Wondering if you can get a debt lawsuit dismissed? Know your rights
If you’ve been served with a debt lawsuit, you have two options.
Option 1: Panic and hand over all your bank details and risk being scammed.
Option 2: Conduct proper due diligence to ensure the debt collector is making a legitimate claim. And if so, explore potential ways to challenge that suit.
If your choice is Option 2, read on to learn your rights—as well as things to do and NOT do in this situation.
A brief explanation of what a debt lawsuit is
A debt collector is a company or person hired by a creditor to collect a debt.
They may reach out via phone, email, or mail to demand payment, but they are prohibited from using violent threats or contacting you at inconvenient hours.
Debt collectors often resort to lawsuits as a tactic to collect outstanding debts.
Ignoring them can have dire consequences, like bank account freezes, taking money directly from your paycheck, or even seizing your property.
To protect your rights and financial interests, respond quickly to the lawsuit. If you don't, you might not be able to argue the debt isn't valid or that you’ve already paid it.
Depending on your situation, you could argue the debt collector has violated your rights, or ask for more time to pay. The case will only go to trial if you cannot reach an agreement.
Valid reasons to get a debt lawsuit dismissed
It is possible to challenge the claims made in a debt lawsuit under the following conditions:
- You don't owe the debt: The debt might be a case of mistaken identity or identity theft.
- You have already paid the debt: Sometimes debt collectors fail to record payments correctly.
- The statute of limitations has passed: The time limit when a creditor can sue you has passed.
- Violation of consumer protection laws: The creditor or debt collector has violated the Fair Debt Collection Practices Act (FDCPA) or other consumer protection laws.
- Bankruptcy: You cannot pay the debt and wish to negotiate a settlement with the lender or file for bankruptcy and have the debt discharged.
How to get a debt lawsuit dismissed: the process
The process of getting a debt lawsuit dismissed rests on the legitimacy of the claims made in the lawsuit.
1. Consider Legal Help
Hiring a debt collection attorney can be beneficial because they know your rights, will represent you in court, and will skillfully negotiate a settlement on your behalf.
Many attorneys offer free consultations, and low-cost legal options are available. Ultimately, it depends on the amount of your debt, your financial situation, and comfort level handling legal matters.
Determine if the debt claim is legitimate
2. Check the statute of limitations in your state
The statute of limitations is a law that sets a deadline for filing a lawsuit. If it's expired, you are not obligated to pay the outstanding debt, and the court will dismiss the case.
3. Negotiate a settlement
Instead of going to court, you can negotiate a repayment plan with the debt collector. In this scenario, it's possible to negotiate reduced payments.
Out-of-court settlements save time and money for both parties and, most important, protect your credit score.
4. File for bankruptcy
If you are unable to pay your debt, you can file for:
- Chapter 7 bankruptcy: Your assets are sold off to pay creditors but you are allowed to keep your home, car, and certain personal belongings.
- Chapter 13 bankruptcy: The court formulates a debt reorganization plan whereby you get to keep your assets and pay your debt back over three to five years.
Be aware that bankruptcy lowers your credit score and can prevent you from borrowing money in the future. It's a drastic step that should be considered only as a last resort.
What to do if the debt claim is illegitimate
In a debt collection lawsuit, the debt collector has to prove you owe the debt and that they are entitled to collect. You, on the other hand, must raise doubt about the collector's claims.
Request proof of debt ownership
If you suspect the debt is illegitimate, ask the debt collector to provide documentation that proves you have debt, such as:
- The original creditor's name and address
- The original creditor's account number
- A copy of the original contract
- The date the debt was incurred
- The original terms of the debt
Failure to provide this documentation means you can dispute the debt.
Dispute the debt
The next step is to send a dispute letter to the address the debt collector provided you. Do this within 30 days of receiving their contact information; otherwise, they will assume the debt is valid.
A dispute letter can sometimes end the matter, especially if there's no proof you owe the debt or if it's a scam. You might never hear from them again, but you should keep a copy of the letter and track its delivery.
What not to do during a debt lawsuit
- Don't apologize: Debt collectors can use any statements you make against you in court. If they call, do not explain yourself, even if you are behind on payments. Just take notes and politely thank them for informing you.
- Don’t share bank account details: Voluntarily sharing your bank account details exposes you to the risk that the debt collector will directly withdraw money from your account. This can complicate debt management and result in serious repercussions, especially if the collector is fraudulent.
- Don't ignore the lawsuit: Ignoring the lawsuit will likely result in the judge siding with the creditor, leaving you powerless to plead your case and change its outcome.
Review your options and don't panic
A proactive approach to negotiating and communicating with creditors is essential to getting your debt lawsuit dismissed.
Understanding the legal process empowers you to effectively navigate the situation and make compelling arguments to protect your interests.
For more in-depth information on how to get a debt lawsuit dismissed, visit the Consumer Protection Financial Bureau.