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Lawsuits & Litigation

Debt Collection Lawsuits – How Should You Deal with Them?

— January 10, 2024

What is your first reaction when a debt collector files a lawsuit against you? Panic, stress, or both?

Whenever you face a debt collection lawsuit, you can become panicky and anxious. However, it’s important to refrain from doing nothing. Although getting a court summons can be frightening, one should not dismiss it. This means that you have only 21 days in which to act. You may personally or through a lawyer do it.

If you choose to handle this yourself, get all the facts from the summons right. Your answer, referred to as a written statement, must be filled out within 30 days after receiving the summons. Although the court may allow late filing, extending not more than 90 days after the date of service, missing this deadline might have some complications.

Why is it essential to respond to summons?

It is essential to respond to summons within the deadline. Otherwise, debt collectors will get an edge over you in the case. Unless you give a reply and attend the court hearing, you’ll lose the chance to defend yourself in court. 

Yes. You can refuse to receive the summons. But the lawsuits won’t go away. In fact, the legal proceedings may go on just as they were scheduled. This means that the court may issue a judgment against you without even hearing your side of the story. Once the court issues a judgment, the court may levy your bank account or garnish your wages. 

Furthermore, they may impose a lien on your property. The judgment will appear on your credit report for at least 7 years.  

What else may happen to you? 

Well, the debt collector may make you pay the court fees, collection costs, and additional interest.     

When you respond to a summons, you make debt collectors to prove that you owe the debt. They have to validate the debt in the court. They have to prove how much you owe with valid documents. Most importantly, they must prove that the debt has not crossed the SOL period. 

When you respond to a summons or attend a court hearing, you open the door to many possibilities. For example, debt collectors might be interested in out-of-court settlements. In this case, you can settle your debts out of court. 

You can either negotiate with debt collectors out of court on your own and settle debt. Otherwise, you can hire a debt settlement company or an attorney to negotiate. 

The best option is to settle credit card debt, medical bills, and other unpaid debt before the court trial begins. This is an affordable option where you can save significant cash on your debt. Read the debt settlement agreement carefully before signing it to avoid getting into unnecessary trouble later on. 

Should you respond to summons even if you don’t owe the debt?

The simple answer is ‘yes’. It will help you to be in a better financial situation. Otherwise, the court might assume that it is a valid debt that you are not paying. If you don’t respond, it will be easier for the debt collector to prove you guilty.  

4 Steps you should take immediately after receiving a summons

Read the summons: 

Read the legal papers thoroughly. Look at the accusations against you. Are they justified? 

You can check to see if the bill collector has all the proof they need or if any information is missing. You can also check the court papers for mistakes or things that aren’t right. Read through the court papers to see what they say. Then, look over any records you have that are linked to the problem, such as:

Statements of account

Calculator and accounting document; image by 777546, via
Calculator and accounting document; image by 777546, via

Letters from the debt collector, including a debt validation letter if you have one, bank or credit card records, or other proof that you have paid the debt.

Messages from the original creditor, if they are different from the present collector.

Respond to summons: 

Draft your reply to the summons. Go through all the papers you have. Collect all the information against the debt collector. Have you asked the debt collector to validate the debt before? Have they sent you the documents? Go through them and defend yourself against all the allegations. You can consult an attorney if required. 

Attend the court hearing:

If you don’t attend the court hearing, you may lose the lawsuit, and the court may impose judgment against you. Attend the court hearing with an attorney on the scheduled date. Submit all the relevant documents. 

Check the SOL (statute of limitations) period in your state. Is the SOL period over? If so, you are saved. The debt is time-barred. The court can’t take any legal action against you for this. But make sure you don’t acknowledge the debt anyway. If you make this mistake, the SOL period on the debt will restart. Once that happens, you will be legally responsible for the debt again. In such a situation, debt collectors can sue you for not paying off the debt. 

Have a rational argument: 

Two things should come out of your argument. First, you should point out any wrong or incomplete information in the bill collectors’ case. You should also explain why it’s not true and show any papers or other proof that backs up your point of view.

Second, you should list any good reasons why the case is wrong.

Common examples include:

  • The debt has already been paid in full.
  • The debt was discharged in bankruptcy.
  • The Statute of Limitations (SOL) period has expired, rendering the debt unenforceable.

You have a certain amount of time before creditors or debt collectors can sue you for a bill. This is called the “statute of limitations.” The time limits in each state are different.

Final note 

Dealing with a debt collection lawsuit is undoubtedly challenging and stressful. However, with a thorough understanding of debt collection laws and your legal rights, you can navigate the situation more effectively.

Knowledge is power whether you represent yourself or hire an attorney. Lack of awareness about the collection process or legal rights disadvantages you. Hence, educating yourself or seeking legal counsel is vital for a strong defense in a debt collection lawsuit.

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