Sued for Debt? Here's What You Should Expect

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Do you have to sue for debt? Here's What to Expect
Take action quickly if you've been in court for an unpaid debt. You have options.
By Sean Pyles Senior Writer | Personal finances, credit, and personal finance Sean Pyles leads podcasting at NerdWallet as the host and producer of NerdWallet's "Smart Money" podcast. On "Smart Money," Sean talks with Nerds across NerdWallet's NerdWallet Content team to answer the questions of listeners about their personal finances. With a focus on thoughtful and practical money tips, Sean provides real-world guidance that can help consumers better their financial lives. Beyond answering listeners' money questions on "Smart Money" Sean also interviews guests who are not part of NerdWallet and also creates special segments on topics like the racial inequality gap as well as how to get started investing and the history of college loans.
Before Sean was the host of podcasts at NerdWallet He also covered issues concerning consumer debt. His work has been published on USA Today, The New York Times and other publications. When Sean isn't writing about personal finance, Sean can be found digging around his garden, going on runs , and walking his dog for long walks. Sean is located in Ocean Shores, Washington.





Feb 13 Feb 13, 2019


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







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A letter comes from a law office threatening a lawsuit for payment to an older bill. It's a bit upsetting, but not rare.
You may get hit with a lawsuit if you have an unpaid medical bill or credit card consumer debt. If you fail to respond on time or appear at the court hearing, the creditor is likely to win -and might be granted rights to take a portion of yourwages or bank account.
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What happens if you are in court for debt?
The use of lawsuits is a popular and efficient debt collection tactic. The state of New Jersey, for example the debt collection lawsuits accounted for 48% of civil judgements in 2011, according to a . A lawyer from a debt collection firm had filed 69,000 lawsuits in one year, the report found.
A debt collection lawsuit begins when the creditor files a lawsuit in a state civil court listing you as a defendant, along with a co-signer in the event that there is one. The complaint will say what the reason the creditor has decided to sue you and what it is seeking. It's usually the amount you owe , plus interest and maybe attorney fees as well as court fees.
The collection agency, creditor or the attorney for the company will notify you of the lawsuit by "serving" you, which means giving you a copy complaint along with a summons to court. The summons has information about when and how you can respond in a formal manner to the court, as well as the date for your court hearing.
Debt collectors bet that most people will not attend their hearing, leaving the judge with the task of filing an order of default. If a default judgment is filed, the creditor might be able to:
.
Place a lien against your property.
Attempt to freeze part or all of the money in your bank account.

This is why you must take action to the complaints as well as summons. Here's what to do.
Gather details
The person who is suing you may not be the first creditor you had. The debt may have been transferred, or perhaps multiple times. It may be something you recognize, or it may be an old bill long forgotten creditor or debt collector has brought back.
Examine your own records as well as any information you got from the mail, which includes the that the debt collectors have to send. Determine:
Who the creditor is, how accurate the amount is and if you actually owe the debt. There are errors that can occur when debt is sold and returned to the market; names and amounts may be inaccurate.
If the debt is beyond the . Once that passes it is considered "time-barred." That means that you cannot legally be pursued in court, however collectors may still try it, against your . Your obligation to pay time-barred debt remains but the unpaid debt will continue to damage your credit.

Don't delay. There is typically a time period of 20 to 30 days from the time you are served with the notice to respond.
React to the suit
"The worst thing anyone can do is not pay attention to the lawsuit," says Ira Rheingold, Executive Director 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 challenge that you have a debt.
Organizing your defense and writing the response could be difficult and you might want to seek the advice of an attorney. Most attorneys offer an initial consultation for free If you win your case, the debt collector is likely to be required to pay the legal costs. Many offices offer low- or no-cost services. Military service members can get assistance through their local Judge Advocate General Office.
An attorney may:
Make sure you point out defenses you didn't know about.
Help you write your formal response.
In the court, if required.

Guidance from an attorney will assist you in writing an elaborative response which can make the debtor more likely to negotiate an agreement with you. If you take it a step more and appear at your hearing in the presence of an attorney, Rheingold says, the collector "likely won't be able to confirm the debt, and it may be dismissed."
It's likely that you'll have make a payment in order to respond. Ask the court clerk for information about fee waivers if you can't pay for the fee.
Alternatives for dealing with hearing loss
Attending your hearing is vital. This is when the judge will determine if you are required to pay, and this is your opportunity to present your case or negotiate a bargain in conjunction with the lender.
How you handle it depends on whether or not you owe the amount.
If you have to pay the debt
There are several choices. 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 payment on the bill up to you've paid the bill off.
Pay off the debt at a lower amount than you originally were due. If you're able to reach an agreement, you must to get a written agreement in which the creditor agrees to consider the debt fully paid and report it to the credit bureaus as paid.

An independent credit counseling company will help you sort through your financial situation to pay for an installment plan or settlement. If you still can't afford to pay the amount that you owe, you might consider pursuing a different option plan, such as an opportunity to start over.
If you've made the loan, but think you shouldn't have to pay it
There are several instances in which you might be able to use your legal rights to stop pay a debt. You may be able to invoke these affirmative defenses if, for example:
The product you purchased was defective or was never delivered.
The debt agreement was invalid or illegal, or you signed it on falsehoods.
You canceled the contract within the legal timeframe.

These are only a few of the affirmative defenses that could be available. If you suspect that you be able to defend yourself get legal advice on how to proceed.
If you don't have the amount
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 give you a powerful defense: "Prove it." When you appear in court, you can request the creditor to produce the original debt agreement and show why you owe that amount. If that's not possible be proved, the judge could reject the claim.
The proper documentation is crucial however, it is also important to consult qualified legal professionals to guide you through this process.
A lawsuit for a debt you don't recognize may be an outcome of identity theft, so you might want to investigate an actions you don't know about.
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The author's bio: Sean Pyles is the director of production and host on NerdWallet's Smart Money podcast. His writing has appeared in The New York Times, USA Today and elsewhere.







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