Sued by a Creditor, Now What?
Few things can suck the oxygen out of your lungs the way that receiving notice that you’ve been sued by a creditor or debt collector can. Although it can be upsetting to receive notice of a lawsuit, it’s hardly rare. Lawsuits are a common debt collection tactic. Take a deep breath, and then review and respond to protect your rights.
First, take time to review the summons and complaint thoroughly. If you have reason to believe that the debt is not yours—or if you don’t know whether the debt is yours—you have the right to request additional information. Write a debt verification letter asking the creditor or debt collector to confirm you owe the debt.
Second, it is critical that you respond to the complaint within 20 days of being served by either immediately contacting an attorney who will respond to the complaint, or answering the lawsuit yourself. If you don't respond to the complaint within the 20 days, the creditor or debt collector can obtain a default judgment against you—even if it isn’t your debt or if the statutes of limitations passed. A default judgment is where a judge resolves the case without hearing your side. It allows the creditor or debt collector to collect the amount that you owe using various methods.
You can respond to the complaint by filing a motion to dismiss or an answer. A motion to dismiss asks the court to "throw out" the debt collection lawsuit without reviewing all of the facts and legal arguments. There are a number of reasons why you might file a motion to dismiss including lack of personal or subject-matter jurisdiction, improper venue, insufficient service of the lawsuit, and failure to state a claim. When you file a motion to dismiss, the time for you to file an answer is postponed until the judge makes a decision on your motion.
If you respond to the complaint by filing an answer, it is your opportunity to tell the court your side of the story. Your answer should not only dispute false allegations, but raise any defenses you have to the claims made in the complaint. There are many possible defenses to a debt collection lawsuit. The most common defenses include:
Improper service of the summons
Identity theft or mistaken identity
Statute of limitations
Being an authorized user
Payment was made
The Amount is in dispute
Bankruptcy
Your answer should also contain any counterclaim. In a counterclaim, you are saying, “Even if I do owe the creditor for the debt, the creditor owes me money because the creditor violated the law." Examples of counterclaims in debt collection lawsuits include:
The creditor or debt collector did something illegal in attempting to collect the bill.
The creditor promised to provide a service, like make a repair, and did a poor job.
The creditor is charging fees or interest that violates the law.
Whether you respond by a motion or dismiss or an answer, be sure to file your responsive pleading . with the Clerk of Court in the county where the lawsuit was filed. A copy of your response must also be delivered to the attorney for the creditor or debt collector. Be sure to save a copy for yourself as well!
After filing your response, you can attempt to settle with the creditor or debt collector. If you are unable to reach a settlement, a trial will be set by the court. If the case is filed in circuit court, there may be pre-trial procedures or motions that need to be done or filed. The court will inform you upon your request for information.
Whether you hire an attorney is up to you. But, it doesn’t hurt to reach out to an attorney and seek their counsel. Many attorneys even offer free case evaluations to help determine your options. We certainly do!
DISCLAIMER: Jackson Lee | PA appreciates you visiting this website. Please remember that this information is based on general facts and might not apply to specific factual situations. Please do not consider this information to be specific legal advice. Always consult a lawyer to apply the law to your specific facts and state.