3 Steps To Take if a Debt Collector Sues You

Collection letters and phone calls from debt collectors can make life extremely stressful. The situation gets even worse when a debt collector files a lawsuit against you. 

If a debt collector sues you, the worst thing you can do is nothing. If the collector wins the lawsuit and gets a judgment against you, they can take more aggressive collection actions.

You can respond to the lawsuit in three steps:

1. File an answer with the court after you get the court papers (summons and complaint)

2. Prepare your defense(s)

3. Attend the hearing for the debt collection lawsuit

Step 1: Answer the Lawsuit When a Debt Collector Sues You

When a creditor or debt collector sues you, they’re required to let you know about the lawsuit by serving you with court papers. Depending on the rules in your state, the debt collector might send these papers by:

• Certified mail

• A process server or someone from your local sheriff’s office (hand-delivered) 

What Is a Summons and Complaint?

Generally, the papers you’re served will include a copy of the complaint that the debt collector filed with the court and a summons form that tells you how to file your response to the lawsuit. 

Sometimes, the summons will also tell you when and where the hearing on the case will be held. You may also receive other papers, depending on your state’s laws.

The complaint is the document that the debt collector filed to begin the lawsuit. It should contain the name of the debt collector and some information about the debt, such as the balance owed or the original creditor’s name. 

After reading the complaint, you may recognize the debt and be aware that you owe it or you may be certain that you don’t owe the debt. In some cases, you may not be sure whether you owe the debt or not. Either way, it’s important to respond to the lawsuit or you’ll probably lose by default.

Step 2: Prepare Your Defense Against the Creditor

To prepare your defense, it helps to know what debt collectors are required to prove to win a debt lawsuit. Different states have different requirements, but generally speaking, the debt collector must prove:

• You owe the debt. This means showing proof that you agreed to pay this debt, such as your original credit agreement. It also means showing that you’re the lawful owner of the debt and not just an authorized user.

• The amount of the debt, plus any interest, court costs, and attorney fees is correct.

• The debt collector has the legal right to collect the debt from you. If the debt collector isn’t the original creditor, they’ll need to show that they bought the account from your original creditor or from a debt buyer.

Knowing this, you can check to see if the debt collector has proof of everything they’re required to prove or if any information is missing. You can also look for mistakes or inaccuracies in the court papers.

Review the information in the court papers. Then, inspect any records you have related to the debt in question, including:

• Account statements

• Correspondence from the debt collector, including a debt validation letter if you got one

• Bank statements, credit card statements, or other evidence of payments

• Communications from the original creditor, if different from the current collector

Your defense should accomplish two things. First, you should point out any incorrect or inaccurate information in the debt collectors’s case. You should also say why it’s inaccurate and present any documents or other evidence that support your position.

Second, you should list any affirmative defenses you have to the lawsuit.

What Is an Affirmative Defense?

An affirmative defense is a reason the creditor should not win the lawsuit against you, based on information that wasn’t included in the creditor’s case. Again, you should include any documents or other evidence that support your defenses. Some examples of affirmative defenses include:

• The statute of limitations for the debt has expired. The statute of limitations sets a limit on how much time creditors and debt collectors have to sue you for a debt. Each state has its own statutes of limitations.

• You already paid the debt.

• The debt was discharged in bankruptcy.

In some states, you must file a written response to the lawsuit with the court within a certain amount of time. In other states, you can just show up on the hearing date and make your defense. The complaint and summons you received should tell you whether you must respond in writing and the deadline to do so. If you’re unsure, contact the clerk’s office in the court where the lawsuit was filed.

Check Your Credit Report & Know Your Rights

If the debt collector has listed incorrect information in the lawsuit, they’ve probably also reported this false information to the credit bureaus. Check your credit report for these mistakes, since you may also need to dispute the mistakes with the credit bureaus. It’s easier to do this now, while you have the evidence of the correct information in front of you. 

In addition to looking for mistakes or missing information, make sure you know your legal rights under the Fair Debt Collection Practices Act (FDCPA) so you can point out any violations that might have occurred. 

Step 3: Attend the Debt Collection Lawsuit Hearing

It’s important to go to court on the hearing date, even if you’ve already filed a written response to the lawsuit. 

Showing up at the hearing gives you two key opportunities. First, going to court gives you a chance to meet with the debt collector’s representative or lawyer and possibly work out a deal to settle the lawsuit. Second, going to court gives you a chance to tell the judge about any defenses you have.

How To Negotiate a Debt Settlement Before a Debt Collection Lawsuit

If you know you owe the debt and don’t have a strong defense against the lawsuit, you can show up early to court and find the debt collector’s representative or attorney before the hearing begins. Introduce yourself and see if you can reach an agreement without a hearing. 

This could mean agreeing to settle the debt  for less than the full amount owed. Or it could mean agreeing on a payment plan to repay the full balance. If you reach an agreement to settle the lawsuit, make sure to get any details in writing before you make the first payment.

How To Explain Your Defenses to the Judge

If you don’t owe the debt, you’ll want to explain your situation to the judge. 

The debt collector will present their case to the judge first. It’s important to wait for your turn to talk to the judge. When it’s your turn, tell the judge why you don’t owe the debt. 

Bring any documents that back up your claim. Request that the debt collector proves that you owe the debt by showing the judge the original debt contract and any other necessary documents. If the collector can’t prove that you owe the debt, the judge could dismiss the case. In any lawsuit, having evidence to support your claims is key.

What if a Debt Collector Broke the Law While Trying To Collect a Debt?

If the debt collector violated your rights under the FDCPA, tell the judge about those violations as part of your defense. You can also file a complaint with the Consumer Financial Protection Bureau (CFPB) and your state attorney general’s office. 

You can file a lawsuit against the creditor in state or federal court within one year after the violation. Your state might also have other consumer protection laws in addition to the FDCPA. 

Keep in mind, if the creditor was collecting a legitimate debt, you may still have to pay the debt, even if the court agrees that the debt collector broke the law. In this case, though, the debt collector might owe you money as well.

What Happens if You Don’t Respond to a Debt Collection Lawsuit?

You may be tempted not to respond to the court papers, but be aware that this won’t stop the lawsuit. All courts have procedures for resolving cases even if one party doesn’t respond.

If you don’t respond to the complaint, the court will likely enter a default judgment against you. A default judgment is a court order to pay a certain amount of money. This amount will usually be whatever amount the debt collector claims you owe. It may also include charges such as interest, collection costs, and attorneys fees. 

Once the court enters a judgment against you, you may not be able to dispute the debt. It’s also difficult to get a judgment changed or set aside. You have much better chances of successfully defending against a debt while the lawsuit is ongoing — before it becomes a judgment.

This is why it’s essential to file an answer or response and make an appearance anytime you’re served with court papers, even if you think you don’t owe the debt. 

What Are the Consequences of a Default Judgment?

A default judgment is a court order that essentially says the debt collector suing you wins the case. Once a creditor or debt collector has a judgment against you, it can use even more effective tools to collect money from you.

Depending on your state’s laws and your financial situation, a debt collector that has a judgment against you may be able to: 

• Put a lien on your property. With a lien in place, you won’t be able to sell or refinance the property until you pay off the judgment.

• Take part of your paychecks through wage garnishment.

• Freeze your bank account(s) and take money from the account through a bank levy.

If a default judgment has already been entered against you, you may want to contact the creditor that filed the lawsuit to set up payment arrangements. An unpaid judgment can cause you bigger problems and can damage your credit score even more than the original debt.

How Do You Avoid a Default Judgment?

Respond to the lawsuit to avoid having a default judgment entered against you. Thoroughly read all the court papers you receive, which should include: 

• The debt collector’s name

• The amount they’re claiming you owe

• Contact information for the court

• Instructions for how to answer the lawsuit

• The deadline for responding to the lawsuit

Depending on the state and court, the paperwork may also contain the date, time, and location of the lawsuit. (Some courts don’t set a hearing date until later in the process.)

Read the instructions for responding carefully. You may need to answer in writing, by showing up in court, or both. If you’re confused about the instructions, contact the court clerk. The clerk can’t give you legal advice, but they can tell you where to go, where to send your response, and what forms to use.

Usually, if you don’t answer the lawsuit, the debt collector automatically wins through a default judgment. By responding to the complaint, you force the debt collector to prove their case to the judge. This can mean a lot of work for a debt collection agency. 

When you respond to the lawsuit, the collector may be much more open to settling the debt with you, rather than proceeding with the lawsuit to get a judgment. Settling out of court is usually better than having a judgment against you.

Do You Have To Hire a Lawyer To Win a Debt Collection Lawsuit?

You don’t have to hire a lawyer to successfully defend a debt collection lawsuit. That said, many people are understandably intimidated by court papers and processes.

If you want legal help but can’t afford to hire a consumer debt attorney, you may be able to get low-cost or free legal assistance from a local legal aid organization. An experienced attorney can show you possible defenses you might have missed, help you prepare your response to the lawsuit, and even represent you in court, if necessary. 

Debt collectors usually don’t expect you to show up in court or even respond to the lawsuit. If you file a response written by an attorney or show up in court with a lawyer, the collector might try to settle with you instead of continuing with the lawsuit. Again, settling out of court is usually better than having a judgment against you.

Need Help Addressing More Than One Unpaid Debt?

If you’re being sued for an unpaid debt, chances are you’re struggling financially and you may be behind on other debts as well.

If so, it’s time to look into your debt relief options. Many people start to address overwhelming debt by scheduling a free consultation with a nonprofit credit counselor. Credit counselors can explain your debt relief options and help you set up a plan to tackle your debt.

Though it’s not right for everyone, it’s worth exploring Chapter 7 bankruptcy if you’re looking to get a fresh start and wipe out medical bills, credit card debt, personal loans, and other consumer debts. In some cases, you can have your student loans discharged as well. A credit counselor can discuss this and other options with you.