Being unable to manage one's debt is stressful enough; the last thing anyone would want is for them to get sued by their creditors. If you find yourself unlucky enough to be in this situation, don't panic! Take a deep breath and tackle the problem methodically. Here are 5 steps to take in case of a debt collection lawsuit.
1. Respond to the lawsuit
Often, in a state of panic and stress, people will not respond to the lawsuit. Big mistake! By doing so, the default judgment may end up in the collector's favor. Depending on the state law, the court could order a deduction from your salary for debt repayments, or give the collecting agency some access to your bank account. Thus, responding to the lawsuit is extremely important.
2. Weigh Your Options
Once you have responded, there are many options available to you to help turn the tide in your favor. Challenge the right of the collector to sue you by asking them to provide the necessary documentation. If they are unable to do so, the judge will dismiss the case. Consider asking for proof of the amount owed. This can make things more difficult for the collecting agency as accounts can often change hands multiple times before a lawsuit is filed. Even if this does not result in a case dismissal, the final settlement agreement would likely be of a much lower amount.
3. Point to the Statute of Limitations
The Statute of limitations is a law that states the specific time before a claim can no longer be legally filed. It can vary from state to state. In Texas, the time-span is 4 years for debt collection. In the case of debt collection, the period begins from the last time you were active on the credit account. If your debt is past the statute of limitations, the lawsuit may be liable to be struck out.
4. File for Bankruptcy
In some cases, filing for bankruptcy may be the right option to choose. During the bankruptcy process, your debt collector can't harass you with collection claims. Filing for bankruptcy can negatively impact your credit score and financial well-being. However, when you are unable to make repayments on your debts, it is often the most viable option on the table, and allows you to start afresh on a clean slate.
5. Hire an Attorney
A qualified legal attorney will advise you better on all the possible options you have on the table to strengthen your defense and improve the chances of winning against the lawsuit. In case your attorney believes that the plaintiff has acted illegally in filing a claim, you won't even have to pay their legal fees as the court will order the plaintiff to do so instead.
Sean T. Flynn is a veteran legal attorney with over 8 years of experience, specializing in bankruptcy law. If you are in need of a professional personalized legal service, call 512-640-3340 and schedule an appointment directly online.
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