Let’s face it – being sued by a debt collector is scary. The legal documents arrive, your heart starts racing, and your mind fills with questions. How did this happen? What do I do now? Can they really force me to pay? I’m here to help you take a deep breath and walk through this step-by-step. I’ve helped people in debt lawsuits for over a decade, so trust me when I say – you’ve got this. Arm yourself with information and you’ll get through this in the best shape possible.

Gather Yourself and Get Organized

The first thing is don’t panic. Debt lawsuits happen every day in America. Yes it’s serious, but it’s not the end of the world. Start by getting organized. Gather up all your financial records in one place – account statements, bills, receipts, etc. Also collect documents like your lease or car title to assess assets. Make a list of your income sources and monthly expenses. Getting a clear picture of your finances will help as you navigate the lawsuit.

Next, read over the court papers carefully. These documents can seem intimidating with lots of legalese. But understanding them is crucial. The two key ones are the summons that says you’re being sued, and the complaint laying out the specific debt allegations. Verify that your name, address, and debt details are all accurate to determine if you have grounds to dispute the lawsuit.

Finally, mark your response deadline on the calendar so you submit an answer on time. Acting fast is imperative. Responding within 20-30 days prevents a default judgment against you. I know how stressful legal documents can be. But avoiding them won’t make this go away. Tackle the process head on from the start.

What to Do if You’re Served

Don’t ignore the documents! You should read through them carefully and respond within the time frame specified, usually 20-30 days. The two key documents you’ll receive are the summons and the complaint. 

The summons informs you that you’re being sued and are required to respond to the complaint. The complaint goes into detail about the debt – including the original creditor, account number, amount owed, and basis for the lawsuit. 

If you fail to respond to the summons, the collector will likely receive a default judgment against you. So taking action is critical.

Statute of Limitations 

One of the first things to check is whether the collector has filed the lawsuit within the statute of limitations period for debt collection in your state. This time limit sets the deadline for collectors to sue for payment of old debts. 

For example, in California the statute of limitations on credit card debt is 4 years. If the debt is older than that, the collector may be barred from suing you. Checking the statute of limitations can help determine whether you have a strong defense.

Not Responding to the Summons

While it’s never advisable to ignore a lawsuit, some people may be tempted not to respond if they think the debt is too old or isn’t valid. This is very risky! You are basically giving the collector a win by default.

The collector can then get a judgment against you and start collection activities like wage garnishment, bank account levies, or property liens. Always consult an attorney and respond to a collection lawsuit properly.

The Debt Collection Lawsuit Process

If you’ve been served with a collection complaint, here is an overview of the key steps in the legal process:

The Complaint

This legal document filed with the court lays out why the collector says you owe the debt and how much. It will include information like the nature of the debt, the original creditor, account history, interest/fees accrued, and the total amount. 

Make sure to read the complaint carefully to identify any errors or include inaccurate information you can contest. Also confirm the collector has filed in the proper jurisdiction.

Filing an Answer

The next step is submitting your official answer to the complaint, either admitting, denying, or contesting the allegations. You typically have 20-30 days after being served to file your response. This is your chance to raise defenses and counter the collector’s claims.

Work with an attorney to ensure you file the proper answer within the deadline and assert valid defenses like the statute of limitations has expired, improper service, mistaken identity, or incorrect debt amount.

Discovery 

The discovery phase allows both sides to request or exchange relevant information related to the case. As the defendant, you can request documents or evidence from the plaintiff about your debt and account history. 

The plaintiff may also send interrogatories asking you questions or request admissions to help establish facts related to the debt. An attorney can assist you with proper discovery requests and responses.

Motions and Hearings

There may also be various pre-trial motions or hearings to resolve disagreements between parties over legal issues, procedures, or evidence. For example, you may file a motion to dismiss if you have proof the debt is past the statute of limitations. Or the collector may file a motion requesting the judge to deem certain facts as established.

Settling Out of Court 

Many debt collection lawsuits end up settling before trial. The collector may offer a settlement deal that reduces the amount owed. Or you could negotiate a payment plan that works for your budget. Reaching a settlement can help avoid the expense and uncertainty of a trial. Just be sure to get any deal in writing first.

Going to Trial

If no pre-trial resolution is reached, the case will proceed to a bench trial where the judge hears arguments and evidence from both sides before issuing a verdict. Trials can be lengthy and complex, so working with legal counsel is essential. Make sure to bring all relevant evidence and documents to support your defenses.

If the verdict goes against you, the collector will be awarded a monetary judgment and can proceed with post-judgment collection activities against you. But if you win, the lawsuit will be dismissed and collector can’t continue pursuing you for the debt.

Defenses Against Debt Collection Lawsuits

When faced with a debt lawsuit, the following defenses should be explored with the guidance of a lawyer to determine if any apply in your situation:

Violations of the FDCPA

If the collector has violated provisions under the Fair Debt Collection Practices Act (FDCPA), such as harassment or false statements, this can invalidate the lawsuit. Even technical errors like not properly validating the debt when asked can strengthen your case.

Identity Theft 

If you’re being sued for a debt incurred by someone illegally using your identity, you can raise identity theft as a complete defense. You’ll have to submit an identity theft report and other evidence proving you didn’t open or use the account.

Statute of Limitations Has Expired

Each state has time limit laws on how long a collector has to sue to recover old debts. If that period has expired before they filed suit, the case can potentially be dismissed. The statute of limitations varies based on debt type and state.

Improper Service

For a lawsuit to proceed, you have to be properly served notice according to the rules for your jurisdiction. If the serving process was defective (wrong address, not in-person) that could invalidate the case.

Debt is Not Yours

Collectors sometimes sue the wrong person over a debt owed by another individual. If you have proof you never opened or held the account in question, you shouldn’t be held liable. Dispute debts that aren’t yours. 

Debt Amount is Incorrect

Review the alleged amount owed closely. If the collector shows the wrong balance, inflated interest, or unrecognized payments, you can contest the invalid debt amount as a defense.

If You Lose the Lawsuit

If the judge rules against you in the debt lawsuit, the collector will be granted a monetary judgment. They can then force repayment through various collection methods, including:

Wage Garnishment 

A collector with a judgment can seek a court order to garnish your wages, requiring your employer to withhold a certain percentage (up to 25%) of your take-home pay to satisfy the debt.

Bank Levies

The collector can seize funds from your bank accounts through an account levy. However, Social Security, disability, and certain other exempt funds are protected from bank levies.

Property Liens 

A judgment lien could be placed on your real property, allowing the debt to be paid from the proceeds if you eventually sell the property. The lien disadvantages you when trying to sell or refinance.

Facing collection activities like wage or bank garnishment can be difficult after losing a lawsuit. Consulting with an attorney to understand and assert your post-judgment rights is key. There are certain exemptions and payment plans that can be negotiated.

Recovering from a Collection Lawsuit

Even after losing a debt collection lawsuit, there are steps you take to start rebuilding your finances:

Rebuilding Credit

A collection lawsuit will damage your credit reports and scores. But the impact lessens over time. Keep accounts in good standing, pay bills on time going forward, and dispute any errors to help improve your credit.

Create a Debt Repayment Plan

Work on paying down your debt through a structured repayment plan, focusing on highest interest accounts first. Avoid taking on new debt during this period. If the collector is garnishing wages, aim to pay more than the garnished amount monthly.

Consult a Bankruptcy Attorney 

In some cases, filing for bankruptcy may be a reasonable option if you’re facing multiple collection lawsuits or aggressive garnishment that makes debt repayment extremely difficult. An experienced bankruptcy lawyer can advise if this choice is right for your situation.

Conclusion

Being on the receiving end of a debt collection lawsuit can be stressful. Arm yourself with information on the legal process and your rights so you don’t feel powerless. Respond properly, raise applicable defenses, and explore settlement offers or alternative payment plans. With the right legal guidance, you can resolve collector lawsuits in the best possible way.