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I’ve Been Sued by a Debt Collector – What Should I Do?

By putting off your debts and financial obligations, you put yourself at risk of legal action by your creditors. A creditor can sue the debtor directly or they can sell the debt to a third-party debt collector. The debt collector then goes after the debtor via a lawsuit to retrieve the money that is owed. A bankruptcy attorney can help you fight this.

Getting sued by a debt collector can be a very stressful and emotionally taxing experience. It’s a legal process, which means a lot of technicalities and minutiae will be involved. Often, the process can be confusing for a debtor. It’s highly recommended to hire a lawyer in these situations so that you can build the best defense and conduct effective strategies that will protect you and your interests. 

A lawyer can guide you through the complex lawsuit, but one of the big benefits of a lawyer is making sure that you are informed. Knowing what you should expect and what you have to do can help you move forward and achieve the best results. Here’s what you have to do after being sued by a debt collector. 

  1. Verify the timeline of events and the legitimacy of the lawsuit 

There are some debt collection scams out there, and you don’t want to fall victim to any of them. If you receive a notice of a lawsuit from a debt collector, the very first thing that you have to do is to verify its legitimacy. The best way to do that is by taking a look at the timeline of events. The process of a debt collection lawsuit usually unfolds in this manner: 

First, you receive a phone call or letter from the debt collector letting you know that they will be collecting your debt. Within five days, they should send you a debt verification letter, which outlines the details of your debt, such as the name of the creditor, how much you owe, etc. 

If you believe that the debt is not yours, you can ask the debt collector to send you a verification letter. This must be sent to you within 30 days. Once the debt has been verified to be yours, you now settle it with the debt collector, which means paying in full, negotiating, or setting up a payment plan. 

If the debt is not paid as discussed, the debt collector may initiate a lawsuit against you. You will be notified of the lawsuit through a court notice that includes the date you need to appear before the court. 

  1. Respond to the lawsuit

Receiving a notice telling you that you are being sued for a debt you owe can be a scary and overwhelming experience. But despite that, it’s very important that you face it and respond to the lawsuit. It won’t do you any good to avoid and ignore it. 

If you do not respond or make your appearances in court, the judge will very likely rule for the debt collector and place a default judgment or court order against you. The consequence of this is that a lien can be placed against your property or your wages may be garnished. 

  1. Hire an attorney to build a strong defense

A debt collection lawsuit can be very complex and difficult to navigate. So it’s highly advisable that you have an attorney guiding you through it and advising you on the best steps you can take. Your lawyer can help you challenge the lawsuit and build a strong defense that will protect you and your interests. 

Suppose you wish to challenge a debt collection lawsuit against you due to false accusations, incorrect debt amount, the statute of limitations having already passed, or you’ve already paid the debt. In that case, your lawyer can help you strategize, bring evidence, and challenge the lawsuit. 

A lawyer can guide you throughout the process, giving you sound and professional legal advice to help you move forward. 

  1. Consider a settlement

Many lawyers would advise you to consider negotiating a settlement with the debt collector. If they agree with the settlement terms, they can drop the lawsuit so you can handle it outside of court. More likely than not, debt collectors will agree to a fair settlement because it can save them time and money compared to undertaking the lengthy and expensive court procedure. 

  1. Learn about the exemptions

Some States may offer exemptions and protective measures for people who are being sued for a debt. If your wages are limited, you can ask your lawyer about the exemptions in your State and whether or not you qualify for them. Some exemptions that may be available include exemptions from wage garnishment, etc. 

  1. Consider filing for bankruptcy

If you know that you cannot afford to pay for your debt and the debt collector will just keep coming for you, you should consider filing for bankruptcy. A Chapter 7 bankruptcy can prevent the debt collector from initiating a lawsuit against you and eliminate all your debts. On the other hand, Chapter 13 bankruptcy can give you more time to pay off your debt. 

Being sued by a debt collector can be scary. It’s important that you know what to do should you become entangled in a debt collection lawsuit. Navigating the process smoothly and knowing your options and rights can go a long way in helping you emerge successfully. 

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Stephanie
Randall

Managing Partner

Colorado Springs