No one wants to receive a court summons for debt collection, but it happens. Life is expensive and medical bills, loans, and other financial strains can quickly add up. According to Federal Reserve data, consumers in the United States have over 26% of their income wrapped up in debt.
If you cannot pay off your debts, you may try ignoring them and hope they go away. This only works for so long before the owner of your debt sells it to a collection agency. Once a collection agency owns the debt, they will pursue you relentlessly to receive payments.
Debt collectors start with letters and collection phone calls. But if you ignore these too, they may decide to sue you for the debt. Learn what to do if a debt collector sues you in 9 easy steps below.
1. Do NOT Panic!
If you receive a court summons for debt collection, the worst thing you can do is panic and shut down. Ignoring the collection letters hasn’t done you any good. Ignoring an official court summons only makes things worse.
You need to address the situation immediately because it will never magically disappear on its own. If you do not respond, the debt collector will only try more extreme tactics to get you to pay. That includes entering a motion for summary judgment to the court, even if you do not respond.
2. Take Care When Speaking to the Debt Collector
According to the Fair Debt Collection Practices Act, you may write the debt collector a letter requesting they no longer contact you regarding the debt.
Unfortunately, that does not mean they will suddenly forget the debt and stop pursuing you. It only means that they have no other option than to sue you since they cannot talk to you or call you in order to negotiate a settlement.
Take care when sending this kind of letter or speaking to the debt collector at all. It may end up causing more harm than good.
3. Respond to the Court Summons for Debt Collection
If you have received a court summons for debt collection, you’ve already past the point of negotiating directly with the debt collector. Either you ignored their past messages, including settlement offers, or you believe you do not owe the debt at all.
Regardless, you still need to respond the court summons. Even if you cannot afford to pay back the debt, you need to respond. Not responding can lead to the court issuing a default judgment in the debt collector’s favor since you failed to defend yourself.
Once the debt collector receives a default judgment, it gives them the power to collect what’s owed by any means necessary. This ranges from wage garnishment to directly taking funds out of your bank account, depending on which U.S. state you reside.
The debt collector may also request the judgment include court costs, attorney’s fees, and interest on the principal debt. This can cause your debt to double or triple with no way to negotiate down the new amount.
How Do I Respond?
You need to file an Answer with the court. You can no longer speak to the debt collector directly to resolve the debt. All communication must go through the court.
In your Answer, be sure that you do not admit that you owe the debt. You should instead challenge the creditor’s right to sue you. Then, file your answer through the appropriate Clerk of Court.
Make sure you ask the Clerk for a stamped copy of the Answer. You must also send a copy to the debt collector’s attorney through certified mail.
Be aware that you need to respond within a certain time period, usually between 20 and 30 days after you sign for the summons. If you do not file the answer, it may lead to a default judgment.
4. Challenge the Creditor’s Right to Sue
Often the debt collector suing you is not the original owner of the debt. The company that owns your debt purchased it from the original owner or a subsequent debt collector who failed to collect the debt. If you are not positive that the debt collector legally owns your debt, you may ask for proof.
If you do not respond, the court will never request the collector provide this necessary proof. They will consider your nonresponse an admission of guilt and simply enter in the default judgment.
To challenge the creditor’s right to sue, you must request that the debt collector, now the Plaintiff, provide the original credit agreement you signed. They also must provide evidence of chain of custody in the passage of the debt from the person who originally owned the debt to the current collector.
5. Focus on Burden of Proof
The burden of proof falls to the Plaintiff in these types of cases. The debt collector must prove that you are responsible for the debt, that you owe a specified amount, and that they have a right to sue you.
Requesting proof of the amount you owe is one way to defend yourself against the collector. Ask for statements that show the entire life of your account from the time you opened it to the very last activity documented.
Often debt that has passed between several collection agencies no longer has these important documents attached to it. If you can prove that they do not have the necessary legal documents, you may end up owing less or convincing the judge to throw out the case altogether.
6. Double-Check the Statute of Limitations
Every state has different rules and regulations regarding the length of time a collector has to bring a suit against you. It varies by the type of debt as well.
Most of the time a debt collector has between 4 and 7 years to bring a case against you.
Always double-check the statute of limitations before responding since you may be able to prove they cannot legally sue you.
7. Show Up to the Court Hearing
Once you respond to the court summons with an Answer, the court will assign a hearing to discuss the matter in front of a judge. During the hearing, you will have a chance to admit you owe the debt, deny it, or challenge the case against you.
Bring your paperwork with you, but do not expect the case to get resolved right away. If the debt collection agency fails to send a legal representative to the hearing, you can get it dismissed.
This does not often happen, however, and chances are that you will need to speak with their attorney.
8. Request Mediation
During the hearing, you may request mediation with the debt collector’s attorney in order to challenge the lawsuit. This is the time to request the documentation proving the creditor’s right to sue and force them to meet the burden of proof.
If the debt collector is able to provide the requested documents immediately, then you may submit a request for mediation to avoid an immediate judgment. You can even file a request for mediation before going to the court hearing to extend the time you have to get your counterargument in order.
9. Negotiate a Settlement
After the debt collector proves that you owe the debt and that they are legally allowed to do so based on the statute of limitations, it’s time to try negotiating.
If you do not feel comfortable speaking with the debt collector’s attorney on your own, you may request mediation with a qualified mediator to help.
A mediator is an unbiased third-party there to help you negotiate a compromise that both you and the debt collector can agree to. Now is the time to offer a lump sum payment if you can afford it.
Most debt collectors do not expect to get more than 50% of the original debt owed. You can use this to your advantage if you prove why you do not have the means to repay the debt in whole.
Avoid payment plans if possible. If you fail to pay even one time, the debt collector can request a judgment from court that will leave you open to wage garnishment, etc.
What to Do If a Debt Collector Sues You: Don’t Face It Alone
Now you should have a better idea about what to do if a debt collector sues you. This may seem terrifying at first, but it doesn’t need to stay that way. As long as you follow these steps and maintain your composure, you can easily find a solution and move forward.
Not sure that you can handle the debt collection lawsuit process by yourself?
Contact the Guardian Litigation Group to get help from experienced debtor rights lawyers who truly care about finding you a resolution.
The Guardian Litigation Group can assist you with debt negotiation, bankruptcy petitions, and debt collection defense in court.
Contact the expert lawyers at Guardian Lit today to learn how they can help you resolve your debt quickly and painlessly!