How to build a debt collection defense against possible lawsuit

You might face a collection lawsuit when a creditor files a lawsuit with the court against you. A debt collection lawsuit can take time and can be expensive. Most creditors do not want to choose this option while collecting old debts. Creditors will always go for other available options.


In most cases, creditors prefer to repossess your assets like cars, home or other precious things. A debt collection lawsuit is rarely issued for debts under $1,000.


There are collection agencies that may aggressively threaten consumers to garnish employee wages to collect debts. However, the creditor or collection agency cannot garnish your wages without a proper court judgment. But still, debtors might face collection harassment from the very beginning of the collection process.


If a collection agency filed a lawsuit against you, do not panic and prepare your next steps to deal with this issue. You may follow the below-given strategies to create a debt collection defense and win a debt collection lawsuit.


1. Give proper response to the lawsuit


Being a consumer, if you do not respond to the debt collection notice, it will be a grave mistake. This notice normally comes as a summons and complaint. If you have debts and can’t pay it, the creditor may file a lawsuit as a last resort.


If you do not attend the summon, the collection agency might get a default judgment against you. Through this, they may be able to garnish your wages and get money from your bank account. As per the collection law in different states, the debt collector may even collect their attorney’s fees, court costs, or interest from your wages.

So, when the plaintiff (the creditor or collection agency) files a lawsuit, you can’t contact the plaintiff via Email or phone. You must reply to the lawsuit via legal briefs called an Answer . This is how you should do it:


  • Do not accept the debt at first glance. Ask the creditor to validate the debt first.
  • File your Answer with the clerk of court.
  • Get your stamped copy of the Answer from the court.
  • Send that stamped copy via certified mail to the plaintiff.

You should send your Answer within the stipulated time as per the lawsuit summons. The given time may vary from 20 to 30 days from the date on the notice. Do not miss the deadline at all. As per the Consumer Financial Protection Bureau (CFPB), once a judgment is given, you can’t dispute the debt from that point on.


2. Challenge the debt lawsuit


You may challenge Plaintiff’s right to file a lawsuit against you. Collection agencies normally purchase your debts at a lower value from the creditors and get a transfer of the signed debt agreement. Through this, they establish the right to collect this debt and initiate collection harassment. But here is the catch. Normally 99.9% of debt cases are not properly transferred to the collection agency through a proper agreement signed by the creditor.


So, you may request the court to dismiss the case as the Plaintiff does not possess the “chain of custody” documents. If the court finds out that debt collectors do not have the required “chain of custody” documents, they may dismiss the case.


3. Check the statute of limitations


Sometimes, debt accounts may take too much time to get transferred from the original creditor to the collection agency. So, it will also take long to start the debt collection lawsuit process. Each state has a different statute of limitations for debts. That means in every state there are different times allotted to file a lawsuit. If the debt collector exceeds the statute of limitations period, the consumer may request the court to dismiss the lawsuit.


However, the statute of limitations clock may start again if you start making payments on an old debt.


4. Hire a good attorney


One of the best ways to create a debt collection defense is consulting a good attorney. He/she will help you choose the best options in defending against a debt collection lawsuit and raise any applicable defenses to the claim. You may get free consultations from many attorneys regarding your issue.


A good attorney may help you to:

  • Know if you have any options left and which one is the best.
  • Check if you are getting equal benefits compared to the legal costs.
  • Provide a helpful view of your case as a third party

If you have a strong case, your attorney may deal with your case without fees. It is because there might be a possibility that the court may order the creditor or collection agency to pay all legal fees including the fees of your attorney.


5. Take legal action against the plaintiff


If you have solid proof that your debt collector has violated the laws of debt collection, as per the Fair Debt Collection Practices Act (FDCPA), you may be able to take strict legal actions against the debt collector. You may successfully sue them for violating the debt collections practices act and get statutory damage charges of $1,000, plus other monetary losses.


6. File a petition of bankruptcy


Devastated with the collection harassment, If you can’t pay off your debts and there’s nothing you can do to improve your financial situation, filing for bankruptcy might be the only option. When you file a petition of bankruptcy, it will initiate an automatic stay which will stop all debt collection activities from that moment.


You must talk to your lawyer first before choosing a Chapter 7 or Chapter 13 bankruptcy. If you want to wait until you get a summons, just before the date of the hearing, your attorney might have to file an emergency bankruptcy petition to save you. But that would be more expensive.


Endnotes

There are multiple options to create a debt collection defense against possible lawsuits. Just remember that you should be honest with yourself and with your attorney. Only then your lawyer may help you to get yourself out of this misery. Good luck.