What to Do if a Creditor Brings a Lawsuit Against You?In case your creditor decides to regain the money you owe him/her by legal means, you will be notified of the beginning of the debt collection lawsuit through a Summons and a Complaint. The complaint letter will state the amount of money your creditor wants to get from you. In case this amount doesn’t exceed $10,000, the legal action should be brought in small claims court. However, the possibility of the creditor starting a lawsuit against the debtor is pretty low (the reasons for that are stated further in this section and in the Debt Settlement section). This article will show you the real probability of the creditor bringing a lawsuit instead of conducting debt negotiations. It will also teach you to respond in the court in case you get sued and explain the possible meaning and effects of a court verdict in case one is brought in against you.
Contents of the article: 1 The possibility of the creditor bringing a debt collection lawsuit against the debtor
2 Responding to a debt collection lawsuit
3 Defenses and counterclaims in a debt collection lawsuit
4 The verdict
The possibility of the creditor bringing a debt collection lawsuit against the debtor The possibility of a debt lawsuit has already been thoroughly described in the “Debt Settlement” section – and considered to be very remote. You can take a look at the information provided in that section of our website if you want to know more about it. The only recommendation we want to give you here is the following: you might want to consider visiting your local court clerk in order to learn if your creditor has brought lawsuits against debtors before. If the record doesn’t show anything, then the threats of a debt collection lawsuit from your creditor are most probably nothing but an old good intimidation tactic used everywhere. However, you shouldn’t forget that the amount of the debt that you owe is also a very significant factor. The larger is the amount of your debt and the longer you fail to pay it, the stronger is the possibility of a debt collection lawsuit being filed against you. Anyway, debt negotiation always seems to be a much better alternative.
Responding to a debt collection lawsuit The very first advice that we want to give you on this topic is: NEVER IGNORE THE SUMMONS IN CASE YOU RECEIVE ONE. Ignoring it will not solve the problem and may result in certain serious legal measures being taken against you. In case you have got a lawyer representing you, we strongly suggest you inform him/her about the Summons as soon as you receive it. And in case you are trying to handle the situation on your own, we advise you to pay special attention to the instructions stated in the Summons.
If the sum of the lawsuit doesn’t exceed $50,000, then you will most probably be directed to appear in court on a specified date. DO NOT FAIL TO SHOW UP THERE AT THE SCHEDULED DATE AND TIME. In case you or your attorney does now show up, the verdict will be given in favor of your opponent (the creditor suing you). If the sum of the lawsuit is over $50,000, then you will be given another form of Summons containing the special document called an appearance or answer that you will have to file within 30 days after receiving it.
There’s a special state procedure of delivering the Summons. The first way of legal delivery is when a deputy sheriff or a process server passes it to you personally. The second way is giving it to any member of your family or household who is already older than 13 years of age. The third way, which applies to small claims summons and complaint only, is serving it by registered or certified mail.
Please, remember that it’s not too late to resort to debt negotiation even if you have already received a Summons. Your creditor will most probably be willing to negotiate a settlement with you since it won’t cost him/her as much as bringing a debt collection lawsuit against you. You may even be allowed to pay off the debt over some period of time.
If the debt negotiation between you and your creditor is successful and you reach a settlement that is suitable for both of you, your mutual agreement should be put in writing and signed both by you and your creditor (or his legal attorney). After that the signed agreement will be presented in the courtroom (please, pay special attention to the fact that you still have to show up in court on the date and time stated in a Summons even if you have reached some sort of agreement with your creditor). The only thing that we want to recommend you in relation with this matter is that you should never be afraid of the possibility of a debt collection lawsuit much enough to accept a payment plan that you know you won’t be able to handle.
If the debt negotiations between you and your creditor result in nothing, then you will have to show up in the courtroom on the date and time stated in a Summons and contest the case. The question that the judge will definitely ask you is whether you agree that you owe the plaintiff the amount of money he/she claimed as due – and if you admit it, the verdict will definitely be brought in against you.
In case you claim that you do not owe the plaintiff any money at all, or that you owe him/her less than the amount claimed as due, then a contested hearing (trial) will have to be held. The trial may be scheduled on another date or held immediately if your case is a small claims one. We strongly recommend you to ask the court clerk whether you might have to be prepared for trial to be held on the first appearance date, or not.
Defenses and counterclaims in a debt collection lawsuit The debtor may present a defense or a counterclaim to the court during the debt collection lawsuit stating why the plaintiff (creditor) should not be able to collect any or a part of the money demanded from him/her. Basically, the defense stands for a set of facts or a legal reason that explain why the creditor is not able to recollect the amount of money he demands from the debtor. If the judge accepts the presented defense, you will be allowed to reduce the sum of the money demanded from you or skip the repayment at all. There are a whole lot of defenses accepted in consumer debt collection lawsuits.
A counterclaim is a totally different claim that the debtor might present in case he/she thinks that it is the creditor who owes some amount of money to him/her due to some mistake in the creditor’s activity (in most cases the reason for a counterclaim is the violation of consumer protection laws by the creditor).
We advise you to try to figure out some defenses and counterclaims that you might be able to use against the creditor in court. Such behavior will be able to make the creditor more inclined to drop the case or accept the terms that will be more auspicious for you – simply because it will eat up more of the creditor’s time and can possibly increase their costs on the conduction of the debt collection lawsuit. Always consult your attorney in case you have had ANY problems with your creditor, or with the products or services he/she provided you with.
The process of presenting defenses or counterclaims may differ depending on what court the debt collection lawsuit is brought in. In cases you are not represented by an attorney, you might want to check with the court clerk to learn the regulations that a given court applies on this process. In some cases you will be directed to file a special written statement (“Answer”) right at the beginning of the case. This written statement will list the defenses and counterclaims against the plaintiff. However, if your debt lawsuit is brought in a small claims court, you might not be required to file an Answer and allowed to present your defenses and counterclaims right in the course of the trial. On the other hand, you are strongly advised to file your counterclaims, should you have any, in writing with the court clerk as long before the trial is held as possible. Otherwise, your creditor can complain that he/she never received any notice of your counterclaims.
Sure, it will be much better if you can get a professional lawyer to represent you in the court. You can always ask the court for a “continuance” – a delay in the trial date needed for you to seek for a legal attorney. Even if you don’t think you can afford to pay for the services of an attorney, we strongly suggest you at least consult a lawyer about how to present your case.
Another very important thing that you are recommended to do before the trial is collecting all available documents related to the case and finding witnesses that might be able to help you prove you are right. If you are not able to bring the witnesses into the court together with you, at least make sure that you collect their testimonies in writing to be able to present them to the judge. Make a checklist of the things you think you should say in the court and the checklist of all the documents that you should remember to take with you. Make sure that you don’t miss the chance to present all of them to the judge.
The verdict In most cases, the debt collection lawsuit finishes with the judge signing an order (called a “judgment”) that decides the rights of both the plaintiff and the respondent. A judgment can be based either on the debt negotiation agreement of the creditor and the debtor or on the decision of the judge announced in the end of a contested trial, or after the respondent doesn’t appear in court. (PLEASE NOTE that if you ignore a Summons and do not show up in the court on the date and time specified in it, you will lose the case AUTOMATICALLY. However, if you fail to do so due to some serious reason, it might not be too late to change the default trial verdict. If such thing happens, consult an attorney immediately to see whether the judgment made by default can be vacated or not)
If the decision of the court is in favor of the creditor, you will be informed about the amount of money you have to pay him/her. Such judgment doesn’t require the payment to be made immediately after the verdict is announced – but at the same time it gives the creditor a number of legal rights that he/she can use against you to force the payment.
Nevertheless, the debtor doesn’t have to worry about paying out the debt until his/her financial well-being improves. No creditor will be able to force the debtor into paying the outstanding amount of the debt to the prejudice of the debtor’s necessities. Plus, you should remember that state and federal laws protect certain types of consumer’s income and property (exemptions). The creditor is forbidden to take away the exemptions belonging to a debtor at all times.
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