Are you really behind on your bills? If you are, you may be getting a lot of calls from debt collectors. When you ignore those calls long enough or fail to come up with a payment plan, those collectors can bring a lawsuit against you. I know, I’ve had three lawsuits against me. Two of the lawsuits caused my paycheck to be garnished for years. I was prepared for the last one, but luckily, it was dismissed. Just know, if you’re being sued by debt collectors, you don’t have to let it defeat you.
Before I tell you what to do if you get sued by a debt collector, I must first tell you to not let it get to that point like I did. (If you want to find out how I got to the point, you can read about it here.)
Answer the debt collectors call to see what they’re asking you to do. Explain your situation and, sometimes, they will work with you on a payment plan. If you disagree with what you owe do not just stop paying; there is a dispute process to follow that won’t damage your credit. This advice is for the original creditor. If you don’t follow my advice and ignore the phone calls and letters, your creditor will sell your debt to a third party. After that, you have no hope of working with your original creditor. It’s usually the third party debt collectors that make all of the constant harassing phone calls, but you don’t want to ignore them either.
When your debt is sold you will receive a letter from your new creditor. It’s important that if you disagree with the debt, you should reply back and ask them to verify that they now own your debt. You have 30 days to ask for verification. (If they fail to verify your debt and keep asking you for payment you can actually sue them.) They will need proof that they now own your debt. They will then send you what proof they have that they own your debt. You can fight it if you want to. If it’s a small debt, and you have the money, I recommend just paying it off. That way, they stop hounding you and your credit won’t be as damaged as much as it already is.
If you don’t do anything, eventually, they may try to sue you. If this happens, there are steps you need to take to prevent things from getting worse than they already are. Before I get to these steps keep in mind that I’m not a lawyer; I’m just a guy who’s been through this before. With that out of the way here’s what to do if you’re being sued by debt collectors.
Do not ignore it
Odds are the first time you learn you are being sued will be from mail from lawyers seeking to represent you. They got that information from court records. You can ignore those letters if you want. What you don’t want to ignore is the court summons. You’ll know if you get a court summons- it has to be given to you in person. If you receive the court summons and choose to ignore it, you will automatically lose your case. This is what the debt collectors want and expect you to do. This is what a majority people who get sued by debt collectors do- it’s also what I did the first two times. It’s an easy win for them that results in your wages or bank account being garnished. You will also have to pay all of the debt collectors court fees.
Below are some options of what you can do instead of ignoring the lawsuit. If at any time you are uncomfortable doing this yourself you should contact a lawyer.
Settle the debt
The easiest way to get rid of the lawsuit is to just settle. You may be able to pay them a lot less then what they’re asking. What most people don’t know about sold debt is that debt collectors buy your debt for pennies on the dollar. Let’s say you owed $1000 to the original creditor. When the creditor sells your debt, they sell your debt along with hundreds of others in bulk. When all is said and done, debt collectors may have ended up paying $50 for your $1000 debt. So, an offer to pay $250 would be just fine with them. They just made a profit of $200. Once debt collectors file a lawsuit, you will have to negotiate with their lawyers. Keep in mind that the fact that you settled and didn’t pay in full will have a negative impact on your credit report.
Fight the lawsuit before you go to court
You can fight the lawsuit. There are many reasons you can fight a lawsuit from a debt collector. They may be asking you to pay on a debt that’s past the statute of limitations. They could be asking you to pay more than you really owe. You can even fight on the grounds that they don’t even own your debt because you never signed a contract with them.
File a response
Should you choose to fight the lawsuit for any reason, there are certain steps you must follow in a limited amount of time. You have 30 days to file a response to the summons. Your response is your answer to the summons. Failure to prepare a response results in you automatically losing your case.
Your response should include whether you agree or disagree with the allegations against you. If you disagree, list the reasons why. Debt collectors don’t expect this and will sometimes drop the suit as soon as you file a response. Remember, they want an easy win.
Statute of limitations
One defense you can use is that the debt is past the statute of limitations for a lawsuit. The statute of limitations varies by state and is based on when you last made a payment. After a certain amount of time has passed, your debt becomes expired debt and you can’t be sued for it. If a company sues you after the statute of limitations, you have grounds to have that lawsuit dismissed.
(You need to be aware of what the statute of limitations is on your debt. Even though you can’t be sued, debt collectors will still try to collect on an expired debt. By making one small payment on expired debt, you will reset the clock and give the collectors the ability to sue you again.)
Ask for proof that they own your debt
Another defense you can go with is to deny that you owe “them” money. What I mean is when debt collectors buy your debt, they usually don’t receive proof or don’t want to reveal the documents that prove that they actually own your debt.
The last time I got sued, I never went to trial or had to do anything. My case was dismissed because I was never served. However, I was prepared to fight. A debt collection agency “claimed” they bought 4-year-old debt from one of my old creditors. The key word is “claimed”. In court, they need to prove that they actually own the debt. A majority of the time, they can’t do that.
I had denied that I owed the debt to them before they filed the lawsuit and asked for proof that I owed them money. They mailed me back a copy of the last bill from my previous creditor. That didn’t prove that they now owned my debt and it wouldn’t hold up in court. This is why debt collectors want you to ignore lawsuits; they don’t have evidence.
Since they don’t have evidence, you can argue that you admit that you owe the original creditor, but you don’t owe the debt collector. The most important part to remember when doing this is to never pay the debt collectors anything and never promise to pay them anything. Don’t even admit that you owe them anything. By paying them a single cent, you are confirming that you owe them.
What happens at court
If you file a response and your case isn’t dropped you will have to go to court. At court, there will be three possible outcomes. You can end up settling for less, paying everything you’re being sued for plus court fees, or having the case dismissed. As I mentioned before, I never had to go to court but I know a friend who went through the process.
You won’t be the only one getting sued by the debt collector that day. Lawyers representing the collector file their lawsuits in bulk. You will likely be there with dozens of other people. You will have to wait before you see the judge. Doing that time, you will be called to meet with the collector’s representative. They will give you one last chance to settle for less. Take it if you don’t think you have a strong enough case.
If you don’t settle, you will have to defend yourself in front of the judge using the arguments you mentioned in your response to the summons. If you use the defense that you don’t owe “them” because you never entered into a contract with “them”, the burden of proof is on the debt collectors. As I mentioned earlier, they often don’t have that proof. (Don’t try this if you’re being sued by the original creditor; they will have proof.) If you make a strong enough argument you will win your case. If your argument isn’t strong enough or at you admit to owing the debt, you will lose.
How my case was dismissed
The last time I was sued I didn’t have to do anything. I only became aware of the lawsuit because I kept getting letters in the mail from lawyers wanting to represent me. I decided to be proactive about it because of what had happened to me twice before. No more running.
I went to the court’s website to find my case info in the docket report. I saw the date the lawsuit was filed and how much they were asking. Then I waited to be served a summons. I could have gone to the court and served myself but I wanted as much time as possible to prepare my defense. Once served, I would only have 30 days. I kept track of the lawsuit using the docket report every day until I saw a new update. The new update read, “summons returned non-est.” The time said 2:05.
I had missed being served at home because I had left to pick up my son. I was only gone for 30 minutes. So, I kept waiting to be served; I was ready. A year went by with no updates and then the docket read “motion dismiss”. My case was dismissed without prejudice. That means I could be sued again but my debt had almost reached the statute of limitations.
That’s it. I had no grand moment in court. I had a vision in my head of confidently explaining why I don’t owe them anything like some hot-shot lawyer. So, I basically did a whole lot of research that I wasn’t able to put into practice. I hope you’ve gotten some useful information out of this. If you’re being sued by debt collectors but don’t feel confident enough to handle it hire a lawyer.
If you have confidence but need more information on what to do on your specific case, you can contact Rocket Lawyer. You can get advice from real attornies and create official legal documents. If you want to try them, they have a 7-day free trial. Always set a reminder for yourself if you plan on canceling.
So, if you’re being sued by debt collectors, I hope you don’t ignore. All isn’t lost as long as you take action. Thanks for taking the time to visit my blog. If you have any comments on what you just read, please leave them down below.