If you’ve fallen seriously behind on your debts and you haven’t been able to make a payment in months, the debtor may sell your debt to a collection agency. These agencies usually will not file a lawsuit to collect the debt, but it’s not unheard of. If it’s happening to you, you may be worried and wondering what will happen next.
Keep reading to learn how to handle a debt collection lawsuit. Understanding the process can help take the worry out of it.
Is the Lawsuit Valid?
Some debt collection lawsuits are valid while others are mistakes or outright fraud. Here are some of the reasons you may not be responsible for the debt.
- Identity theft: Someone stole your identity and used your name and credit card details to make unauthorized purchases.
- The bill was paid: It could be that you paid the bill and the creditor made a mistake. You can try looking for the receipts for the payment to prove that you paid it.
- Mistaken signup: Someone could have signed up for something, made a mistake, and used a credit card with detail similar to yours. To determine if this is the case, you can run a credit report.
- Expired statute of limitations: Different states have varying statutes of limitation. This is the time frame in which a claim can be filed. In most cases, it runs four to six years from the day the last debt payment was made. If your debt lawsuit is filed after that time expired, then it will be dismissed. However, you must attend the court hearing and state that the time has indeed passed.
Regardless of what the reason for the lawsuit may be, it would be best to seek confirmation. If you do not owe, then there is no need to go to court. You will most likely be able to clear it up with the debt collector directly.
If You Owe
If the stated claim is valid, then there is no need to panic. You can take these steps to handle it.
- Respond to the lawsuit: Do not ignore the claim. Usually, the response time given is 14 to 21 days, so be sure to respond within that time frame. Failure to do so means that the claimant may file for a default judgment, and you end up losing part of your income and property.
- Seek legal help: These matters require the help of a legal representative. Consider seeking a lawyer to assist you. The claimant will have a lawyer, and so should you.
- Consider your defense: Just because you are sued does not mean you go ahead and accept it. You may be lucky to find out that the debtor does not have all the records for the unpaid debt. This works in your favor. In other instances, the statute law of limitation may have run out.
- Attend the court hearing: A lawsuit means you will be required to show up in court during a particular time and date. Be sure you are there to avoid a default judgment. In the case of court proceedings, be sure to follow through.
- Challenge the judgment: If you owe the debt but are not in a position to pay for it, you may challenge the judgment by filing for bankruptcy. Alternatively, if you are able to settle the debt, then please do so.
How to Handle Debt Collectors
If you have a debt collector hot on your trail, to avoid further costly damages you should do the following.
Do Not Ignore Them
If the collectors are constantly bugging with calls, answer each one. Failure to do so may result in a low credit score.
Guard Your Details
Do not give the creditor the details of your personal information or anything else except the basic facts.
Settle for Negotiation
It is easier to handle the case through negotiations rather than in court. If you have this option, take advantage of it.
Regarding the debt and creditor, have ample information. You can follow this link for more information about how to handle collections and debt collectors.
It is in your best interest to follow through with the lawsuit by responding, seeking legal services, and attending any hearings. You can put this debt and the lawsuit behind you, but only if you handle these proceedings correctly.