What to Do If Sued By a Debt Collector

A random person walks up to you, verifies your name, hands you a packet and says the words ‘you’re served’.Yup you’ve been sued by a debt collector.

Take a breath & calm down its not the end of the world. Here’s what to do if you’ve been sued by a debt collector.

Don’t ignore it!

This is the most common response and the worst thing you can do if you’ve been sued by a debt collector not to mention exactly what they are hoping for.

Many people just ignore it hoping and praying it will go away. It won’t.  If you ignore the lawsuit the debt collector will get a default judgment against you and now has more power than ever to recoup the money you owe.

Judgments don’t go away

In many states a judgment can be renewed indefinitely or pretty darn close to indefinitely. You may not care now if you don’t have anything but what if 10 years down the line you get an inheritance? They can swoop in and take it.

Don’t believe me? Google legal advice forums where people were shocked to see a wage garnishment from a debt they had long forgotten about.

You may be able to bk out of a judgment but remember filing bankruptcy successfully is a lot harder than it used to be.

Swerve the wheel

If you’ve been sued by a debt collector chances are good you probably owe the money. You may not be able to stop the car but you can at least swerve the wheel. Swerve it enough  in fact to where they offer a favorable settlement or even get off the hook.

You must file an answer

You can file a two sentence answer with the court simply denying that you owe the money. This is a strong step forward since, as discussed before, most collection agencies are hoping you’ll ignore the whole thing.  A lot of times just filing an answer will lead to a favorable settlement offer.

Read our article on why not to settle right away.

What to put in an answer

Nolo Small Claims Lawsuit Kit

Lawsuits are more so about intimation than anything. If you’ve got a particularly diligent debt collector that doesn’t offer a settlement after you’ve filed your answer the next step is to challenge their right to sue you in the first place.

The collection agency must prove that they legally own the debt. In order to do this they must prove they have the right to collect, as evidenced by a transfer of the signed agreement. Believe it or not most collection agencies are sloppy operations and they don’t keep the necessary paper trails.

You can challenge their right to collect from you in the first place and have the suit dismissed due to lack of proper documentation.
I have some dispute letters that you can use but if you want the best professional looking letters then try these from FindLegalforms.com

Fight Back with knowledge

The statue of limitations is your friend

If you’ve been sued by a debt collector always make sure you check the statue of limitations. The statue of limitations is a series of laws saying how long a business may sue you to collect a debt. The law varies by state and type of debt so you’ll need to research if the statute of limitations applies to you.

If the statue of limitations has expired you’ve won the case regardless if you owe the money or not.

Here’s a list of statute of limitations on debt by state. All numbers represent years:

State Oral Written Promissory Open
Alabama 6 6 6 3
Alaska 6 6 3 3
Arizona 3 6 6 3
Arkansas 6 6 3 3
California 2 4 4 4
Colorado 6 6 6 6
Connecticut 3 6 6 3
Delaware 3 3 3 4
Florida 4 5 5 4
Georgia 4 6 6 4
Hawaii 6 6 6 6
Idaho 4 5 5 4
Illinois 5 10 10 5
Indiana 6 10 10 6
Iowa 5 10 5 5
Kansas 3 6 5 3
Kentucky 5 15 15 5
Louisiana 10 10 10 3
Maine 6 6 6 6
Maryland 3 3 6 3
Massachusetts 6 6 6 6
Michigan 6 6 6 6
Minnesota 6 6 6 6
Mississippi 3 3 3 3
Missouri 5 10 10 5
Montana 5 8 8 5
Nebraska 4 5 5 4
Nevada 4 6 3 4
New Hampshire 3 3 6 3
New Jersey 6 6 6 6
New Mexico 4 6 6 4
New York 6 6 6 6
North Carolina 3 3 5 3
North Dakota 6 6 6 6
Ohio 6 15 15 6
Oklahoma 3 5 5 3
Oregon 6 6 6 6
Pennsylvania 4 4 4 4
Rhode Island 15 15 10 10
South Carolina 3 3 3 3
South Dakota 3 6 6 6
Tennessee 6 6 6 6
Texas 4 4 4 4
Utah 4 6 6 4
Vermont 6 6 5 3
Virginia 3 5 6 3
Washington 3 6 6 3
West Virginia 5 10 6 5
Wisconsin 6 6 10 6
Wyoming 8 10 10 8

 

Debts generally fall into one of four categories. It’s important to know which type of debt you have because the time limits are different for each type. Consult an attorney if you have questions about which type of debt you have.

  • Oral Agreements are debts were made in an oral contract. With an oral contract, you only made a verbal agreement to pay back the money. Nothing was in writing.
  • Written Contracts are debts with a contract that was signed by you and the creditor. A contract includes terms and conditions of the loan, e.g. the amount of the loan and monthly payment. A medical debt or would be a type of written contract.
  • Promissory Note is a written agreement to pay back a debt in certain payments, at a certain interest rate and by a certain date and time. Mortgages and student loans are types of promissory notes.
  • Open-Ended Account is an account with a revolving balance that you can repay and borrow again. Credit cards, in-store credit, and lines of credit are open-ended accounts. If you can only borrow the money on time, it is not an open-ended account.

Turn those lemons into lemonade with a lawyer

Most people just automatically assume that they cannot afford an attorney. This is simply not true. There are more lawyers than ever out there.

Many offer free consultations. What’s nice about that is the consultation can at least give you an idea of whether or not you have a viable case or not.

If your case does indeed have merit many will work on a contingency. That is they don’t get paid unless you get paid. Just like the personal injury lawyers you see on TV.

Also remember under the FDCPA you are entitled to attorney’s fees if you win. That means you could end up with your debt not only gone but some extra cash leftover!

File a counter suit

You have many rights under the Fair Debt Collections Practices Act.  If any of those rights are violated you may be to able counter sue the debt collector for damages. Here are just a few of them.

  • The right not to be called at  inconvenient times. The generally accepted times are between 8 am and 9 pm unless both parties agree otherwise.
  • Gives you the right to dispute and request validation of the debt
  • The right not to be lied to or use any sort of false or deceptive means of collecting the debt
  • The right not to have friends and family members called about the debt
  • The right not to be called multiple times a day just to harass you
  • The right not to be cursed at or have abusive language used towards you
  • The right not to be embarrassed by them publicly disclosing the debt
  • The right not to be contacted once the debt collector knows you have legal counsel or representation
  • The right not to be contacted once you’ve sent a cease and desist letter

The number 1 violation debt collectors usually commit is calling you too many times which constitutes harassment. This is usually your easiest way to win a counter suit.

Why?

Because the statute doesn’t set a specific number of times a debt collector can call you before it constitutes harassment. That means its vague and left up to the courts to interpret .

This is why its so important to keep track of the number of times a debt collector has called you. This can be your ticket to winning your counter suit.

Another easy avenue of success is the fact that often times debt collectors inflate (lie) about the amount you owe in order to intimate you into paying up.

While they are allowed to charge interest they cannot exceed the amounts of your original contract. In other words they can’t just add a ‘debt collection fee’, for example, unless it was stipulated in the original contract; that would be illegal.

If you are successful you would be entitled to up-to $1,000 per lawsuit in addition to punitive and economic damages. They would also be required to shoulder your attorney’s fees.

That being said it is vital you contact a licensed attorney prior to any lawsuits. This is because the law can be tricky sometimes so you need someone with experience to assist you.

Just a quick aside your family members and friends may also sue if they’ve been burned by debt collectors calls looking for you.  

Bankruptcy 

If you’ve been sued by a debt collector and all else fails then bankruptcy might be the best option. Contact a reputable debt relief agency prior to filing bankruptcy.

As mentioned in our previous article bankruptcy is not as easy to file as it used to be but that doesn’t mean it’s impossible. Under bankruptcy laws all lawsuit proceedings must cease once a bankruptcy petition is filed with the court.

This is called an automatic stay. In most cases you would file either a chapter 7 or chapter 13 bankruptcy petition.  You can read more about bankruptcy here or if you want to do it yourself you can buy a Nolo Bankruptcy Instruction Guide from Nolo.com

Get help before a lawsuit

Get Help Representing Yourself in Court

If you are drowning in debt don’t just pray it’ll go away. It won’t!

 Before you get sued by a debt collector contact  National Debt Relief or call them at 855-224-0820.

They will offer you a free debt relief consultation so you’ve got nothing to lose. They can offer options like debt consolidation, debt negotiation, and debt settlement (if that’s the right option for you). They’ve been around for nearly 2 decades and they are rated #1 in the industry.

 

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