I’ve Been Sued by a Debt Collector. What Should I Expect?
Lawsuits are a common debt relief tactic, and they represent one of the most common forms of a civil lawsuit. Just because you have been sued does not mean that you have to pay off your entire debt immediately. Nor do you have to accept their lawsuit without a fight. Continue reading for a discussion of what to expect and what to watch out for when you are sued by a debt collector. Call an experienced bankruptcy and debt relief attorney to discuss your options for financial relief.
How the Lawsuit Starts
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. The complaint will be “served” on you, typically via mail or hand-delivery.
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.” A default judgment allows a creditor to:
● Garnish your wages
● Get a lien on your property
● Freeze some or all of your bank accounts
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 the creditor or debt collector. You may have a defense to the claim, including that the debt may be past the statute of limitations; that the creditor is wrong about the amount due, payments missing, or the due date; or that you are not actually the person the creditor should be suing. You have a limited time frame within which to respond, and you forfeit some or all of your defenses if you fail to respond within that time limit.
The Hearing and Your Defense
The court will set a hearing for you and the creditor to dispute the matter. If you do owe the debt, you might be able to reach a settlement with the creditor before the hearing–often they are willing to accept a reduced payment rather than have to go through an expensive and time-consuming court process. You may also be able to restructure or delay payments. 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. The creditor has the burden of proving that you owe a debt, and you do not have to do their job for them.
We strongly advise retaining an attorney to represent you. You may have defenses, such as you legally canceled the contract, you never received what you purchased, the contract is unenforceable for some legal reason, or you were induced to enter the contract based on some form of fraud. These are just a few examples; consult with a qualified debt collection attorney to find out what defenses you may have in your case.
The 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.
Bankruptcy
One way to stop a debt collection lawsuit is to file for consumer bankruptcy. Filing for bankruptcy places an automatic stay on all pending debt collection efforts, including debt-collection lawsuits. If the debt is dischargeable in bankruptcy, the bankruptcy could make the lawsuit go away as well. Speak with a bankruptcy attorney to help you evaluate whether bankruptcy is the right option based on your circumstances.
Call a Knowledgeable Southern California Debt Relief Attorney
If you’re struggling with debt and considering bankruptcy and other debt-relief options, please contact Rounds & Sutter for a free, confidential consultation. With offices in Ventura, Santa Barbara and Westlake Village, we represent clients throughout Southern California, offering smart, compassionate legal counsel in the face of life’s challenges.