Do you know that you can be sued for credit card debt or payday loan debts? Yes, the debt collection agency can file a lawsuit against the debtor for the unpaid debt. However, you should also know that you can defend the lawsuit as well. In most of the cases, debt collection agencies harass people for a wrong debt or already paid debt. Debtors commit due to panic. The worst part is, most of the debtors don’t know how to deal with debt collection scam. They even don’t know how to defend a debt collection lawsuit!
Today we will discuss how to handle a lawsuit filed by the debt collection agencies. So, you should read the article to know the ways you can defend a lawsuit filed by the debt collection agency.
Table of Contents
1. Know when you can be sued
Remember, you can be sued for credit card debts. However, when can you be sued depends on the credit card provider and their rules and strategies. However, legally you can be sued for nonpayment of credit card bills. Many credit card companies can start legal action against you for non-payment of dues only for 60-90 days. But as said, before this varies as some other company may sue you for non-payment of bills for 120 days or more.
2. Answer to the lawsuit
After a lawsuit is filed against you for non-payment of the credit card dues, you are supposed to receive a summons, you are supposed to file an answer to the summons or else the creditor or collection agency can win a default judgment against you. As a result, your wages can get garnished as per the situation provided by the creditor or collection agency in court. You won’t have a say after that.
3. Challenge the lawsuit
However, in regards to the summons, you should know that the collection agency is required to serve you the summons before the court date so that you can file the answer in time. If you are not served the summons and if you come to know about it after the creditor or collection agency wins the lawsuit, you will have the opportunity to appeal in court to void the judgment. If you were not aware of the lawsuit, you have 180 days within which you will have to file your appeal.
4. Know about the SOL (Statute of Limitations) on your debts
Another thing that is important for you to know is that there is a certain time frame within which a creditor or collection agency can sue you. This time frame is known as the Statute of Limitations or SOL and it varies from state to state. If an SOL on debt expires, no collection agency can sue you. So, it is essential for you to know the SOL in your state.
5. Consult with an attorney
To manage a lawsuit, you may have to consult with an attorney. It will help you to understand all the options that you can consider to tackle a lawsuit. The attorney can also help you to give you advice.
6. File bankruptcy
If you can’t repay the debt, then bankruptcy is a last resort to avoid a lawsuit. Once you file bankruptcy, the automatic stay will apply and thus, the debt collection activity and their lawsuit will not be held. Your property will be accounted for in the court and will be distributed among the creditors or collection agencies based on the type of bankruptcy chapter.
Lastly, remember it can be a default judgment or just a simple judgment, as a result of the judgment, your wage can get garnished and a lien can also be put on your property or other assets. You can avoid your wages from getting garnished by the creditor or collection agency if you agree to make the payments. It is always better to agree to a repayment plan rather than letting your wages garnished. Moreover, to avoid being sued in the first place, it is better for you to keep track of your credit card bills. You can do that by getting hold of your credit reports from time to time and the credit card receipts. Judgments also hurt your credit and stay on your credit report for 7 years. Thus, it is better to try and avoid judgments as much as possible.
