the type of debt you owe.
If you’ve had debt in collections for a long time, you could be sued by the debt collector. Ignoring or losing the lawsuit can have severe consequences. Here’s what to do. If you’ve had debt in collections for a long time, you could be sued by the debt collector. Ignoring or losing the lawsuit can have severe consequences.
This typically occurs when a debt is 180 days past due. Within five days of contacting you, the debt collector must send you a debt validation letterstating how much you owe, the name of the creditor and how to dispute the debt if you believe it’s not yours.
This could mean paying in full, setting up a payment plan or negotiating the debt. If you don’t repay or settle the debt, the debt collector can sue you.
If you’re being sued for debt and you disagree with any or all of the information in the debt collection lawsuit, you will want to file a response to the lawsuit in court. You will then have the opportunity to contest what’s in the lawsuit or ask the court to dismiss it altogether.
If this happens, a default judgment or court order will be placed against you. This means you could have your wages garnished or a lien placed against your property.
When a creditor sues you to collect debt you haven't paid, you have three choices to deal with the lawsuit: 1 allow the creditor to obtain a judgment against you (called a "default judgment") 2 defend the lawsuit yourself, or 3 hire an attorney to represent you in the lawsuit.
allow the creditor to obtain a judgment against you (called a "default judgment") defend the lawsuit yourself, or. hire an attorney to represent you in the lawsuit. Which option is best for you will depend on a number of factors.
A defense is a reason why you aren't liable for the debt or a reason why the creditor shouldn't be allowed to collect the debt. Here are some common defenses to creditor suits: the statute of limitations (the time period in which the creditor must bring the lawsuit) has run.
A counterclaim is a claim that you have against the creditor. In most states, the counterclaim must relate to the transaction at issue in the creditor's lawsuit. For example, say the creditor sues you for nonpayment of a credit card debt.
In most states, the counterclaim must relate to the transaction at issue in the creditor's lawsuit. For example, say the creditor sues you for nonpayment of a credit card debt. You might be able to file a counterclaim alleging that it harassed you in trying to collect the debt.
If bankruptcy might be inevitable, think twice before using retirement funds to pay bills. Most people can keep their retirement account in bankruptcy.
If you are being harassed by a debt collector, contact an attorney whose practice focuses on issues relating to the Fair Debt Collection Practices Act (FDCPA) to discuss your situation. Consultations are free, without obligation and are strictly confidential.
Jeffrey Johnson is a legal writer with a focus on personal injury. He has worked on personal injury and sovereign immunity litigation in addition to experience in family, estate, and criminal law. He earned a J.D. from the University of Baltimore and has worked in legal offices and non-profits in Maryland, Texas, and North Carolina. He has also earned an MFA in screenwriting from Chapman Univer...
A debt collection lawsuit starts when a creditor or debt collection agency files a complaint in civil court naming you as a defendant, as well as your co-signer if you have one. The complaint will explain the basis for the suit and what the creditor wants–typically the money you owe plus interest, and maybe attorney fees and court costs.
If you are sued by a creditor, call a debt relief attorney immediately. Your attorney will help you gather the appropriate information and evidence, identify and build any defenses you may have, and file a formal response to the lawsuit. Make sure that you gather all records relevant to the debt, including communications with ...
If you cannot come to an agreement, you will eventually appear at a court hearing. If you do not believe you owe the debt, or if you think you should not have to pay, you will want to prepare a defense to the claims. The most important thing is to prepare a proper defense and to make sure the creditor proves their side.
If you do not believe you owe the debt, or if you think you should not have to pay, you will want to prepare a defense to the claims. The most important thing is to prepare a proper defense and to make sure the creditor proves their side.
Respond to the Lawsuit. The worst thing any debtor can do is simply ignore the lawsuit. Debt collectors actually expect and hope that a debtor will ignore the complaint and fail to show up in court. If the defendant debtor does not show up or contest the creditor’s claim, the creditor may be able to get a quick “default judgment.”.
If you do not settle with the creditor, the court will ultimately issue a judgment. The court has the power to dismiss the creditor’s claims or order you to pay, including through collection mechanisms such as liens or wage garnishment.
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