What should you do if you’re sued for a debt?

Credit card and debt collection lawsuits are amongst the most prevalent in the country.  In some jurisdictions, more than half of all lawsuits filed are brought in an attempt to collect an alleged consumer debt.

In upwards of 80-90% of these cases, the collectors win by default – and that is what they are hoping for.

If you do not respond to a lawsuit, the party bringing the suit, the Plaintiff, will get a default judgment.  Unlike the other debts, which generally expire over time, judgments stick with you.  More significantly, with a judgment, a creditor can put a lien on your property, seize money from your bank account, garnish your wages, and find other ways to make your life miserable.

So, what should you do if you’re being sue?  The answer is almost anything is better than nothing.

Some people think when they get a registered letter in the mail, they can avoid the problem by simply not signing for the letter.  With lawsuits, though, that approach will only make the problem worse.  In Ohio, if registered mail service fails, the plaintiff can simply affect service by sending the legal papers by ordinary mail.  Then, who knows if the service is ever received and opened, or when.  But, the clock ticks against you nevertheless.

Problems do not go away by avoiding them.  In almost all cases, they are better handled straight on… and a lawsuit is no different.

One way to respond to a lawsuit is on your own.  Some people are able to navigate the legal system and defend themselves without a lawyer.  However, even though pro se litigants are given some leeway in their conduct before the court, the law holds them to the same standard as the corporate lawyers they are up against.  So going this route is the equivalent of the proverbial David against Goliath.  Additionally, consumers generally have multiple viable defenses and potential counterclaims, which if not handled properly are lost.  As a result, pro se defendants often dig a bigger hole for themselves.  Many clients have come to my office only after they have lost control of a case, leaving me few options to help.  Had they come at the outset, many would have had a viable way out of their predicament.

The truth is:  If you are defendant a collection lawsuit, or if you are a consumer in almost any matter, a consumer attorney will likely consult with you for free.  Just like when you’re sick, you go see a doctor, the smart move when you are sued is to at least consult with a lawyer that deals in the subject matter of the lawsuit.

Possible strategies to fight a lawsuit are:

  • Negotiating a settlement.  If you owe the debt, you may be able to negotiate it down or negotiate favorable payment terms.
  • Affirmative defenses.  Many times a consumer has already paid all or part of claim, or the plaintiff cannot prove their case.  A well-mounted defense will often make a lawsuit go away.  Remember, credit card companies and debt collectors are hoping for a default judgment.  They don’t want their legal expenses to exceed what they will collect in the end.
  • Counterclaims.  Particularly in the case of debt collectors, consumers often have affirmative claims against collectors for their bad behavior in the course of their collection efforts.  Consumers need to know their rights, so that they can stand up for themselves.

Bottom line, if you are sued, make sure you respond.  Face all your problems, legal, financial or otherwise, head on.  You will be much happier for the effort.

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This entry was posted on Thursday, November 15th, 2012 at 9:57 am and is filed under Articles. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.