- Respond to the lawsuit. Although you may want to throw away the letter informing you of the lawsuit and pretend you never got it, that is the worst thing you can do. You must respond to the lawsuit or face a default judgment against you. This may happen if you ignore the lawsuit. If the debt collector’s attorney is in court and you aren’t, the court may rule in their favor.
- Gather evidence about your debt. First, you need to make sure the debt is really yours. Unless you are positive it is, start asking questions about the debt. Look back through your records for the debt. You may also be able to look at your credit record for the debt. If the debt is yours, check your records for what you have already paid and make sure it wasn’t paid off. While there are unscrupulous people, it may also be a mistake in bookkeeping that can be resolved.
- Contact an attorney. Make sure the attorney you choose has experience with debt settlements. A family attorney may not have the skills you need to fight a lawsuit over debt. Take your documentation to an attorney and discuss your options with him/her. Always be completely honest as an attorney they cannot give you the best advice if you hide things from them. You may be embarrassed, but your attorney is there to help you out of a bad situation. Resist the temptation to handle the lawsuit without an attorney. You may think that incurring more debt by hiring an attorney is a terrible idea, but you need help when dealing with the lawsuit.
- Challenge the lawsuit. If you and your attorney feel you have reason to dispute the lawsuit, file that paperwork immediately. Make sure you have copies of all of your documents that prove you have either paid the debt or that it isn’t yours. Your attorney can advise you on what types of documents the court will want to see.
- Consider filing a countersuit against the creditor. If you and your attorney feel the creditor did not follow the Fair Debt Collection Practices Act, a countersuit may be another option for you. Again, consult with your attorney and always keep detailed notes when you have contact with the debt collector so you can prove what you and the collector said.
Drowning in unpaid bills is one of the most stressful things you can go through in life. Worrying every day about what bills to pay and hoping that no debt collectors call is a terrible feeling. It is even worse when a debt collector sues you for an unpaid bill. You may be humiliated and worried about what to do. Below are the top five things you need to do if you are being sued for unpaid debts.
Dealing with debt is hard enough without trying to handle a lawsuit, too. No matter how well you think you understand your options, an attorney who specializes in debt defense is your best option. You may make your problem worse by making a wrong decision too quickly.
Unpaid debts can affect your life for several years. You may be stressed over how to pay your bills and think it would be easier to not pay them, but not repaying what you owe can cause long and short term problems you may not have considered.
Short Term Effects
Few things are as stressful as owing money and not being able to pay that debt. Most people feel this at some point and have questions about what will happen. To help alleviate anxiety about your debt, we have written about five things you should know about debt.
The Affect on your Credit Score
Your credit score is used for many things besides being able to get a loan. Higher credit scores often means better rates on credit cards, loans, and even insurance. An overwhelming amount of debt will lower your score.
Negative information stays on your credit report for seven years. Oftentimes, you will need to request the negative information to be removed after the time has expired. However, even if the information is gone, you may still owe that debt.
What Debtors Can Do if You Can’t Pay the Debt
First, understand that debtors are never allowed to lie or be abusive when they contact you to collect debts. They may try to bully you into payment agreements, but there are laws that protect you.
Debtors are also not allowed to contact you at inconvenient times (before 8:00 AM or after 9:00 PM) or places. Once they have been told you cannot receive calls at work, they can’t call there.
The debt collector can’t talk about your debt with anyone but you or your spouse, but they can contact other people to obtain your contact information.
A debt collector can sue you for the money you owed within a certain period of time. Any time you receive legal papers about your debt, you need to contact an attorney immediately and only respond through him/her.
If a Debt Collector Breaks the Law
If you feel a debt collector has broken the law, you may be able to sue the collector within one year of the violation. You will have to decide if any possible damages you may receive are enough to make a lawsuit worth your time. Again, this a discussion for you to have with your attorney.
Each state has different laws about wage garnishment. A creditor must obtain a court order to garnish your wages. In South Carolina, wages cannot be garnished for commercial/personal debt. However, debt pertaining to child support, taxes, alimony, and student loans can be collected through garnishing your wages. Any federal benefits you may receive may also be garnished for those debts.
How Long a Creditor can Collect Debt
Creditors only have a certain number of years to collect your debt. This time begins the first time you miss a payment. Once the statute of limitations expires, the debt is considered “time-barred.” However, you need to be aware that every state has their own laws on how long the statute lasts and that may be different depending on what types of debt you have.
Often, creditors will work with you to resolve your debt. Most of the time, they would rather get a small amount from you each month than have to take you to court. For this reason, it is a good idea to contact your creditors immediately when you are having problems making your payments. Try to find a solution that works for you and your creditor before legal action is taken against you.
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