What to Do if a Debt Collector Tries to Sue You
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What to Do if a Debt Collector Tries to Sue You

The phone rings and it’s a call about a credit card debt you forgot about long ago. Soon after, you learn you’re being sued. “Typically, a creditor or debt collector will sue when a debt is very delinquent, usually 120 or 180 days late,” says Gerri Detweiler, personal finance expert for Credit.com and author of the book Debt Collection Answers (Ultimate Credit Solutions Inc.; $14.95).

If you owe a large amount or if the debt is reaching its statute of limitations (past the number of years when a debt collector could sue you and win in court), a collector may be more likely to sue. “Once the statute of limitations on a debt has expired, depending on state law, they either can’t sue you, or if they sue, you can tell the court the debt is too old, and they would lose the lawsuit,” says Detweiler.

A creditor may also be more likely to sue if you’ve sent a cease communication letter. It’s your right under the Fair Debt Collection Practices Act to write a letter to a debt collector stating you don’t wish to be contacted. Be aware, though, that such a missive could trigger a lawsuit. “It leaves them with no other option but to sue you because they can’t call you, talk to you, or try to work something out,” says Detweiler. So unless you know for sure you don’t owe the debt and there’s nothing they can go after, use caution when sending this type of letter.

So, what should you do if you’re sued?

Consult an attorney
Many attorneys will provide a free or reduced-cost initial consultation. It is recommended that consumers at least talk to an attorney with expertise in representing consumers in debt collection cases, according to Detweiler and Sonya Smith-Valentine, a consumer rights attorney and author of the forthcoming book, How to Have a Love Affair with Your Credit Report. “Bankruptcy attorneys are familiar with the debt collection lawsuit process. They understand what happens if a collector enters a judgment against you. They’ll also know what property is safe from creditors and what’s not,” says Detweiler. At the National Association of Consumer Advocates website (www.naca.net/find-attorney), you can search for an attorney by area of expertise as well as location.

Organize your documents
In order to prove that your debt is past the statute of limitations, have available the last six months (at least) of payment statements before you stopped paying. “This will show where the statute of limitations should be calculated,” says Smith-Valentine. She notes that a credit report by itself is inadequate to prove that a debt is past the statute of limitations. “You need to have information regarding when payments were last made on the account provided directly from the creditor, not a third party,” she says.

Show up in court
“If you don’t, the court might issue a judgment against you for the amount the collector is suing you. Consequently, the collector can attempt to garnish your wages or freeze your bank account,” says Smith-Valentine.

Sometimes you can work out a settlement or payment plan if you’re sued. “However, if you come to an agreement, make sure you get it in writing before you pay, and confirm with the court that the debt collector has dropped the lawsuit,” says Detweiler.