If you are sued by a creditor, you should consider hiring an attorney. While there is no legal requirement to retain counsel, the stakes are high and can result in costly, long-term consequences. The benefit of effective legal representation in a collection lawsuit is great. Not only will an attorney help you understand your rights, and identify any defenses you may have, but you will also have an advocate to fight for you, which may improve your chances at a settlement agreement that keeps you out of court and without a judgment on your record.
Do you need an attorney to handle your credit card lawsuit? No, but it is usually in your best interest to have one.
The process
When a collection agency is unsuccessful in recovering an unpaid debt, the original creditor or debt-buyer may file a lawsuit against the consumer. If you are sued by a creditor or third-party who purchased your debt from an original creditor, you will be served with a summons and complaint. These legal documents explain what you are being sued for, by whom, and how long you have to respond. The complaint contains allegations that you must respond to by filing an answer with the court. State law determines the time frame for responding to a lawsuit, but most states typically allow thirty days with the possibility of an extension when necessary.
When you are sued by a credit card company, how you respond is critical to the outcome of the case. Failure to respond can result in a waiver of your rights and a default judgment being entered against you. Therefore, it is important to carefully review the complaint and file an appropriate response on time. While you can file an answer on your own, it is wise to seek the counsel of an experienced consumer litigation attorney. An inadequate response can result in a waiver of your rights or defenses that might otherwise spare you from having a judgment entered against you and can even constitute an admission of guilt.
Trial is expensive. As such, many creditors are willing to settle credit card debt before going to court, often for less than the full amount due. However, if you do not adequately or timely respond to the lawsuit, it is an easy win for the creditor. This gives the creditor authority to collect the debt from you by taking the money directly from your paycheck, your bank account, or seizing and selling your personal property. This is why if possible, it is worth exploring a debt buyer lawsuit settlement.
Defenses
A collections lawsuit is supported by claims that you borrowed money, failed to repay it, and that you are therefore responsible for paying the debt. However, even if you agree to these claims, you may still have a defense to the lawsuit. Some defenses are waived if not raised in the answer; therefore, it is important to understand what information the creditor must have, what information the creditor actually has, and which defenses you should raise.
An attorney knows what to look for in the complaint, what questions to ask, and can easily identify applicable defenses. Before filing a response or speaking with the opposing counsel about a lawsuit, you should consult an attorney to review the complaint and help you identify available defenses.
Common defenses to collection lawsuits include:
- The debt is not your responsibility – If your account was compromised, if your identity was stolen, or if there was fraudulent activity on the account, you may not be responsible for the debt even if the account is in your name.
- You do not owe the debt – Bookkeeping errors happen. Perhaps you paid the debt and the creditor did not credit your account properly. There are circumstances where you may not owe the money the creditor claims you do.
- The creditor did not file the lawsuit in time – State law sets a Statute of Limitations for filing civil lawsuits. If the creditor does not file the lawsuit on time, the lawsuit must be dismissed.
- The creditor is in violation of federal law – The Federal Debt Collection Practices Act imposes certain requirements on creditors and debt collectors. If your rights have been violated under one of these federal laws, you may have a defense to the lawsuit.
- You have declared bankruptcy – Once you file bankruptcy, the creditor must get in line through the bankruptcy proceedings with the rest of your creditors to pursue payment.
- The creditor is not entitled to collect on the debt – This is a common defense with third-party debt buyers. Many debt buyers cannot provide required information about the debt and therefore, are not entitled to collect on the debt.
Possible outcomes
Without an attorney, a collection lawsuit will likely end with a judgment. Regardless of whether the judgment is entered by default or as part of a settlement agreement, a judgment orders the debtor to pay the debt plus accrued interest and court fees. A judgment also may give the creditor the authority to garnish your wages, levy your bank account, and even seize your personal property either as collateral until the debt is paid in full or as satisfaction of the debt.
This kind of legal action can affect your credit, your job, your housing, and even your education. In exceptionally difficult circumstances, a judgment on your record can even impact visitation rights with your children and limit your ability to adopt or foster a child. In other words, debt collection matters are serious. Avoid gambling with your rights and hire an experienced, hard-hitting attorney who will fight for you and ensure your case resolves in the most favorable way possible.
