Not being able to pay ever-climbing debts can be one of the most uncomfortable, anxiety-provoking and scary experiences that people can have. This only gets worse when debt collectors sue you for any outstanding debt that you owe them. In the vast majority of cases, these collectors will have bought the debt from somebody else for very little money with the express purpose of suing and making a profit. It can be an overwhelming call to receive, so here is what you need to do when faced with a debt lawsuit.
Do Not Ignore It
Many people ignore letters from debt collectors, but when they issue a lawsuit, this is one of the worst things you can do if you want the outcome to be at all beneficial to you. You need to respond – simply ignoring the letter will mean that the lawsuit still goes to court, but without your presence there, the collection agency is awarded a default judgement.
Once this happens, your options for dealing with the debt (like restructured payment plans) disappear and the power that collectors have increases. They will be able to garnish your wages, take money directly from your bank account, and in many cases, force you to pay for their own court costs. You will also not be able to file a dispute against the debt in the future.
How to Respond
Once you know that you should respond to the lawsuit, you should deny liability. This is the key to fighting your lawsuit to the end, even if you personally accept liability. If you officially accept liability from the get-go, you will not have much ground to stand on in court. Denying liability here isn’t the same as saying that you never borrowed any money, it is denying that the collection agency has a right to sue you.
At this point it is important that you know your entitlements in the fight for consumer rights and against unfair debt lawsuits. Debt collection agencies have several administrative necessities that they need to uphold on their end, which means that if they have made any errors, they may not have a right to sue.
Sometimes they are aware of their own sloppy practices and may drop the suit as soon as you challenge it as they cannot produce a chain of custody that shows they have done all the right steps in accounting and obtaining debts. Proving that they can do this in a legally binding way can be very difficult for agencies.
You should also be aware that there is a statute of limitations on debt, even if the collectors provide evidence of a chain of custody. Many collectors sue those with a debt outside the statute of limitations because they want to make profit, but if this is the case you have an easy way out: just prove that your debt is outside the statute in court and your case should be dropped. If you are close to the statute of limitations and want to wait it out, be aware that paying any amount of debt to the collectors or even promising to make a payment will reset the clock.