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How To Resolve Your Collection Lawsuit

You’ve Been Served With a Debt Collection Lawsuit – Now What?

Getting served with a summons for a debt collection lawsuit can be scary; but don‘t panic. There are steps you can take to protect yourself and resolve this in the best way possible.First thing‘s first – don‘t ignore it! Ignoring a lawsuit is one of the worst things you can do. If you don’t respond, the court will likely issue a default judgment against you. That means the debt collector automatically wins and can pursue aggressive collection tactics like garnishing your wages or freezing your bank accounts.I know, I know – dealing with this stuff is a huge headache. But avoiding it will only make things worse in the long run. Take a deep breath and keep reading to learn how to tackle this head on.

Respond to the Summons Within the Deadline

The summons you received will have a deadline for filing a response, usually around 20-30 days. Mark that date on your calendar and make it a priority. Missing the deadline is basically surrendering to the debt collector.Your response is called an “Answer” and it allows you to admit or deny the allegations and raise any defenses you may have. This is your opportunity to fight back against the claims.Don’t worry, you don’t have to be a legal expert to draft an Answer. There are resources that can help guide you through it, like this guide from the SoloSuit blog. Or you can hire an attorney to handle it for you (more on that later).The key is not to miss that response deadline! Even a simple “I deny the allegations” is better than no response at all.

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Gather Proof & Documentation

While you’re preparing your Answer, take some time to gather any documentation or proof you have related to the debt being collected. Things like:

  • Account statements
  • Letters or emails with the creditor
  • Payment records
  • Anything that could support your case

You’ll need this documentation later if you have to go to court or try negotiating a settlement. Don‘t worry if you don’t have much – the debt collector has the biggest burden of proof. But any ammo you can provide will help your position.

Consider Hiring an Attorney

I’ll be honest, representing yourself in court against a seasoned debt collection law firm is an uphill battle. They literally do this for a living. Having an experienced consumer defense attorney in your corner can make a huge difference.A lawyer will be able to review your case, advise you on the best legal strategy, draft persuasive responses, represent you at any hearings, and negotiate with the debt collector‘s attorneys. Their expertise is invaluable.I know hiring a lawyer sounds expensive, but there are options that can make it affordable:

  • Many consumer law attorneys offer free consultations
  • You may qualify for free legal aid from non-profit organizations
  • The debt collector often has to pay your legal fees if you win the case

Do some research on attorneys in your area on Avvo and read reviews. Or check for referrals from your state bar association. Having the right lawyer makes a world of difference.

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Potential Defenses Against the Debt Lawsuit

When you file your formal Answer to the lawsuit, you’ll have a chance to raise any legal defenses that could get the case dismissed or give you leverage to negotiate. Here are some common defenses to consider:

Statute of Limitations – Every state has a time limit for how long a creditor can pursue you for a debt, usually between 3-10 years. If the debt is too old, you may be able to get it dismissed on statute of limitations grounds. The statute of limitations by state can be found here.

Lack of Documentation – The burden is on the debt collector to prove you owe the debt. If they can’t produce adequate documentation like the original credit agreement and account statements, you can argue they haven’t met their burden of proof.

Mistaken Identity – If the debt doesn’t actually belong to you, you can argue a case of mistaken identity or fraud. This happens more than you’d think when debts are sold and records get jumbled.

Violations of Fair Debt Collection Practices Act – Debt collectors have to play by certain federal rules under the FDCPA. If they violated these rules, like making false statements or harassing youyou may be able to countersue as discussed on Reddit.There are other potential defenses too, like the debt was already paid or discharged in bankruptcy. An experienced attorney will be able to evaluate which defenses are strongest for your specific case.

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Consider Negotiating a Settlement

If the debt is legitimate and you don’t have a solid legal defense, your best option may be trying to negotiate a settlement with the debt collector. This allows you to resolve the debt for a reduced lump sum that is less than the full amount they are suing for.Debt collectors are often willing to settle because it allows them to quickly recover something rather than going through a lengthy court battle with no guarantee of collecting. From their perspective, getting paid a portion upfront is better than potentially getting nothing.The negotiation process involves going back-and-forth between your respective attorneys (or you can negotiate directly if representing yourself). You‘ll want to get the settlement terms in writing before making any payments.A good negotiation strategy, as discussed on Quora, is to start your offer extremely low, maybe 20% of what’s owed. The debt collector will likely counter higher. Then you can make incremental increases in your offer amount until you reach a reasonable middle ground, maybe 40-60% of the total debt.Having a lump sum amount to put on the table makes you a more attractive settlement candidate versus someone with no way to pay anything. Settling also avoids the debt showing up as a judgment on your credit report.

What If You Can’t Settle? Prepare for Court

If you‘re unable to negotiate an acceptable settlement, or you’re determined to fight the lawsuit on legal grounds, then you need to get ready for an actual court battle. The debt collector will likely file a Motion for Summary Judgment asking the court to rule in their favor without a trial.To oppose this, you’ll need to file a written Response laying out the evidence and legal arguments for why there are still facts in dispute that deserve a trial. This is another scenario where having an experienced consumer defense lawyer is extremely valuable.If the case does go to trial, you‘ll need to show up in court with any witnesses and documentation supporting your defense. The debt collector will have to prove their case by presenting evidence that you owe the debt. You’ll get a chance to cross-examine their witnesses and evidence.The judge or jury will then make a ruling based on whichever side had more convincing evidence and legal arguments. If you lose at trial, the debt collector will likely get a judgment against you.

Potential Outcomes If You Lose the Case

If the debt collector gets a court judgment against you, either from a default judgment (because you missed deadlines) or after an actual trial, they gain powerful collection tools like:

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  • Wage Garnishment – They can garnish up to 25% of your disposable earnings from each paycheck until the debt is paid.
  • Bank Account Levies – They can seek a court order to freeze and seize money from your bank accounts.
  • Property Liens – They can place liens against any real estate or valuable property you own, preventing you from selling it until the debt is resolved.
  • Contempt Charges – If you defy or ignore the court’s judgment orders, you could potentially face fines or even jail time for contempt of court.

The judgment will also appear as a negative public record on your credit reports for 7-10 years, making it very difficult to get approved for new credit or loans during that time period.So as you can see, having a judgment go against you in a debt collection lawsuit gives the collector a lot of power and leverage. It’s a situation you want to avoid if at all possible, which is why it’s so important to respond to the lawsuit properly and put up a strong legal defense.

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