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Lawsuits are a common and efficient debt collection tactic. In New Jersey, for example, debt collection lawsuits accounted for 48% of civil judgments in 2011, according to a ProPublica report. One attorney at a debt collection firm filed 69,000 lawsuits in a single year, it found.

A debt collection lawsuit begins when a creditor files a complaint with a state civil court listing you as a defendant, along with your co-signer if you have one. The complaint will say why the creditor is suing you and what it wants. Typically, that’s the money you owe plus interest, and maybe attorney fees and court costs.

The creditor, collection agency or attorney representing it will then notify you of the lawsuit by “serving” you, which means delivering a copy of the complaint and a court summons. The summons has information about when and how you can file a formal response in court, and the date of your court hearing.

Debt collectors bet that most people won’t attend their hearing, leaving the judge to file a default judgment. With a default judgment the creditor may be able to:

  • Garnish your wages.
  • Place a lien against your property.
  • Attempt to freeze part or all of the money in your bank account.

The creditor suing you is unlikely to be your original creditor. The debt may have been sold, perhaps several times over. It may be something you recognize, or it may be an old bill long forgotten.

Review your own records and any information you got in the mail, including the validation letter that the debt collectors must send.

Questions to ask yourself:

  • Who the creditor is, whether the amount is accurate and whether you actually owe the debt.
  • Whether the debt is past the statute of limitations. Once that passes, the debt is considered “time-barred.” That means you can’t legally be sued; if sued, it could be a violation of your consumer rights.
  • You generally have 20 to 30 days from when you get served to file a response.

Organizing your defense and writing the response can be complicated, therefore, our firm will be here to help. Guidance from an attorney can help you write a more complete response, which might make the creditor more likely to pursue a deal with you.

How you handle it depends on whether you owe the debt.

What if you owe the debt:
You have a few options. Seek out the creditor before the hearing begins and see if you can agree to:

  • Set up a payment plan where you make regular, affordable payments on the bill until you pay it off.
  • Settle the debt for less than you originally owed. If you can strike a deal, be sure to get a written agreement that says the creditor will consider the debt fully settled and will report it to the credit bureaus as paid.

What if you owe the debt but think you shouldn’t have to pay
There are several instances in which you might have standing to refuse to pay a debt. You may be able to invoke these so-called affirmative defenses if, for example:

  • What you bought was defective or never delivered.
  • The debt contract was unenforceable or illegal, or you signed it based on falsehoods.
  • You canceled the contract within the lawful time frame.

These are just a few of the possible affirmative defenses. If you think you might have such a defense, seek legal advice on the best way to proceed.

What if you truly don’t owe the debt:
When you’re sued for a debt you don’t owe or for an amount you dispute, two words can give you a strong defense, the Plaintiff/Creditor will have to prove it with evidence in court. The documentation will need to be authenticated and relevant to the client matter. If this cannot be shown to the courts satisfaction, the case may be dismissed.