Receiving legal notice of a debt collection action may be a daunting and stressful event. You can, however, handle this difficult position if you know what to do and what your rights are. Find out the crucial steps you need to take to ensure you properly respond to and defend your rights in the event that you get a lawsuit for debt collection.

Understanding the Debt Collection Lawsuit

When a creditor or collection agency sues you in a civil court to recover an outstanding debt, this is known as a debt collection lawsuit. A summons and complaint, which inform you of the legal action and outline the allegations made against you, including the claimed debt amount, are delivered to you when you are served with a lawsuit.

You must treat this litigation seriously since a default judgment against you may come from your inaction. This decision can give the creditor the authority to levy your property, freeze your bank accounts, or garnish your earnings in very limited circumstances.

Step 1: Carefully Review the Lawsuit Documents

When you’ve been served with a debt collection lawsuit, your first step should be to carefully review all the documents you receive. These documents will include the summons, which tells you when and where to respond, and the complaint, which outlines the creditor’s claims. Pay close attention to the name of the creditor, the creditor’s attorney, the amount being claimed, and the deadline to respond.

Verifying the debt itself is also very important, which includes confirming that the obligation is indeed yours, making sure the amount stated is correct, and figuring out if the statute of limitations has run out. Within the statute of limitations, a creditor may lawfully file a lawsuit against you in order to collect a debt. In the event that the statute of limitations has passed, you could have a strong defense against the other party’s claim.

Step 2: Responding to the Lawsuit

After reviewing the lawsuit documents, your next step is to respond to the lawsuit. Your response, known as an “answer,” must be filed with the court within the time frame specified in the summons, usually 20 to 30 days. In your answer, you can admit or deny the claims made by the creditor and raise any defenses you may have.

Filing an answer is critical because it prevents the court from issuing a default judgment against you. Even if you believe you owe the debt, filing an answer at least gives you the opportunity to negotiate with the creditor or explore other legal options instead of receiving a default judgment against you.

Step 3: Consider Your Legal Options

After filing your answer, consider your legal options, which may include negotiating a settlement, filing a motion to dismiss, or even filing a counterclaim against the creditor.

Negotiate a Settlement

If you believe you owe the debt, one option is to negotiate a settlement with the creditor, which could involve agreeing to pay a reduced amount or setting up a payment plan. Settling the debt instead can help you avoid the costs and stress of a trial while resolving the issue in a way that is manageable for you.

File a Motion to Dismiss

If you have strong defenses, such as it being past the statute of limitations deadline or a lack of standing in another way by the creditor, you may consider filing a motion to dismiss the lawsuit. A motion to dismiss is a legal argument asking the court to throw out the case before it goes to trial. If successful, the lawsuit will be dismissed, and you won’t be liable for the debt.

Consider Bankruptcy

If you are facing multiple debt collection lawsuits or overwhelming debt, bankruptcy might be an option. However, due to the potential consequences of bankruptcy it is best to consult with a bankruptcy attorney to determine if it’s the right choice for you.

Step 4: Prepare for Court

If your case is not resolved through negotiation or dismissal, it may proceed to trial. Preparing for court involves gathering evidence, organizing your defenses, and presenting your case effectively.

Gather Evidence

Collect any relevant witness statements, as well as all relevant documents, such as credit card statements, payment records, and correspondence with the creditor or collection agency. If you have evidence that the debt is not yours or that you have already paid it, be sure to include it in your case.

Practice Your Presentation

Work with your attorney to prepare and ensure your case is presented effectively.
Practice talking about your case and the evidence clearly and confidently. Organize your arguments logically and be prepared to respond to questions from the judge or the creditor’s attorney.

Step 5: Attend the Court Hearing

On the day of your court hearing, arrive early, dress appropriately, and be respectful to the court. Bring all your evidence and any witnesses you have arranged to testify. The judge will consider the evidence and arguments from both sides before making a decision. If the judge rules in your favor, the lawsuit will be dismissed, and you will not be liable for the debt. If the judge rules in favor of the creditor, you may be ordered to pay the debt, along with any additional costs or fees.

Seek Legal Guidance

Facing a debt collection lawsuit can be daunting, but by understanding the legal process, responding promptly, and exploring your legal defenses, you can protect your rights and work toward a favorable outcome.

Call Gillespie & Murphy, P.A. today at 252-659-5045 to schedule a consultation with our team. Taking proactive steps to seek legal guidance will help you navigate the situation with confidence and ensure that your rights are upheld.