Do you have to sue for debt? Here's What to Expect

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Do you have to sue for debt? Here's What You Should Expect
Make sure you act quickly if you're being sued for debt. There are options.
by Sean Pyles Senior Writer | Personal finances and debt Sean Pyles leads podcasting at NerdWallet as the host and producer of the NerdWallet's "Smart Money" podcast. In "Smart Money" Sean talks with Nerds on the NerdWallet Content team to answer the questions of listeners about their personal finances. With a focus on shrewd and practical money tips, Sean provides real-world guidance that will help consumers improve in their finances. Beyond answering listeners' money concerns on "Smart Money," Sean also interviews guests outside of NerdWallet and creates special segments on topics like the racial wealth gap as well as how to get started investing, and the history of student loans.
Before Sean was the host of podcasts at NerdWallet the company, he also wrote about topics concerning consumer debt. His work has been published throughout the media including USA Today, The New York Times and other publications. When when he's not writing about personal finance, Sean can be found working in his garden, going on runs , and walking his dog for long walks. He is based within Ocean Shores, Washington.





Feb 13 Feb 13, 2019


Edited by Kathy Hinson Lead Assigning Editor Personal finances, credit scoring financial management and debt Kathy Hinson leads the core personal finance team at NerdWallet. In the past, she worked for 18 years working at The Oregonian in Portland in positions such as copy desk chief and team leader for design and editing. Previous experience included copy and news editing for various Southern California newspapers, including the Los Angeles Times. She received a bachelor's degree in mass communication and journalism in The University of Iowa.







A majority of the products we feature are from our partners who pay us. This impacts the types of products we feature and where and how the product appears on a page. However, this does not influence our evaluations. Our views are our own. Here's a list of and .



A letter arrives from a law office warning of a lawsuit to collect to an older bill. It's upsetting, but hardly uncommon.
You could be hit with a lawsuit if there is an unpaid medical bill credit card, credit card or any other consumer debt. If you don't respond on time or appear at the hearing in court, the creditor will likely winand might be granted rights to take part of yourwages or bank account.
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What happens when you get sued for debt
Lawsuits are a common and effective debt collection strategy. For New Jersey, for example that debt collection lawsuits were responsible 48 percent of civil judgments in 2011, as per an . A lawyer from a firm that collects debts has filed more than 69,000 lawsuits in just one year, it discovered.
A debt collection lawsuit is initiated when the creditor files a complaint before a civil court of the state with you listed 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 along with court expenses.
The creditor, collection agency or attorney representing the company will notify you about the lawsuit by "serving" you in the form of sending a copy of the complaint along with a summons to court. The summons has information about when and how to submit a formal response to court, as well as the date of your court hearing.
The debt collectors are betting that the majority of people won't show up for their hearing, allowing the judge to file an order of default. If a default judgment is filed, the creditor may be capable of:
.
Place a lien against your property.
You can try to freeze a portion or all the funds in your account.

It's the reason you should respond to the complaint and summons. This is how you can do it.
Collect the information you need.
The creditor that is suing you will not be the first creditor you had. The debt could have been transferred, or perhaps multiple times. You may find something that you recognize, or it could be an old debt that was forgotten -- now a creditor or debt collector has brought back.
Examine your own records as well as any information you got from the mail, which includes those that debt collectors must send. Determine:
Who is the creditor, how accurate the amount is and if you actually owe the amount. There are errors that can occur as debt is sold or resold; names and amounts can be incorrect.
If the debt is beyond the . After that, the debt is considered "time-barred." This means that you aren't legally accused of a lawsuit, but creditors might still pursue it violating your . The obligation to pay the time-barred debt remains but the unpaid debt is likely to hurt your credit.

Don't delay. You generally have 20 to 30 days from when you receive the notification to file a response.
Respond to the lawsuit
"The most damaging thing anyone could do is to ignore the suit," says Ira Rheingold as chief executive officer of the National Association of Consumer Advocates. That puts your wages and bank accounts, as well as your property at risk. In addition, you could lose the ability to dispute that you have a debt.
Writing your defense and organizing the response can be complicated and you might want to consult an attorney. Most attorneys offer free consultations If you win your case the debt collector likely will have to pay the legal costs. Many offices offer affordable or free services. Service members of the military can receive help by contacting their local judge advocate general office.
An attorney could:
Find defenses that you didn't know about.
Help in writing the formal reply.
You can be represented in court, if necessary.

A lawyer's guidance can help you write a more complete response, which could make the creditor more likely to negotiate an agreement with you. If you go further and go to this hearing with an attorney, Rheingold states that the debt collector "likely won't be able confirm the debt, and it may be dismissed."
It is likely that you will need to pay a fee in order to respond. Ask the court clerk for information about fee waivers if you can't pay for the fee.
Options for handling the hearing
Showing up for the hearing is essential. This is when the judge will decide if you are required to pay, and this is your opportunity to make your defense or negotiate a settlement in conjunction with the lender.
The method you take to handle it is contingent on whether you owe the debt.
If you have to pay the amount
There are a variety of choices. Find out the creditor before the hearing begins and see if you can agree to:
Establish a payment plan where you pay regular, reasonable payments on the bill until you're able to pay it off.
Pay off the debt at a lower amount than you originally were owed. If you can strike a deal, be sure to get a written agreement that says the creditor will take the debt as fully paid and declare it to credit bureaus as having been paid.

An independent credit counseling agency can help you comb through your finances in order to fund the cost of a settlement or payment plan. If you're still unable to pay the amount you owe, you may be able to consider an alternative , such as , for the chance to make a fresh start.
If you have were the one to cause the debt and you think that you shouldn't be required to pay
There are a variety of situations where you could have standing to refuse to pay a debt. You could be able to invoke these affirmative defenses if you are, for instance:
The item you purchased was not as expected or never arrived.
The debt contract was unenforceable or unenforceable, in the event that you signed it based on lies.
You canceled the contract within the lawful time frame.

These are just a few of the affirmative defenses that could be available. If you believe you be able to defend yourself take legal advice about the best method to take.
If you don't have the debt
If you're being sued for the payment of a debt that you do not owe or for a amount that you don't agree with Two words can offer you a powerful defense: "Prove it." In the court hearing you could demand the creditor provide the original contract for debt and show why you owe the money specified. If they can't be proved, the judge could reject the claim.
Adequate documentation is key However, you should also seek the help of an experienced legal professional who can assist you in this procedure.
A lawsuit for a debt you don't recognize may be caused by identity theft, and you might want to investigate an activity you don't recognize.
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Author bios: Sean Pyles is the executive producer and host of the NerdWallet's Smart Money podcast. His writing has been featured in The New York Times, USA Today and elsewhere.







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