How Often Do Debt Collectors Take You to Court?

Clients Helped

48000 +

Cases Defended

75000 +

5 Star Reviews

950 +

The frequency of lawsuits filed by debt collectors varies depending on several factors, including the amount owed, the type of debt, and the collector’s business model.

That being said, most creditors will sue for small balances such at $1,000

Toll Free: 800-220-4318

When Debt Collectors Are Likely to Sue

Debt collectors are more likely to pursue a lawsuit in the following situations:

Debt Amounts: The Debt amount is often not a significant factor. We have defended lawsuits where the creditor sued for under $1,000. People mistakenly believe creditors will only file lawsuits for large balances but this is simply not reality.
Type of Debt: Creditors usually sue for credit card debt and car repossession deficiencies. This means if your car was repossessed and there is a balance left after they sell it, they may sue you for this. They also sue for other types of bank loans. Creditors rarely sue for medical debts.
Debt Buyer Involvement: Debt buyers (e.g., Portfolio Recovery Associates, Midland Funding, LVNV Funding) frequently file lawsuits as part of their standard collection strategy.
Your financial situation: Creditors often do not care if you have money or not, they often still file lawsuits. We have represented clients on social security or disability as their only source of income and they have no assets. Creditors will still sue because it is part of their business model.

When Debt Collectors Rarely Sue

Lawsuits are less likely in these scenarios:

Medical Debt: Creditors rarely sue for medical bills in our experience. It’s usually defaulted credit card debt. That being said, if you pay for medical bills on credit cards you are more likely to be sued.
Time-Barred Debts: If the statute of limitations has expired, the collector cannot sue. For most debts this period is four to six years and varies from state to state. The timeframe is often the date of last payment or date of default.

Why Debt Collectors May Choose Not to Sue

Debt collectors don’t automatically take every case to court. Here are some reasons they might avoid litigation:

Cost of Legal Action: Filing a lawsuit, hiring attorneys, and going to court can be expensive. Collectors must weigh these costs against the likelihood of recovery.
Risk of Losing: If the collector lacks proper documentation or the debtor asserts a valid defense, they could lose the case.
Availability of Alternative Methods: Collectors often prefer less expensive tactics, such as negotiation or settlement offers.

What Happens When Debt Collectors Do Take You to Court?

If a debt collector decides to sue, the process typically follows these steps:

You Receive a Summons and Complaint

The summons notifies you of the lawsuit, and the complaint outlines the amount owed and the basis for the claim.
Depending on state law, you may have 20 days plus the following Monday to file a response.

The Court Case

If you respond to the lawsuit, the case proceeds to court. The collector must provide evidence that:
- The debt is valid.
- You owe the claimed amount.
- They have the legal right to collect the debt.

Judgment

If the court rules in favor of the collector, they will issue a judgment, allowing the collector to take further action, such as:
- Garnishing bank accounts.
- Placing liens on non-exempt property.
- Garnishing wages in most states.

How to Reduce the Risk of Being Sued by a Debt Collector

While there’s no guaranteed way to avoid a lawsuit, taking proactive steps can reduce the likelihood of legal action:

Communicate with the Collector

Ignoring debt collectors increases the risk of escalation. Respond to their calls or letters and try to negotiate a payment plan or settlement.

Stay Current on Payments

If you’re unable to pay in full, make partial payments or negotiate new terms with the creditor.

What to Do if You’re Sued by a Debt Collector

The best way to avoid the consequences of missing court is to take action as soon as you receive a summons. Here’s how:

Respond to the Lawsuit

File a written answer with the court by the deadline specified in the summons (usually 20 days plus the following Monday in many states). This prevents a default judgment.

Assert Defenses

In your response, you can assert defenses such as:
- The debt is beyond the statute of limitations (four years in Texas for most debts).
- The amount claimed is incorrect.
- The creditor lacks the legal right to sue.

Gather Evidence

Collect documentation, such as account statements, correspondence with the creditor, or proof of payments, to support your defense.

Consult an Attorney

A debt defense attorney can help you draft your response, negotiate with the creditor, and represent you in court.

Tips for Avoiding Default Judgments

Open All Mail: Never ignore court documents or correspondence from creditors.
Letters from Attorneys: Often you will receive letters from attorneys or law firms offering to represent you in the lawsuit. Do not ignore these as it’s a sign you are being sued for debt and you need to take action.
Communicate with Creditors: If possible, try to resolve the issue before it escalates to a lawsuit.
Attend Court: Showing up gives you the chance to contest the debt or negotiate better terms.

Conclusion

Debt collectors take people to court when they believe it’s a viable way to recover money, but lawsuits are not always their first choice. By understanding the circumstances under which lawsuits occur and knowing your rights, you can reduce the risk of legal action and protect your financial future. If you’re facing debt collection efforts or a lawsuit, act quickly to respond, seek professional help, and explore options to resolve the debt on favorable terms.

Mike Weston, Esq.

Mike Weston is a seasoned debt lawsuit defense attorney and founder of Weston Legal. Since 2005, Mike has devoted his career to compassionately helping consumers struggling with issues involving their personal and business debts. Mike is grateful to have been able to help tens of thousands of clients become empowered with knowledge on the path to financial stability.