Defending a Debt Collection Lawsuit


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If a person owes money to a creditor, the creditor or debt collection company may commence a debt collection lawsuit against the debtor. If the creditor secures a judgment, it can then take steps to collect on it through garnishment or attaching a lien on the debtor’s unexempted property. There are often several ways that a debtor can avoid these negative results, including the following:

Provide a Response

Debt collection law firms have successfully received many judgments against debtors simply because the debtor did not respond. This can occur even if the debtor did not actually owe the debt or had a viable defense. Debt collection law firms rely on this non-response when evaluating the risk versus the potential reward of bringing forth a lawsuit of this nature.

When a debtor does not respond to a summons and complaint, the creditor can get a default judgment against the debtor. Once it has this judgment, it can take action to collect on the judgment. Debtors should file a response to the summons and complaint within the time limit described on these forms. This requires the debtor to include the case number and file the answer with the court that has jurisdiction of the case. The debtor must provide a copy of the answer to the plaintiff’s lawyer.

If the debtor does respond, the debt collection law firm may choose to negotiate a settlement with the debtor rather than have to go to court to prove the debt.

Argue the Statute of Limitations

Many debts take a long time to go from the original creditor to the point where they are the basis for a debt collection lawsuit. Each state has a different statute of limitations for debts. This is the time period in which the creditor must bring forth a lawsuit in order to recover. If the debt has gone uncollected for a period that exceeds the statute of limitation, the debtor may be able to get the case dismissed by asking the court to dismiss it because it exceeds the statute of limitations. However, the clock may start ticking again if the debtor took certain action more recently, such as making a payment on an old debt.

Challenge Standing

Another way in which a debtor may be able to avoid liability is by contesting the creditor’s standing to bring the lawsuit. In most situations, the party suing is not the original creditor. Instead, it is a debt collection firm that has purchased the debt for a fraction of its original value. The debt collection firm then sues the debtor. By challenging the creditor’s right to sue, the debtor takes an offensive position that requires the creditor to establish the right to collect, such as by having to show a transfer of the signed credit card agreement.

Countersue

When a party is sued, he or she has the right to bring forth any legal claims that he or she has against the other party. In many situations, debt collection firms do not comply with the legal requirements regarding the collection of debt. The Fair Debt Collection Practices Act provides guidelines that must be followed when collecting such debt. If the creditor has violated these provisions, it can be held liable for statutory damages, attorneys’ fees, costs and other damages.

Defend the Case

In a civil lawsuit, the plaintiff has the burden of proving the case by a preponderance of the evidence. In many situation’s, the debt collection firm may not have the necessary records to establish the debt, or such information may have been lost in the process of transferring the debt to different owners multiple times.

File for Bankruptcy

In cases in which the debtor owes a substantial amount of money, the debtor may consider filing for bankruptcy. Filing creates an automatic stay regarding the collection of most debts.

Seek Legal Assistance

A civil attorney can provide information about a debtor’s rights. Additionally, he or she may be able to provide information about whether a bankruptcy filing is appropriate given the current circumstances. A civil attorney can help defend the lawsuit and raise any applicable defenses to the claim. Sometimes obtaining legal representation and notifying the creditor of this may be enough for the creditor to consider negotiating the debt rather than moving forward with legal action.

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Disclaimer: While every effort has been made to ensure the accuracy of this publication, it is not intended to provide legal advice as individual situations will differ and should be discussed with an expert and/or lawyer.

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