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Being sued for a debt can be terrifying. But did you know that the main reason that collectors win in court is because debtors don't even show up? Don't ignore a debt collection lawsuit. Learn more about what to do if a debt collector sues you.
If you are being sued for a relatively small amount of money -- generally anything from less than $1,000 to $10,000, depending on your state -- the lawsuit will probably be heard in small claims court. The rules and procedures in this kind of court are informal, and most small claims trials are over in a just an hour or two. Typically, both parties -- the plaintiff in the lawsuit (the creditor or debt collector that has initiated the lawsuit) and the defendant (that’s you) -- must represent themselves during the proceedings. If you are sued for more money than fits your state’s definition of a small claim, then the debt lawsuit against you will be heard in a higher, more formal court.
Regardless of where your case is heard, a uniformed county officer -- a marshal, constable or sheriff -- or a private process server will formally notify you of the fact that you are being sued by serving you with a legal summons. The county officer or process server will personally deliver the summons to you at your home, place of business, in a parking lot -- wherever you can be found. The summons will tell you who has initiated the lawsuit, the reason for the lawsuit, the amount of money you are being sued for, the court that will hear the lawsuit, and the date, time and place of the first hearing in the lawsuit.
If you are being sued for a debt that you can't afford to pay or settle, one of the first things you should do is get a free consultation with consumer law attorney right away.
law attorneys who represent debtors against debt collection lawsuits
often find that the collection agencies do not have the documentation to
back up the case against the debtor. In an article in the New
York Times, for example, one judge said that “roughly 90
percent of the credit card lawsuits are flawed and can’t prove the
person owes the debt.” That means you have a good chance of having one
of these lawsuits dismissed - but only if you challenge it!
There is no reason to go it alone. Consumer law attorneys who help consumers with debt collection harassment will usually provide a free consultation. If they think you have a good case against the collection agency, they will often represent you for free because they will get paid by the collection agency if it settles or if you win your suit against them.
Here are some ways you can respond to the information on the summons. You can:
• Contact the plaintiff to try to negotiate an out-of-court settlement in exchange for having the lawsuit dropped. This is a good option if you know you owe the debt, agree with the amount of the debt, and can afford to pay something on the debt, but not the full amount. The plaintiff may agree to settle in order to avoid the hassle and expense of a court proceeding.
If you and the plaintiff reach a settlement, be sure to get all of the specifics of your agreement in writing upfront, before you pay. Both of you should both sign the agreement and the plaintiff should file it with the court. Be sure to get a copy of the agreement for your records and confirm that the agreement has been filed with the court, either by getting written proof from the debt collector or creditor that sued you or by checking with the court clerk.
• File an answer or response to the information in the court summons. You should definitely do this if you disagree with all or some of the information in the summons such as the fact that you owe the debt or the amount of the debt, for example. In your response, you can contest some or all of the information in the summons, or ask the court to dismiss the lawsuit. You can also counter sue the creditor or debt collector in your answer if you believe that it violated your legal rights in some way.
Don't be afraid to stand up for yourself! If you are being sued and fight back in court, you may have a better chance than you think. It is not unusual for a plaintiff in a debt collection lawsuit to drop its lawsuit because many debt collectors lack the documentation they need to prove a debt. When they sue a consumer they are gambling that the consumer will do nothing to defend himself, which is what happens in most debt collection lawsuits. At the very least, tell your side of the story in court, and explain your financial situation to a judge. Although the judge may still issue a judgment against you, the amount of the judgment may be smaller than if you had not been in court. Best case scenario, the judge may even dismiss the lawsuit.
Some states require that you file an answer if you want to contest any or all of the allegation/s against you. If you want to know if your state is one of them, contact the clerk with the court where the lawsuit has been filed. The clerk’s office can also help you if you have any questions about how to file your answer.
• Show up in court for the hearing without filing any formal paperwork ahead of time. Most states allow this.
However you decide to respond to the lawsuit against you, it is critical that you show up in court on the day and time indicated on the summons. If you do not, it’s likely that the judge will award a default judgment to the plaintiff even if the judge believes that the plaintiff’s case against you is weak!
• Talk with a bankruptcy attorney
This is important because the bankruptcy attorney will be able to tell you what property you own may be at risk if the creditor or collector is successful in getting a judgment against you. If the bankruptcy attorney tells you that your income and assets are "safe" or "exempt," you may be in a better position to negotiate a settlement, or the creditor or collector may even back off.
[Related Article: Bankruptcy Exemptions - What Can I Keep?]
Learn how debt collection laws can help you protect your rights.