Five Options When Sued By A Debt Collector: Fight The Lawsuit On Your Own

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How to Deal With Debt Lawsuits

Four Parts:

If you receive a demand for payment of a debt, whether in the form of a demand letter or a complaint filed against you in court, you need to respond quickly and carefully. You have some options in the way you respond. You need to consider the validity of the demand, your ability to pay, your chances of defeating it if you go to court, and the possibility of filing bankruptcy. If you choose to fight the matter in court, you need to make sure that you comply with all court procedures and requirements.


Negotiating the Dispute

  1. Review the demand or complaint carefully.As soon as you receive a demand, whether it is an early demand for payment or in the form of a complaint that has already been filed in court, you need to look it over carefully. Compare the demand with your own paperwork, receipts, notes or whatever records you may have.
  2. Consider your options.If you know that you owe the debt and if the demand seems accurate, then your choices are limited. If you do not agree that the demand is correct, then you need to try to find out what prompted the demand and resolve the problem before the matter escalates.
    • Pay the debt if it is owed, and if you can. If the demand is accurate, and if you can pay it, then the best course of action is to pay it and put the dispute to rest. If you pay the debt in full, make sure that you get a receipt from the creditor that verifies payment in full. When you send payment, include a letter that says, “I understand that this payment is in full satisfaction of the outstanding debt.”
    • Bargain for a lower payment. You may agree that you owe the debt, but be unable to pay it in full. If you contact the creditor, you may be able to reach an agreement for a lower amount, or some payments over time. Be careful, at this negotiation stage, not to admit anything that the creditor may be able to use against you in court. It is a good idea to get legal help with this step.
    • Challenge the debt, if it is incorrect. If you do not agree with the demand, you should reply in writing. Be clear about your dispute. If you agree to some lower amount, say so, and the creditor may accept that as a final resolution. If you dispute the debt completely, ask the creditor to clarify the demand with any documents that can prove the issue. Be polite in your response, and be clear about the facts that you dispute.
  3. Consult with an attorney.Dealing with legal issues like this, it is a good idea to have professional advice and support. If you can afford an attorney, or if you can reach out to a legal aid service, you should do so. It is an unfair fact of life that if an attorney calls a creditor on your behalf, the creditor is more likely to respond favorably and reasonably. If you call on your own, you are more likely to get bullied.
  4. Contact the creditor and make an offer of settlement.Depending on who the creditor is and the amount that is in dispute, you may choose to make contact by telephone, or in writing. If you make your initial contact by telephone, you should always confirm whatever was said in writing.
    • For example, if your landlord has sent a demand for one month’s rent, this is a fairly small matter. You may be able to call the landlord on the phone, discuss the issue, and reach an agreement.
    • If the demand is from a company collecting on a ,000 past due credit card bill, that is another matter. For that amount, you should put your response in writing. If you are represented by an attorney, the attorney may contact the collection office directly to discuss the debt, but if you call on your own you are not likely to be treated favorably. Keep it in writing.
  5. Get a receipt or signed settlement agreement.If you resolve the demand, whether for full payment, partial payment, or even no payment (if the creditor agrees that you do not owe the money), make sure that you get something in writing. You don’t want this coming back up again in a year and have to deal with it all again.

Responding to the Lawsuit

  1. Prepare an answer to the complaint.Even while you are attempting to negotiate a resolution to the debt, if the creditor filed a complaint against you for collection, you should begin preparing an answer to the complaint. In most states, you have only 20 or 30 days to file your answer with the court.If you do not file an answer within the time limit, the creditor could get a default judgment against you, and you will lose any further opportunity to challenge the claim.
  2. Respond to each allegation of the complaint.The complaint should be written in a format that makes individual legal statements in individually numbered paragraphs. In your answer, you should follow the same numbering system and respond briefly and clearly to each allegation. In some cases, your responses may be as brief as “Admitted” or “Denied.” If you have something to add in response, you may do so.
  3. Present any affirmative defenses to the demand.The answer is also your time to raise what are called affirmative defenses. These are your reasons, beyond simply admitting or denying the plaintiff’s allegations, to support your assertion that you do not owe the debt. Some standard affirmative defenses are:
    • There has been an accord and satisfaction. In other words, this means that you believe the debt has been paid or settled already. Provide the facts that support your defense--when you paid it, how much you paid, and who received the payment.
    • Failure of consideration. This is a legal phrase in contract law that means the plaintiff did not give what he or she was supposed to give in exchange for your debt.
    • Statute of limitations. This may be the most commonly used defense. If the debt is very old, the plaintiff may have lost the opportunity to collect in court. The time for a creditor to collect on most credit cards or contracts varies from state to state, but generally ranges from 3 years up to 10 years. If the time has passed since your debt was due, you may be able to raise this defense.
  4. Serve the plaintiff with your answer and file a copy at the clerk’s office.Make sure that you deliver a copy of your answer to the plaintiff within the time limit set by your court's rules. The summons that you received with the initial complaint should have the date for your response. Keep a signed copy for your files as well.

Proceeding with the Lawsuit

  1. Conduct discovery.Discovery is a portion of the lawsuit when each side has the opportunity to ask the other for information about the case. Contrary to what happens in the movies and on television, there are not supposed to be any surprises for anyone when a case gets to trial. During the discovery phase, the parties are allowed to ask each other questions, review documents and evidence, and interview witnesses.
    • The citations in this section are generally to the Federal Rules of Civil Procedure. This is the set of rules that directs trial preparation in federal court. Each state has a similar set of Rules of Civil Procedure. You should become familiar with the set of rules that controls the court where your case is filed.
  2. Send interrogatories to learn about your opponent’s case.You have the opportunity to ask your opponent 25 to 30 questions about the case. These should be questions that are designed to learn about the evidence your opponent has, the witnesses he or she intends to call at trial, and anything else that you need to know in order to prepare your defense.Some typical questions to pose as interrogatories may be:
    • ”What contracts do you have that create an obligation by the defendant? Identify each contract by its date, the names of the parties signing it, and a brief description of its purpose.”
    • ”Identify all witnesses you intend to present at trial, giving their name, occupation, relation to the plaintiff, and a brief description of their testimony relative to this case.”
  3. Use document requests to get copies of relevant paperwork.In most jurisdictions, you are allowed to make an unlimited (within reason) request for the plaintiff to provide you with copies of documents. The plaintiff has 30 days to respond to your request.
    • A sample document request might be, “Provide the original and any copies of all contracts you have that you claim create an obligation by the defendant.” Whether you actually need the original is up to you and your attorney. In some cases, if the veracity of your signature is an issue, for example, you may actually want to examine the original, analyze the ink, etc.
  4. Consider taking a deposition, if you think it will help.A deposition is your opportunity to call in a witness or a party to the case and directly ask questions in person. This is useful, if there is someone who is likely to have a great deal of information about the case, beyond what you can ask in 30 interrogatories. A deposition can be expensive, however, because you need to pay for a court stenographer to record a transcript of the deposition, and this can cost several hundred dollars. Before taking this step, have in mind what you expect to get from it, and make sure that it is worth the time and expense.
  5. Respond to your opponent’s discovery requests on time.At the same time that you are preparing your case and sending discovery requests (if you choose to do so), your opponent may be sending the same sorts of requests to you. Be sure to reply to them in a timely fashion. If you fail to respond by the deadline, the court may impose sanctions against you. Possible sanctions are monetary fines, an order finding you in contempt of court, or you may lose the opportunity to present certain issues in your defense at trial. Do not treat discovery requests lightly.
  6. Prepare for trial after discovery is completed.After your discovery is complete, you will likely get a notice from the court for a pre-trial meeting or pre-trial conference. This is a time for you and the plaintiff to meet with the judge and plan the trial. You will each be prompted to present lists of evidence and witnesses, and to prepare an agreed statement of the legal and factual issues that are to be decided at the trial. This is often a good opportunity for a final settlement to take place.
  7. Go to trial.At the trial, the plaintiff will present his facts and evidence, and then you will present yours. Depending on the court you are in, there may or may not be a jury and may or may not be opening statements. If it is just a small claims court, then you will each just present your information and whatever evidence you have. But if the amount of the dispute is larger, you could be in a higher level court with more formalities. At the end of the trial, the judge or jury will declare its decision.
  8. Deal with a negative judgment as soon as you can.If you won the trial and got the debt erased, congratulations. However, if the decision goes against you, then instead of a “regular” debt, you will have a formal court judgment against you. If you can, you should pay it as soon as you can. Under some circumstances, your debt may begin accruing interest right away.A judgment remains valid for collection for up to 20 years, depending on the state where it issued.
  9. Consider a post-judgment settlement.Once a judgment has entered against you, your chances of convincing the creditor to accept less than full payment will generally drop. A creditor with a judgment has more power to seize any non-exempt assets you may own, including bank accounts, property, cars or other things. If you can come up with a settlement, you may be able to prevent this. Depending on your financial status, a reasonable creditor may be willing to accept a reasonable settlement. If you have limited assets or limited earnings, the creditor may realize that there are limits to collection. Contact the creditor again and offer to make some payment on the judgment. The creditor may be willing to accept a payment plan over time, if it is reasonable.

Considering Bankruptcy

  1. Weigh the strength of your legal defenses.When you get either a demand or a complaint from a creditor, you need to consider the validity of the demand. If it is a valid claim, then fighting the demand in court may be little more than a waste of time. You might need to file bankruptcy to discharge the debt, along with others that you owe.
  2. Compare your overall assets and liabilities.In many cases, a single demand from a single creditor is often just the tip of the iceberg, with additional, similar demands to come soon. You need to take a realistic look at your assets and your debts. Add up everything you own -- house, car, valuable personal property, cash in bank accounts. Then make a list of all your debts -- college loans, other personal loans, car loan, home mortgage, outstanding credit card bills. If the debts outweigh the assets, then it may be a good idea to consider filing bankruptcy.
  3. Consult with a bankruptcy attorney.Bankruptcy is a fairly straightforward legal process, but it is always a good idea to enlist the help of a professional. If you have not hired an attorney yet, this may be a good time to do so. If you do not know someone, you may be able to contact the bankruptcy court clerk’s office. They sometimes maintain a list of attorneys who take cases on referral or who provide free or reduced-fee legal services.
  4. Prepare the paperwork to file your bankruptcy petition.There is a lengthy packet of papers that you must complete and file to start a bankruptcy case. They consist of a single page called the “bankruptcy petition,” and then several “schedules,” which list your assets, your creditors, your outstanding loans, and other financial information. The forms are all available at .
  5. Participate with the trustee and get your discharge.The trustee is someone appointed by the court to review your filing, challenge any inaccuracies or misinformation, and determine whether you are entitled to receive your discharge. The discharge is the final order that erases your debts. As long as you are honest and cooperative, you will likely receive your discharge within a few months.
  6. Understand the repercussions of bankruptcy.The positive outcome of a bankruptcy filing is that your debts, in most cases, will be discharged. You will have what is called a “fresh start” and will no longer owe the debts that you had before. Your credit rating will likely take a negative drop. However, many people see their credit score actually begin to rise again soon after bankruptcy, because, with all your old debts gone, you become a better credit risk again. It is up to you not to repeat what happened before.

Community Q&A

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  1. Know your rights. The Fair Debt Collection Practices Act governs debt collection practices. Collectors may not call you before 8 a.m. or after 9 p.m. They may not contact you while you are at work if they know that your employer doesn't allow personal calls. They may not harass you, lie to you, perform unfair practices against you, and if you put a formal request into writing to them to quit contacting you, they must honor it. If a creditor intentionally violates any of these conditions, you may be able to use that as a defense against payment.

Video: 3 Tips for Drafting the Answer in a Debt Collection Lawsuit

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