I've Been Served with a Debt Collection Lawsuit. Now What?

I've Been Served with a Debt Collection Lawsuit. Now What?

First of all, don't panic. You need to be thinking clearly because what you decide to do next will have a major impact on a number of things. The first thing you should do? Write down who served you, how you were served, and where it happened. If you were served personally, write down what the person looked like. If you found the papers on your porch, write down exactly where, how they were held together, and the address where they were left. If you found them in the mail, save the envelope.

The second thing you should do? Read the complaint. See if you recognize the debt you are being sued for. It's common for the company suing you to be a company you have literally never done business with before in your life. Once you know who and what you're dealing with, you're ready to respond, which brings me to the first rule of debt collection lawsuits.

RULE # 1: DO NOT IGNORE A DEBT COLLECTION LAWSUIT

You may think to yourself that the debt lawsuit will just "go away" if you don't respond, or that you not responding will tell the court that the case is frivolous. This is not how it works. Matter of fact, this is about as far from how it works as you can possibly be. If you ignore it, here is what is going to happen:

  1. They will wait a month or two.
  2. They will file for a default judgment.
  3. They will receive a default judgment.
  4. They will file that judgment and possibly put a lien on your house or other real property.
  5. They will try to figure out where you work, and if successful, they will garnish your wages.
  6. They will charge you for attorney's fees, interest, collection fees, and possibly even statutory interest.
  7. They will ruin your credit.

So, once again: 

DO NOT IGNORE A DEBT COLLECTION LAWSUIT.

Ok, now that you know what not to do, you're left with two options. You can handle the matter yourself or you can hire a lawyer to handle it for you. Your decision is ultimately going to come down to (1) how comfortable you feel with handling the case yourself and (2) the amount of money in question. $200.00 for a credit card? You will likely pay a lawyer more than that to defend the lawsuit. $60,000 in student loan or medical debt? Call a lawyer.

If you decide to handle the case yourself, the first thing you're going to need to do is to file an answer with the court. You can find sample answers online and some courts let you answer on a form created specifically for debt collection cases. In your answer, you generally need to include every defense you plan on using against the debt collector. They didn't serve you properly? Put it in the answer. They sued you after the statute of limitations has run? Put it in the answer. You don't think the company suing you can prove they own the debt? Absolutely put it in the answer. Any argument you plan to make in defense of the debt should generally be listed as an affirmative defense in your answer.

In my experience, debt collection lawsuits are successfully defended based on:

  1. Missing a statute of limitations;
  2. Standing issues (the debt collector can't prove they own the debt); or
  3. Lack of personal jurisdiction (meaning they didn't serve you properly).

Once you've filed an answer, you should decide whether you want to try to settle the case or if you want to fight it. If you decide to fight it, it's probably a good idea to request copies of the contract from the debt collector's attorney. You will also want any documents transferring the debt to the current company suing you. After you get the documents, you can review them to see how well your defenses will hold up. If you think you have a shot, you can ask for a hearing or trial and make your arguments. If you decide to settle, you may want to reach out and talk to the lawyer for the company suing you. How you should approach a case varies greatly based on the case itself.

This seems very complicated. It may seem like I'm hedging and not referring to any specific case. If it seems that way, it is because it is very complicated and I am hedging a bit. Each case is wildly different; all I can do here is provide an overview of what you might want to do.

Now, if you have one of those relatively small cases where hiring a lawyer to handle it doesn't make sense, but you definitely want help, there are ways to get help. I offer a la carte services where I will draft pleadings, draft discovery, review documents, or provide opinions for a set fee. I'm sure other attorneys do the same thing.

Honestly, you can go it entirely alone if you want. There are a ton of resources online that can help you defend one of these cases by yourself. That said, I wouldn't recommend it unless you are very comfortable pushing back against debt collectors. There are very few cases where a lawyer's help, even on an a la carte basis, would not be beneficial.

Oh, and don't forget:

DO NOT IGNORE A DEBT COLLECTION LAWSUIT!

Until next time...