If this is you, we know you have questions.  We’ve got answers.

If a debt collector is suing you there are steps you can take to defend yourself.  A better understanding of the legal process is necessary to know how to defend yourself against debt collector lawsuits.

How to Avoid a Lawsuit Before it is Filed

Before explaining how you get sued and trials, the best thing for you is to avoid getting sued in the first place.

The Huffington Post published a good article titled, “Four Magic Words to Get Out of a Debt Collector Lawsuit”.  The author recommends these four words, “Show me the evidence” when first contacted by the creditor.  Basically, you immediately demand that the creditor provides all the evidence proving that you owe the money.  The article surprisingly claims that most creditors do not have the proof they need to win a lawsuit and will stop bothering you.  That’s because most of the time proof of your debt may not be strong enough to win a lawsuit because of missing documents.

Legal Process - Sued by Debt Collector

How Lawsuits Start

A lawsuit begins when a debt collector files a Complaint (or Petition) against you seeking payment of money you owe (debt).  According to the federal government agency, Consumer Financial Protection Bureau, you must reply to the lawsuit.  Otherwise, you will lose the lawsuit.

Which Court

The lawsuit is filed with a civil court which the law says has the right to hear the complaint against you which is called having “jurisdiction”.

You will be sued in a state civil court (each state has different names for their civil courts, such as superior court, municipal court, county court, or justice court, etc.).  If you owe a debt to the federal government, it will be in federal court.

If the debt is small (such as up to $1,000 in some states or up to $10,000 in other states) you could be sued in a Small Claims court.  Here is a list of small claims courts in all 50 states and how much can be claimed.   

You've been served

Finding Out About the Lawsuit  

The law requires that the plaintiff (debt collector) must notify you that a lawsuit has been filed against you.  The legal documents which must be given to you are known as the “Summons and Complaint”.  The Summons is a legal document notifying the defendant of where the lawsuit was filed (which court), when it was filed, and how many days you have to respond (Answer) to the lawsuit, and the date you must first appear in court.  The Summons must accompany the Complaint which is another legal document identifying all the parties to the lawsuit (plaintiffs and defendants), the reasons for the lawsuit (claims), what type of relief is being sought (money damages, injunction, or other court order), and the name & address of the plaintiff’s lawyer and law firm.

Affidavit – Sued by Debt Collector

Most states allow the plaintiff (or his/her lawyer) to notify you about the lawsuit by certified mail with a return receipt proving that you received it.  Otherwise, the lawyer will hire a person to personally deliver the lawsuit documents to you (called a “process server” and file a sworn affidavit (statement) with the court saying when you were personally served with the legal documents.

An affidavit is a written statement sworn before a notary public who places a seal on the statement verifying that person made the declaration under oath.  Notary public’s are available in nearly every state.  Basically, affidavits can be written about what a person heard or saw which is relevant to the evidence of a lawsuit.

Steps in Debt Collection LawsuitThere are several legal maneuvers a defendant can take to keep an affidavit from being used as evidence by the court.  One is called a “Motion to Strike” which is exactly that.  Formal requests for a judge to act are called “motions” and to “strike” something means asking the judge to prevent the affidavit from being considered.

Refusing to sign the certified mail receipt or avoiding the person attempting to serve you with the lawsuit documents will not stop the lawsuit from proceeding.

 

You must never ignore the lawsuit because the court can issue a Default Judgment against you for failing to respond to the lawsuit and give the plaintiff the amount demanded.  In addition, the court can order that you pay the court costs (filing fee, certified mail or personal delivery costs) along with the debt collector’s attorney’s fees.

Answering the lawsuit

After you have been “served” with the notice of the lawsuit, you must reply to it.

You can reply through an attorney or personally, but you must do so before the stated deadline in the legal document called a “Summons”.

Your reply is called an “Answer” to the claims in the lawsuit.  Most courts only allow you 20 or 30 days to
file your Answer with the court.  Some states allow for Registered Mail as long as it arrives before the deadline to Answer.  Basically, your Answer will demand that the debt collector provides evidence to the court that you owe the debt and have not paid it.  Preparing an Answer can be tricky as they must be written in a formal legal manner which lawyers are trained to do, but laypersons may find difficult.  Making a mistake in your Answer to the lawsuit (like failing to Deny all the claims) can result in the plaintiff winning right away due to your failure to properly Answer all of the claims against you.

Affirmative Defenses

Link to complete document -> Affirmative Action Document

Your Answer can also list “Affirmative Defenses” which basically adds new facts which can defeat the claim.  Several Affirmative Defenses can be raised at the same time in your Answer like:

  • Failure to state a claim where relief can be granted.  Basically, this defense says the facts that plaintiff claims are not adequate to win the lawsuit
  • Plaintiff’s complaint violates the Statute of Frauds because the agreement or contract creating the debt was required to be in writing and was only verbal.
  • Plaintiff’s complaint is barred by the Statute of Limitations because it was filed after the legal deadline for filing this type of lawsuit.
  • Plaintiff is not a valid legal party with the authority to file this lawsuit.

There are many other Affirmative Defenses which can be made in your Answer.

Find a lawyer

Find a Lawyer Who Specializes in Consumer Protection

If Answering the Complaint is too complicated, you will need to hire a lawyer to defend you.

Lawyers come in all sizes and shapes based on what kind of laws they specialize in.  First, you need an experienced trial lawyer since this is a lawsuit requiring a lawyer who knows how to go to trial.  Trial lawyers also specialize in criminal or civil laws and then have areas of law they know the most.  If you hire an attorney, find one that specializes in Consumer Protection laws.  Such a lawyer will know all about debt collection and how to defend against them.

Prior to the trial

Unless the claim is filed in a Small Claims court where no lawyers are allowed to represent the plaintiff or defendant, the plaintiff is usually represented by a lawyer.  Most plaintiffs hire a lawyer because there are so many technical details which must be followed from the time the Complaint is written all the way through the trial.

While a defendant has the right to defend him or herself, many hire a lawyer who is experienced with conducting trials.  That’s because the defendant must engage in tricky procedures and one mistake could lead to the plaintiff winning the lawsuit.

If you hire an attorney, he or she will communicate with the plaintiff’s attorney to attempt a settlement of the debt.  If you and the plaintiff agree on an amount you can pay, the lawsuit can be settled.  There will be no need to go to trial.

If not, the next stage is called “Discovery” where both sides have the right to ask questions to the other party either in writing (called “Interrogatories”) or by demanding that the other party personally appear for a session of questions in front of a court reporter who types everything down (called a “Deposition”).

“Motions” are another legal process where both sides file written requests for a judge to approve or reject.  Motions can be about most anything concerning the law, legal procedures, where the trial takes place if evidence should be stricken, or witnesses to be prevented from testifying, etc. This is another tricky legal maneuvering where lawyers draft motions to weaken the other side’s case by preventing evidence from being considered by the court.  Lawsuits can be won or lost because of motions being approved or rejected by a judge.

Going to Trial - Debt Collector Lawsuit

Be Well Prepared

If no settlement can be reached, a public trial will occur.  This is when the plaintiff provides all the evidence of the debt, how much is owed, that you are legally responsible for paying the debt, and you failed to do so.

You, as the defendant, have the right to present your defense to these claims.

Witnesses can be called by both parties to support the claim or your defense.  Documents relevant to the lawsuit can also be presented as evidence.

The trial could occur in front of a jury or a judge.  When a verdict is rendered in favor of the plaintiff the judge issues a written judgment against you for a specific amount.  If the verdict is in your favor the lawsuit is dismissed ending the claim against you.

Judgment

A court Judgment against you allows the plaintiff (creditor) to seize your funds and possessions (like your car or home and furniture).  State laws differ regarding what properties can be seized and the way they can be seized.  The most common methods are:

  • File a lien against your property which is a legal document preventing you from selling your property until the court orders the property to be sold to pay the judgment.
  • Garnish your wages which allow a percentage of your paychecks to be sent to the court to pay off the judgment.
  • Freeze all or some of the funds in your bank accounts in order to pay the judgment.

What happens after judgement

You’ve Got Options

After a judgment against you, there are only a few options available to fight it.

  • You can file an “Appeal” asking a higher court to review the evidence to see if an error occurred during the trial requiring a “Reversal” of the judgment.  This can be expensive as your attorney’s fees can add up quickly.  However, some states will not allow a Small Claim Court’s judgment to be appealed.
  • You can attempt to negotiate with the plaintiff to settle for a lower amount to avoid your filing an appeal.
  • You can file for federal Bankruptcy. (See Below)


Bankruptcy
Most bankruptcy lawyers do not recommend filing for one if you just owe a small amount of money.  Filing for bankruptcy is better when you are being sued for a large debt or you owe many other debts.  Once you file for bankruptcy, an “automatic stay” protects you because the lawsuit can’t proceed nor can other efforts to collect debts from you.

Don’t wait to lose the lawsuit before contacting a bankruptcy lawyer.  Talk to a bankruptcy lawyer soon after you are served with the Summons and Complaint.

There are two types of Bankruptcy:

(1) When a company stops doing business and files for Bankruptcy to liquidate all its assets to pay the debtors is called a “Chapter 7”.  An individual can also file for total Chapter 7 Bankruptcy.  You can only file for a Chapter 7 Bankruptcy once every eight years.

(2) The other type of Bankruptcy is called “Chapter 13” which is known as the “wage earners plan” because it allows individuals earning regular wages to create a way to pay all of the debtors in three to five years called a “Repayment Plan”.

What to Watch Out For-debt collection

When being involved in a debt collection lawsuit, occasionally check your credit reports to keep your eye on your credit scores.  You can spot potential problems before they become bigger.  Each of the three major credit reporting agencies is required to give you one free annual credit report.  They are:

Monitor your credit scores for free at the Credit.com Credit Report Card which provides an overview of your credit profile with monthly updates.

Conclusion

If a debt collector is suing you, understanding the civil court process and your legal rights will help to defend yourself from the lawsuit.  Even if a court judgment is entered against you, there are a few things you can do to slow down the collections or you can file for bankruptcy for a fresh start.

You can avoid lawsuits by paying your debts and making sure your credit history and credit score are clean.  An error in your credit report could lead to a lawsuit being filed against you.  That’s why credit repair can be important for you.

Get back on track-debt collection

Free Strategy Session

If you feel that a lawsuit may be impending, have collections or charge-offs, and need help please CONTACT US today for a free strategy session! 


Legal Disclaimer – Credit Repair Heroes does not provide legal advice.  The information provided in this blog are for informational purposes only and not for the purpose of providing legal advice.  The author is not a lawyer and no attorney-client or confidential relationship exists or will be formed between you and Credit Repair Heroes or the author.  You should contact an attorney to obtain advice with respect to any particular issue or problem.

Resources:    There is a federal law called the Fair Debt Collection Practices Act enforced by the Federal Trade Commission (FTC) which sets rules for protecting consumers (like you) when plaintiffs with a judgment against you start garnishing your wages and try to repossess your car.  Some properties can’t be seized by judgment creditors.Here is a link to the states which have their own Fair Debt Collections laws explaining them.There are some state laws which will help you with debt relief.  Here is a link to 13 state debt management centers and the District of Colombia.This is a link which explains each state and the District of Columbia’s Garnishment of Wages laws and how much can be garnished.