If you have a counterclaim that you can file against the creditor, such as one for illegal debt collection practices or unfair trade practices, the attorney might be able to recover his or her fees from the creditor if you win. Most attorneys will ask you for a retainer or a down payment on the fees before they take the case.
Full Answer
Did you know you can sue a creditor or a credit bureau for violating the Fair Debt Collection Practices Act? Violations happen all the time to unsuspecting… Violations happen all the time to unsuspecting consumers who don't have a clue as to what…
Most creditors DO NOT abide by the laws set by the Fair Credit Act and if they do you can still sue them. Some actions of a creditor that substantiate a law suit are: failure to validate a debt; calls you at work or very late at night; erroneous reporting of your credit history; and, refusing to note partial payments on your credit.
The lawsuit starts when the creditor, collection agency, or more likely a lawyer for one of these entities, files a "complaint" (sometimes called a "petition") with the court. The complaint will list you as a defendant, and perhaps someone else too, like your spouse or someone who cosigned the loan or account.
The creditor or collection agency (or lawyer) must "serve" you with a copy of the complaint, along with a "summons." The summons notifies you that you are being sued, and usually provides additional information such as when you need to file a formal response in court.
The creditor may sue you in state civil court (these courts can have many type of names: municipal court, superior court, justice court, county court, to name just a few), or, if you owe money to the federal government, in federal court.
Usually, you have about 20 to 30 days to file a written response to the lawsuit. The document you file is often called the "answer." You will probably have to pay a filing fee when you file your response. If you don't have a lot of money, you might qualify for a fee waiver. Ask the court clerk about these.
Sometimes it's in your best interest to default (not respond). This might be the case if you definitely owe the debt, have no defenses, and the lawsuit and amount requested by the creditor accurately reflects what you owe.
The number of debt collections suits going through each state’s court system has skyrocketed in recent years. In some cases, the original creditor, like a credit card company, files the lawsuit against the consumer. Other times a debt buyer—a business that purchases delinquent debt from original creditors—sues the debtor to collect it.
If a creditor or debt collector sues you for an unpaid debt, you could:
Ignoring the suit is almost always a bad tactic. If you fail to appear in the case, the court won’t examine the validity of the debt, the accuracy of the amount sought, or whether the correct person was sued. Creditors and debt collectors often automatically win cases that have inaccurate information or where defenses are available.
If you don’t have any defenses or counterclaims, and assuming the creditor has sufficient evidence to prove its case, you’ll lose. So, if you have to pay a lot in attorneys’ fees—more that you owe on the debt—it might not make sense to hire a lawyer to help you.
Generally, once a creditor gets a judgment against a debtor, that creditor may garnish wages, levy bank accounts, place a judgment lien on any real estate, or seize personal property (things other than real estate) to collect the debt. But if you’re judgment proof, the plaintiff won’t be able to collect anything from you even if it gets a judgment.
Even if you can’t afford to hire a lawyer to represent you in court, meeting with an experienced debt settlement lawyer for one consultation can help you evaluate the plaintiff's case and your circumstances to determine the best course of action.
It’s entirely possible that you ignore a debt forever and the consequences never go beyond repeated phone calls and letters. There are costs associated with taking a case to court, after all, so the debt needs to be worth the effort and the cost.
To move the case forward, the creditor (or someone acting on the creditor’s behalf) needs to “serve” you a copy of the complaint and a “summons.” The summons is basically a notification that you’re being sued, and should provide some direction on the steps you need to take to address this.
The summons should set a timeframe for when you need to respond to the creditor’s complaint, but it’s usually within 30 days or less.
Once you file your response, the path forward can diverge pretty dramatically depending on the circumstances.
If you have unpaid debts and they’re legitimate, try to do your best to avoid getting summoned to court. Stay in communication with your creditor. Seek ways to reach a satisfactory compromise.
A lawsuit costs the creditor time and money. Because of this, they may be more interested in settling instead of going to court. If they can prove you owe the full debt and if the statute of limitations hasn’t expired, discuss a settlement offer with them before going to court.
Keep notes of when and how you received your suit papers, gather copies of all the documentation you currently have on the account, and request a copy of your account statement. The more organized you are, the better prepared you’ll be to respond. Also, gather copies of your most recent paystub and your latest tax return.
Even if you don’t hire one, it’s a good idea to at least have a consultation with a lawyer that specializes in collection lawsuits. Gather all the knowledge you can about how long you have to file a response and how a judgment can impact you. It’s important to know your options.