What to Do If a Debt Collector Sues You
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What to Do If a Debt Collector Sues You
If you have debt that is more than 180 days past due, your creditor can send it to collections. Considering that approximately 71 million Americans have debts in collections, this is a common problem in the country. Once in collections, agents will attempt to collect the debt. If you fail to pay the collections agency, it might choose to sue you. Debt collectors will often sue for any amount of money, even under $1,000.
If you are being sued for a past-due debt, do not panic. There are steps you can take to protect yourself.
Don’t Ignore the Lawsuit
Debt collectors hope that you will ignore the lawsuit so they can get a default judgment. If that happens, the debt collector might be able to garnish your wages in many states, seize your bank accounts, and put a lien on your property. Read the summons carefully to find out when your answer is due. While you normally have 20 days to respond, you only have 14 days to respond if the suit is filed in a Texas JP/Justice Court.
You will need to file your answer with the Court before the deadline to avoid a default judgment. The Court will provide you with a stamped copy that you must mail to the plaintiff. Once filed, you will need to prepare in case the case goes to court. Many attorneys charge low flat fees on payment plans so it may be better at this stage to consider this.
Collect Evidence
The best way to achieve a positive outcome is to gather all the possible evidence. That includes any paperwork you have related to the debt, as well as paperwork from the debt collector. Have the debt collector send you a document that validates the debt, including the chain of custody to ensure the debt collector has the right to take you to court.
Contact Co-Signers
If you have co-signers on the debt, you need to contact them before the case goes to court. Everyone listed on the contract is responsible for paying it. If they have not received a summons, contact a lawyer.
Don’t Transfer Your Property
As you get closer to a lawsuit, you might want to transfer your property so the court can’t put a lien against it. However, if you do this, the court might determine that you engaged in a fraudulent conveyance. Then, the court can make the person who now owns the assets hand them over to settle your debt.
Make Sure the Debt Collector Followed the Law
The Fair Debt Collection Practices Act (FDCPA) outlines rules and guidelines for debt collectors. If the collection agency broke any of the rules when attempting to collect the debt, you can countersue. You can also use the violation as leverage to get the collection agency to drop the lawsuit or settle for less than what you owe if the debt is valid.
This act states that creditors cannot try to collect more than what you actually owe. Debt collectors also cannot call so frequently that it becomes harassment, use abusive language or make threats when speaking to you. They cannot make calls before 8 a.m. or later than 9 p.m., and it’s against the law for debt collectors to inform a third party about your debt without your consent. There are exceptions to this rule. Debt collectors can talk to your attorney, your spouse, and the credit reporting agency.
Other violations include:
- Contacting you at work if you’ve asked them to not do so.
- Failing to validate the debt.
- Contacting a third party more than once to find your location.
These are just some of the possible violations. If the collection agency violated your rights, talk to an attorney about how to move forward. This is something to take very seriously. The Federal Trade Commission has sued more than 30 third-party collection agencies for violating the law. Some have been forced to pay steep penalties, while others can no longer do business in the country. The law is on your side, so use it to your advantage.
Resolving the Issue Before it Goes to Court
If the debt is valid, you can still resolve it before you go to court. Many creditors are open to settlement agreements.
The agreement should be for less than what you owe and if you cannot make a lump sum payment, you should negotiate affordable monthly payments. The written agreement must state that a judgment will not be entered as long as you make the payments, and if you miss a payment, you will receive written notice. The notice will give you 10 days to make the payment without a judgment being entered. This will give you some additional protection in case anything happens.
Also, don’t provide your bank account information when authorizing a settlement agreement. While rare, some debt collectors make unauthorized withdrawals, and that can cause you to pay overdraft fees. Don’t make any payments until you have the agreement in writing, and do not agree to pay more than you can afford since that will cause you to default on the agreement.
Should You File for Bankruptcy?
If you cannot reach a settlement or afford to pay the debt, you might want to file for bankruptcy. Chapter 7 bankruptcy is a viable option if you don’t have a lot of disposable income. However, if you make a sufficient income, the court might only allow you to file for Chapter 13. This can also stop the collections process and a lawsuit, but you will have to repay the debts. You’ll make a consolidated payment, and then it will be sent to your creditors. The repayment can be relatively low and spread out over five years.
Seek Legal Help
While some people try to handle debt collections lawsuits on their own, it’s far better to seek legal help with a flat fee. From providing advice on bankruptcy to creating a defense against a lawsuit, your lawyer can help you through the process.