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Creditor Lawsuits

How to Handle a Debt Collection Lawsuit

Constant calls, emails, or lawsuits from debt collectors may stress you out, putting you in a frenzy, but they are more common than you know. The Consumer Financial Protection Bureau states that over 70 million Americans have faced debt collectors at some point in their lives, while approximately 25 percent have felt threatened in their dealings.

Debt collection lawsuits are something people do not like to deal with. The type of language used in collection agencies is enough to ignite fear and panic in individuals. After all, when you are served with a lawsuit, and your wages, bank accounts, and assets are under threat, it is natural to become overwhelmed.

This blog will list down the steps you can take to defend yourself or your company against a debt lawsuit to help you stay composed and collected when served papers for debt. First things first- understand your rights.

Respond to the Lawsuit

If you get served a lawsuit or debt claim, the first thing you need to do is respond to it. Failing to respond in a timely manner results in notices arriving in the form of summons and complaints.

If you owe some debt but can’t afford to pay it, you still need to respond otherwise, the collection agency will form a default judgment against you. Then, they might collect their money through wage garnishments or from your bank account.

Challenge the Collection’s Company Right to Sue

You can respond to a lawsuit by challenging the plaintiff’s right to file the lawsuit. Mostly, when a debt reaches this stage, it has already been sold. This means that person who owns the debt is legally required to prove that they have the right to file a lawsuit. Once served, the burden of proof rests with the plaintiff. This means that the person suing you has to prove that you are solely responsible for the debt, that they can legally sue you, and that you owe a specific amount.

To prove that you owe a specific amount, the collection agency needs to show proof of your balance increasing when you made purchases and that your current balance is accurate and accounts for every dollar you have spent.

However, if you choose not to respond, the court will assume that your silence means that you take responsibility for the debt.

Hire Your Own Attorney

If you cannot afford to pay back the debt, incurring further legal expense is not attractive. However, once you consult your attorney, you will be made more aware of your options and have a higher chance of defending yourself against the debt collection lawsuit.

Sometimes, all you need is a third-party to help you see things from a different situation and pick out key elements you might have missed out and could use to your advantage.

File for Bankruptcy

If you cannot pay back the debt, bankruptcy might be the only option. When you file for bankruptcy, an automatic stay is ordered. This means that all debt collection activity must cease until the bankruptcy process is handled.

For more information, speak with an experienced bankruptcy attorney – schedule your free 1-hour consultation today: https://seanflynnlaw.com/calendar/

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