Being Sued By A Debt Collection Agency

What do I do when I’m sued by a debt collector’s lawyer?

When a bank, credit card company or any other debt collector sues a debtor, they do so using an attorney. It is rare for debt collectors to go without professional legal representation, and this is another reason why defendants should consider their own representation. For most, it’s intimidating to deal with an attorney representing a debt collector, as they know how the law works and what they can get away with. However, attorneys are limited by the facts of the case, which means there may be options available to the defendant in pushing back.

How do I know when I’m about to be sued?

Most defendants never see the lawsuit coming, in part because people are mistakenly sued all the time for debts they never accrued. This happens even when the creditor is a reputable, globally-known institution. However, even when the defendant does owe the debt, a lawsuit can feel like a jolting bolt out of nowhere. This typical reaction is something that lawyers attempt to leverage, hoping they can surprise and shock the defendant into not responding well, or at all.

There are a couple of indicators that a debt may soon be pursued. Keeping an eye on these signs will prepare debtors for what may lie ahead. Those indicators include:

  1. The debt has been sold to an aggressive third party – Known as debt scavengers, third party debt buyers are businesses that profit from purchasing high-risk debt and squeezing the account holders until they get some form of payment. As scavengers buy this debt at a small fraction of the debt’s value, they only need to recoup a small amount back to make a profit. And because debt scavengers are anonymous to most people (when sued by a debt scavenger, it’s often the first indication that the debt has been passed to someone else), they don’t have a reputation to protect. That adds up to a system that incentivizes aggression and a proclivity toward litigation.It’s always best, then, to know who owns the debt. If it has been sold to a scavenger, then research them and determine if they are likely to sue. Consumer websites are valuable resources in this regard, as others will undoubtedly have similar experiences. This can provide insight as to whether a lawsuit is likely forthcoming.
  2. Contact with the debtor is through a local attorney – Debtors have many rights, outlined in the Fair Debt Collection Practices Act, or FDCPA. One of those rights is passing any lawsuit through a local court, so the debtor does not have to travel to another part of the country to manage their legal affairs. It’s a sign that a lawsuit is impending, then, if contact starts coming in from a local attorney. Attorneys usually make attempts to collect prior to a suit, so check the address on any letters. If it’s a nearby address, get prepared.

Defense Options When Sued by a Lawyer

Most lawsuits are kicked off once the defendant is served with official documentation, which includes the complaint and the summons. The complaint details the exact nature of the debt, including amount owed, and the summons tells the defendant when to show up in court. These documents are usually served in person, but they don’t have to be. In some areas, for example, the process server may only need to leave the papers on the defendant’s doorstop.

Although formal notice of a lawsuit is enough to get the heart racing, it is critical that a coherent answer is made as soon as possible. Defendants have a few weeks (rarely more than 30 days) to provide such an answer, and this is when the defendant is most at risk. If no answer is provided in response to the complaint, the creditor or scavenger will likely win a default judgment in their favor. Once they do, the defendant has few options in contesting debt collection efforts, and the collector can escalate their attempts, such as garnishing bank accounts.

Fortunately, it doesn’t take a law degree to answer a complaint. In some cases, a couple sentences will do, though they should clearly contest the collector’s accusations.

Once the court has been satisfied in this way, the collector can no longer win a default judgment, as long as the defendant continues to follow court proceedings. At this point, the real case building can begin, and may include these defenses:

  1. Lack of proof – Lawyers are limited by the information their clients provides. If the creditor or scavenger cannot demonstrate proof of the debt, or if they cannot prove they have the authority to sue for the debt, then no manner of legal maneuvering will save their case. If someone has been sued for a debt they never accrued, then the case will fall apart as soon as the creditor is required to prove it. However, even if the account in question is tied to the defendant, the creditor’s lawyers must still prove that their client has the right to sue. When buying up thousands of delinquent accounts, this is something that is often overlooked.
  2. Statute of limitations – Lawyers know the statute of limitations inside and out regarding debt collection. Once the statute of limitations period expires on a particular debt (usually between two and six years), it’s no longer available through litigation. However, that doesn’t stop lawyers, who often send form letters threatening a suit, even when it is a debt that can’t be sued for. That’s because the majority of defendants either do not respond to the complaint or do not know that they are safe from a lawsuit.
  3. Settlement negotiation – Most creditors and scavengers would prefer to enter into settlement as soon as possible. It keeps their legal costs down. If the debt is something that the defendant cannot sidestep, then a favorable settlement is the only realistic option. In this scenario, it is dangerous to go to the table without experienced legal representation, as the creditor’s lawyers will not play nice.

Dealing with debt is difficult enough, but it’s made much worse once the creditor’s lawyers get involved. A debt defense attorney can even the odds and ensure no legal stone goes unturned in building a defense.