Over the last few decades, debt-related issues have come to dominate the civil court environment. The number of debt collection lawsuits climbed from roughly 1.7 million in 1993 to around 4 million 20 years later, according to Pew Charitable Trusts data. According to the same survey, while the majority of persons being sued for debt do not have legal representation, those who do frequently have better outcomes.
What Causes You to Be Sued?
You aren’t usually sued for debt out of the blue. If you’re facing a debt collection lawsuit, start by evaluating whether the creditor or collection agency followed the Fair Debt Collection Practices Act’s guidelines (FDCPA). This is the path creditors and credit bureaus must take:
- You get a letter or a phone call informing you that you owe money.
- A debt collector must send you a debt validation notification within five days of first contacting you.
- You have the right to request validation if you believe the debt is not yours.
- If you owe money, you must negotiate with your creditor to come up with a new payment plan or a relief.
Only if you are unable to come up with a viable repayment option can you expect to be sued.
When You're Sued for Debt, What Happens Next?
When you receive a summons and a copy of a legal complaint, you know you’re being sued for debt. The complainant’s name, the type of the debt, and the amount you owe are all listed on the complaint. If you choose to defend your case, the summons will notify you when you must appear in court.
It is advised not to ignore any such litigation warning because a default judgment may result. A debt collector may be able to garnish your bank account or earnings as a result of this. Even if you intend to settle the debt, it is in your best interests to reply to the complaint.
Alternatives Available to You
You can seek the creditor to verify the debt’s legitimacy in court if you don’t recognize the debt or believe you don’t owe it. This will entail supplying a copy of the original contract, as well as all purchases and payment history associated to the account. If a creditor fails to present the necessary documentation, the case may be dismissed by the judge. Consider seeing an attorney if you’re unsure how to proceed in this situation.
What if you owe money to someone?
Consumers who have legal representation in debt claim litigation have a better probability of winning their cases or receiving relief, according to the Pew Charitable Trusts report. As a result, seeking legal guidance from a debt-related attorney is the best course of action. While many of these attorneys offer free initial consultations, if you are on a tight budget, you can consider seeking help from your local legal aid office.
Your lawyer may be able to assist you in the following ways, depending on your situation:
- Creating a new payment plan that allows you to keep making smaller monthly payments to pay off your debt.
- Negotiating a debt relief in which you pay a smaller lump sum to repay the loan
If you own the debt but believe you are not obligated to pay it, you may be able to use an affirmative defense to your advantage. The following are some examples of instances where this might apply:
- The contract is void, unenforceable, or was signed on false pretenses.
- You ended the contract within the agreed-upon time frame.
- It entails purchasing a product or service that you never received or that was defective.
Conclusion
If you have been sued for a debt or believe you will be in the near future, it is critical that you act quickly. Know that there is a lot you can do if you act quickly. If you are unable to reach an agreement with your creditor, you should consult an attorney as soon as possible.