Receiving a summons for a debt collection lawsuit can be scary. But if you are served a complaint for a debt do not despair. You may have options. It is best to consult an experienced attorney so you are advised of your available defenses and other options.
The following are 6 ways you may respond to a debt collection lawsuit.
At a minimum you should file a response to the complaint. The most common mistake people make when they are sued is not filing an Answer. If you owe the debt and can’t afford to pay it, then it is easy for you to assume you don’t have any options. But this isn’t necessarily the case. If you respond to the complaint and force the creditor to make its case, then it may be willing to entertain settlement offers.
If you do not respond to the complaint, then you have effectively admitted to the amount of the debt and the creditor can obtain a default judgment against you. The creditor may also request and receive attorney fees, costs, and interest. Also, the default judgment offers the creditor new, court-assisted ways to collect on the debt. For instance, the creditor may request the Court for a wage garnishment or bank garnishment.
It is not enough to simply send the Answer to the creditor. Your Answer also must be filed with the Court. Your Answer must be filed within 20 calendar days of the date you were served the complaint.
2. Challenge the Creditor’s Standing to Sue
Challenge the plaintiff’s ability to bring the lawsuit. Does the plaintiff have standing to sue you? Credit card debt is often purchased for pennies on the dollar by “debt buyers” which in turn sue people to collect on the debt. By challenging the plaintiff’s standing, the creditor will have to prove that it is the rightful owner of the debt. This is proven by tangible evidence of a transfer of the debt. The document evidencing the transfer may be entitled Assignment or Bill of Sale. If the plaintiff cannot show that it is the rightful owner of the debt, then it will not be able to obtain a judgment.
You may request the court to dismiss the case because the creditor does not have standing to sue you. Absent an Assignment or Bill of Sale, the Court will likely dismiss the lawsuit.
3. Make Them Prove the Amount They Claim You Owe
It is important to request the originally signed agreement as well as the balance history on the account from zero to present. The creditor’s documentation may be insufficient. Frequently debts will have changed hands multiple times prior to the purchase from the current owner of the debt.
Sometimes, original creditors will lack the appropriate documentation of the debts you owe. If the credit card issuer cannot provide sufficient documentation, then there is a strong possibility that the subsequent owner of the debt won’t have it either.
4. Is the Debt Barred by the Statute of Limitations?
For most states, creditors have a maximum of four to six years to sue on a debt. The period begins to run from the last payment made on the account. A debt barred by the Statute of Limitations does not mean the creditor will not sue you. Creditors may sue you hoping that you do not respond to the lawsuit or fail to raise this defense. The Statute of Limitations is an affirmative defense. If you do not timely raise the defense, then the defense is lost.
If the Statute of Limitation has run and you raise the defense timely, then the creditor will lose. Contact an experienced attorney to determine whether you have a valid Statute of Limitations defense.
5. Fair Debt Collection Practices
You may have a cause of action against the plaintiff for violations of the Fair Debt Collection Practices Act (FDCPA). Such a cause of action may be raised as a counterclaim to the debt collection lawsuit. Only debt collection companies are subject to the Fair Debt Collection Practices Act. As such, an original creditor cannot violate the act.
Ordinarily, consumers who are successful in bringing violations of the FDCPA are entitled to statutory damages of $1,000, plus punitive and economic damages. The debt collection company may also be required to pay attorney’s fees and costs.
Florida has their own act entitled Florida Consumer Collection Practices Act (FCCPA) which applies to both debt collection companies and original creditors. Contact an experienced attorney to determine whether a counterclaim under the FCCPA or FDCPA is appropriate.
6. File for Bankruptcy
While bankruptcy may not make sense if you owe a small amount of money, if you are being sued for a large sum of money or if it is one of the many debts you owe, it may make sense for you to file. Contact an experienced bankruptcy attorney to determine whether you may file bankruptcy.
When you do file for bankruptcy you are protected by the automatic stay immediately upon filing. The automatic stay halts all collection efforts against you or your property. The automatic stay also halts a pending lawsuit against you.