Debt Collection Law and How to Respond to a Lawsuit

debt collection law     Debt collection law is something that every person should familiarize themselves with if they have been contacted by a debt collector.  Approximately 30 million Americans are involved with debt collections as of 2013.  If you’ve recently been contacted by a debt collector, and you’re being served with a lawsuit or similar threat, you may be feeling worried and unsure about how to move forward. Once you know your rights, and you understand more about the debt collection process, you will feel confident defending yourself against a debt collection lawsuit. In this article, we’ll share some important steps in responding to a debt collection lawsuit.

What is a Summons and Complaint

  There is a lot of jargon involved in these debt collection lawsuits so lets break them down a little.  First we will start with a complaint. This is a document that is filed by the debt collector with the court.  It basically states the amount of money they think you owe along with details about why they are entitled to a judgement against you. This is what you would call the "lawsuit".  With a third-party debt buyer, the summons will be referencing a loan that was entered into with an old credit card company. That debt was then sold to a collection agency. In addition to a complaint, you will also receive a Summons.  This is a document that will tell you what you are required to do when it comes to responding to the lawsuit.   The language does tend to be confusing and does not really tell you how to actually respond. You only have a certain number of days to respond so double check the summons to see how long you have.  

Ways to respond

   

Be Sure to Respond to the Notice - and Carefully Prepare Your Answer

  debt collection laws

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  You may feel tempted to simply ignore the notice or put off responding to it. However, responding to the notice promptly is very important.  You want to do everything you can to protect your assets. Even if you can’t pay the debt, don’t ignore the notice. Usually, you have about 20 to 30 days to file a written response.   When you respond to a complaint, you have to do two things:    
  • Respond with whether you admit, deny or are lacking knowledge of the allegation(s) being presented to you by the debt buyer or collection agency.  Make sure you do not admit to anything unless you completely agree with it.  If you do owe the debt but are really not sure of the amount you actually owe, respond that you lack enough knowledge to be able to verify the information.
  • Type out your response and choose a legible font.  You can write a response, but we suggest not doing that.
  If you’re not sure how to prepare a formal answer, you may want to hire a lawyer to help you.  However, if you don’t have the money to hire a lawyer, you do have the option to represent yourself.  Do a Google search or head to your local library for advice about preparing your response and moving forward with the process.     

Debt Collection Law Allows You to Challenge the Company’s Legal Right to Sue and Require Proof

    It is not uncommon these days to get a collections letter in the mail or  for a creditor or collector to serve you with a lawsuit.  Creditors are often selling off debts to debt buyers and collection agencies.  There are a few defenses you will be looking at submitting.  Here they are:    
  • Debt verification: This is a cornerstone of debt collection law.  It is required by both federal and state law that you be given the right to request all information surrounding a debt.  If the collection agency or debt buyer cannot produce the necessary documentation, you can then use that as a defense to a lawsuit.  Doing this may seem tedious but you want to protect your assets so it is definitely worth your time.
  • Statute of Limitations:  This defense is one of the more successful ones.  Each state is different so you should check out what the case is for your state.
  • You already satisfied your debt: This one should be pretty obvious. You are alleging that you have already paid the debt in full.  Therefore, you can’t possibly owe any more money to the creditor.
   

Debt Collection Law Helps You Prepare Yourself for Court

      debt collection laws

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  Depending on your individual case, you may need to go to trial. Before that, though, you'll receive written notification of all further proceedings regarding your case.  You will likely receive notice of a trial date if your case is considered to be routine.  On the other hand, the case may be non-routine.  This means a lot of time may pass before you receive notice of your trial. To learn more about the various legal terms and about what might happen next, check out this helpful resource from Nolo.comMost importantly, you’ll want to remember not to delay any step of the process, and to move forward promptly.     

Filing for bankruptcy may be right for your case

    If you do indeed owe the debt and your current financial situation is in distress, filing for bankruptcy may be the best option for you.  Once you file a petition for bankruptcy, a stay on your debt collection takes place.  All activity surrounding debt collection must stop while the bankruptcy process is taking place.  Keep in mind, bankruptcy is a very big decision and is not one to be taken lightly.  Your credit and financial state will take a hit but it also means a fresh start to rebuild your credit.  If you do feel it is the right option for your situation, get in touch with a lawyer asap.  Waiting may lead to having to file an emergency bankruptcy petition which is going to cost you a pretty penny.    

Debt Collection Law is on your side

  When dealing with a debt collection lawsuit, it is vital that you learn about debt collection law and what your rights are.  The above tips should serve as a guide in how to respond to your debt collection lawsuit.      

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