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What To Do If You’re Being Sued By A Debt Collector

sued-for-debtBeing served with a debt collection lawsuit is an unsettling experience. This is a possibility when you no longer keep communication with a debt collector or have a series of past-due payments. Even though this may appear to be the end of the line with your financial struggles, you still have options at this stage. Here are three of them.

Answer the Lawsuit

Ignoring the lawsuit will not make it go away. It will only end in a default judgment which grants further authority to the creditor to garnish your wages and attach your property. One day, you will find your income diminished and your bank account emptied. This can prove burdensome if it happens during a long vacation or if your car is in the shop for a major repair.

You respond to the lawsuit by filing an answer in the court where the creditor initiated it. Even if all you state in your answer is, “I dispute all claims in the complaint,” that gives you a place to start. You can allege the amount you owe is represented incorrectly or that you never received documentation for the debt if that is true in your case.

If the lawsuit involves an old debt, you can also claim statute of limitations. In New York, that is six years for a money collection lawsuit. If your creditor filed the lawsuit today but they first acquired the debt seven years ago, you can state the case is barred by the statute of limitations.

Other defenses include mistaken identity, bankruptcy discharge. and fraudulent charges on a credit card.

Depending on your approach, you can settle the debt with the creditor. This can take many forms including a reduced amount, payment plan or even waiving interest and fees.

File a Fair Debt Collection Practices Act (FDCPA) claim

If you were a victim of illegal debt collection practices, you can file a separate lawsuit or bring that as a counterclaim in your answer. Debtors’ rights are protected under the federal Fair Debt Collection Practices Act also known as the FDCPA.

Illegal conduct by collectors includes harassment, abuse, misleading statements, threats, failing to provide verification of a debt or insisting on post-dated checks. If you faced any of these instances, contact our debt collection attorneys to see if you possibly have a claim under the FDCPA.

FDCPA claims result in money damages for Plaintiffs or the waiver of the balance owed on the debt. It can also be used as a settlement tool to greatly reduce your debt if the collection violations were minimal.

File Bankruptcy

If the lawsuit is not the only debt you face, it may be time to consider bankruptcy. This is the most efficient way to eliminate debt and enjoy a fresh start with no balances owed.

Once a Plaintiff files a bankruptcy petition, all collection activity against them must stop. That includes telephone calls, garnishments, and even lawsuits. When you complete a bankruptcy successfully, the creditor must cease pursuing the lawsuit and you will not be liable for their costs or the amount of the debt.

Your options for bankruptcy include Chapter 7 or Chapter 13. Chapter 7 bankruptcy is a straight bankruptcy that eliminates all your dischargeable debt. Credit cards, medical bills, unsecured loans, deficiency balances after repossession, and even lawsuits arising from any of these debts can be discharged completely in a Chapter 7 if you meet requirements.

A Chapter 13 bankruptcy is considered a wage earner’s plan. If you do not qualify for a Chapter 7, you can eliminate lawsuits with a Chapter 13. This involves a three to five-year commitment where you make payments to a trustee. Payments cover court and trustee fees and are distributed to your creditors who file claims. Any debts not paid at the end of a Chapter 13 are discharged.

If a creditor serves a lawsuit on you, Gertler Law Group, LLC is here to help. We can review your options and find the best one for you. Contact us today to schedule a consultation.