7 steps to take if you are sued by a debt collector

By itself, debt collection is no picnic. And it can get even worse if it results in legal action.

For some very unlucky borrowers, the nightmare of being sued by a debt collector is all too real.

If you’re the victim of a debt collector lawsuit, you must be prepared. You need to hit the ground running, and you need a game plan.

By the end of this article, you’ll know the steps you should take if you’ve been served, including the single most crucial piece of advice.

Seven steps to take if you are sued by a debt collector

Step 1: Act quickly

It’s critical to treat any lawsuit seriously and quickly. You only have a brief window of time to respond.

Delaying too long can result in a default judgment against you, in which case the court favors the collection agency. This can result in several consequences:

• Monetary liabilities: Default judgments often conclude with an order for the defendant (the borrower) to pay the plaintiff (collection agency) the dollar amount specified in the suit.

In addition to the principal, the amount will likely include interest, attorneys’ fees, and other costs deemed appropriate by the court.

• Property lien: A lien on the borrower’s home means it can’t be sold until the debt is satisfied.
• Wage garnishment: The judge may order a portion of the debtor’s paycheck to be regularly sent to the creditor until the debt is cleared.
• Credit impact: A default judgment will negatively impact a debtor’s credit score, sometimes for years.
• Bank levies: The court may freeze and seize money from the borrower’s bank accounts.

Step 2: Consult a professional

If you find yourself being sued by a debt collector, strongly consider professional help. Speak with an attorney specializing in consumer debt or work directly with an accredited debt relief company.

Step 3: Verify the debt

You need to make sure the debt is indeed yours. You also want to ensure all the details, such as the outstanding balances, are correct.

Fortunately, the Fair Debt Collection Practices Act (FDCPA) recognizes the importance of validation. If you’re unsure about a debt’s validity, you have the right to request confirmation.

This request must be delivered in writing. It must also be sent within 30 days of initial contact from the collection agency.

While a debt specialist can help you with the exact details, you’ll typically request the following:

• The amount of the debt
• Name of the original creditor
• Proof of assignment or purchase—this confirms that the collector has the right to collect the debt
• Evidence of how the owed amount was calculated (i.e., detailed account statements)
• Proof that the debt is within its statute of limitations

As part of the verification process, you’ll also want to...

• Collect your own details about the debt, e.g., payment records or old statements
• Request a copy of your credit report from the major agencies and inspect it for inaccuracies
• Document any communication with the collector, like the dates, times, and details of any phone calls or discussions

Step 4: File a response

If the lawsuit against you is inaccurate or the debt collector lacks proper documentation, file a response. Known as an “answer,” this is your official reply to the suit.

And, as with all matters regarding the lawsuit, the quicker, the better.

Step 5: Assert your rights

You have several rights as a consumer under the FDCPA. If the debt collector is found to be in violation of any of these rights, you may have grounds for a claim.

Some of the most important ones include:

• The right to be treated fairly and respectfully: A collector cannot use abusive or harassing language.
• The right to accuracy: Debt collectors cannot falsify documents. Details about the debt must be accurate and factual.
• The right to dispute the debt: Collectors must pause the collection process until written verification is delivered.
• The right to control communications: You can specify how and when the collector contacts you (i.e., on your mobile phone number between 4 PM and 6 PM Monday through Friday).

In fact, you even have the right to request they cease communications altogether.

Step 6: Negotiate

Sometimes, the collector may agree to a lower amount than the existing balance. Talk with a specialist to see if this option is suitable.

But don’t rush to negotiate a settlement before understanding its consequence. It can harm your credit score and trigger a taxable event. Still, it may be your best course of action.

Step 7: Prepare for court

If you didn’t settle in Step 6, it’s time to prepare for court.

Although a lawyer can assist with the finer details, you’ll likely need to gather supporting evidence and develop an understanding of the court procedures.

Remember, diligent preparation is vital. Thoroughly study the contents of the lawsuit and be mindful of any deadlines. Work closely with an attorney, research your defenses, and understand court etiquette (like dress code).

Consult with a professional

This step was briefly mention earlier, but it bears repeating in more detail: you are strongly encouraged to work with a consumer debt lawyer or an accredited debt relief company.

There are several ways their expertise can help:

• Professional guidance: An attorney or debt specialist can provide valuable advice unique to your situation.
• Debt validation: An expert can ensure you follow the debt validation process correctly.
• Negotiations: Attorneys and debt relief companies are trained and experienced negotiators. As a result, they can often achieve a more favorable outcome than you could on your own.
• Counterclaims: They can help you file a counterclaim if the debt collector violates your FDCPA rights.
• Education: Both lawyers and debt relief companies can educate you about your rights as a consumer. This will empower you to better fight back against any claims.
• Peace of mind: Professional help can reduce the stress and anxiety that a lawsuit can produce.

A lawsuit is no joke. It requires a level of expertise that nearly always justifies using a professional.

If you’re being sued by a debt collector, don’t panic. While it may feel like the world is ending, it’s not.

Just remember

Take swift action as soon you’re served. Consult with an expert before verifying the debt and filing a response. Ensure you understand your rights, and consider seeking a negotiated settlement.

If court is inevitable, prepare. Treat it as if you are going to war.

The better armed, the more likely the victory.