What are your options when being sued by a debt collector?

Being sued a debt collector or creditor can be stressful and intimidating. If you are facing a creditor lawsuit, don’t despair. Letters and phone calls from collectors may leave you feeling down and like a second rate citizen. You’re not. Some collectors — violating the law — may even suggest that you’re a criminal because of your debt. You’re not.

Even the most conscientious and responsible person can face unforeseen economic situations in their lifetime. A loss of the job can be financially and psychologically devastating and periods of unemployment are lasting longer and longer. If you end up in a situation where you cannot pay your debts, the best thing you can do for yourself is to face the situation head on.

  • Before dealing with any situation involving collection agents and creditors, take an inventory of your finances.
  • Make a complete list of all of your debts.
  • Make a complete list of all of your accounts for savings, checking and other forms of investment.
  • Make a list of the property and items that you own which could be sold to raise money if necessary.

Stop it

The best thing you can do for yourself is to avoid having the matter brought to court. If you can make an arrangement to pay off the debt, then negotiate that directly before the matter is brought to court.

Unfortunately many people can’t pay off the debt which is why they’re behind on the bills in the first place. Most creditors realize that the expense and effort of taking you to court is not worth it. You can also try to negotiate an alternative amount to pay back. Especially during tough economic times creditors realize that this amount may be better than nothing at all.

Unless you settle the debt, you’re not going to be able to hold back the tides forever. Eventually, the creditor is going to renew efforts to collect and may even rush to sue you before the statute of limitations expires.

Fight it

It is possible that despite your best efforts the creditor will end up taking you to court anyway. In this situation you will need to face them along with the judge and fight for the best possible outcome you can manage.

Just because you’re sued in court does not mean you have no chance of winning. Perhaps you are being sued by landlord who failed to meet all of the obligations of your signed lease. Or the plaintiff is a contractor you hired to do work which did not meet the standards set out in the contract.

As a defendant you may have tried to settle these issues before going to court. If that wasn’t possible and your day in court as a defendant is your day to launch the best defense possibly can. Be sure to have on hand all evidence you can collect on the matter. Demonstrate to the judge that you made a good faith effort to resolve this issue outside of court by showing records of emails, phone calls and letters exchanged in regards to the matter.

Unfortunately, fighting debt in court is difficult to do for most situations involving common types of debt. Unless you can prove that the debt is not yours (for example, mistaken identity), then you will probably lose in court. Now you have a judgment against you and even more pressure to pay.

Default judgment

If you are sued for a debt and do not show up in court, the most likely outcome is a default judgment against you. This means whenever the plaintiff asked for is most likely what will be awarded.

You may wonder why this is being listed as an option. Not responding to the situation is a choice. There’s no such thing as doing nothing. While this may not seem like a very good option, this is what you choose by not going to court when you’re sued. Inaction is a form of action. Unless you have extenuating circumstances which you can show to the judge, explaining why you were not able to make it to the court as scheduled, you’re choosing not to go. It may seem harder to do emotionally, but working directly with the creditor and keeping this matter out of court is a far better option than one that leads to a default judgment against you.

Renewal judgment

The statute of limitations for an open account, such as a credit card, is four years. However, if a creditor wins a judgment against you, things change a bit. Under Texas law a judgment is valid for 10 years. After a period of 10 years the effects of the judgment can stick around if the original plaintiff files for it a renewal of the judgment.

Bankruptcy can offer you protection

If you’re going to be sued and you have nothing to offer, seeking bankruptcy protection might be your best course of action to ensure that you’ll have the legal protection bankruptcy can offer. When bankruptcy is filed, collection processes stop immediately. Depending on which chapter of bankruptcy you qualify for, you may still have to work out a payment plan for some portion of your debts, but the opportunity it can give you to regroup can be invaluable.

The word bankruptcy sends chills down the spines of many, if not most, people. In spite of the stigma it carries, this option is available to help you get back on your feet. Bankruptcy is a process which is intended to give individuals and businesses of fresh start in their finances when burdened by overwhelming debt.

Recent changes to bankruptcy laws have made it more difficult for some people to qualify for bankruptcy protection, and does not give everyone the same access to a clean slate that was once possible. However bankruptcy may still be your best bet to stop collection efforts and to retain important assets like your home and your car.

Whereas bankruptcy in the United States used to be a streamlined process, today it is more important than ever before to get qualified legal advice if you think bankruptcy might be your only option.

A significant benefit of filing bankruptcy is that it can — at least temporarily — stop a bank from foreclosing on your house, stop repossession attempts on your vehicle and even halt collections processes and prevent collection agents from contacting you. Because of the new bankruptcy rules it can be very difficult to file bankruptcy on your own quickly. If you’re facing a dire situation seek out the services of a bankruptcy attorney who can help you.

Do I need a bankruptcy attorney?

While many people can manage to find their way out of debt issues independently, most people do need experienced help. Issues of law can be complex to navigate and unfortunately many collection agents and agencies push the limits of the law to the edge or violate them outright.

At a minimum, a consultation with an attorney can give you a reality check on the situation. Many attorneys provide a free consultation period before they agree to take your case and you hire them.

An attorney is duty-bound to represent your best interests when representing you. They also have their own time and reputation to consider so a good attorney is going to give it to you straight and may even advise you not to pursue a case if you are not likely to win, be able to collect or if the process is going to be more involved that what the possible return is worth to you.

If you are being sued by a debt collector or creditor

If you are being sued by a debt collector or creditor, don’t try to face this situation alone. A bankruptcy attorney at Allmand Law Firm, PLLC can help. Contact us today for a consultation.