What You Should Do If a Creditor Sues You

What to Do If a Creditor Sues

Receiving notice you’re being sued by a creditor can be one of the most frightening experiences you’ll ever have. Suddenly those letters and calls you’ve been receiving have some weight behind them and you’ll have no choice but to take action.

If you’ve been hiding from or ignoring your debt issues up to this point, now is the time to take things seriously. Failing to do so will result in the court finding in favor of the creditor and you’ll automatically face severe consequences.

Make Sure the Lawsuit – and the Debt – is Valid

First things first, don’t panic. Just because you’re being sued doesn’t mean you’ve lost all of your power. You have fewer options now, but you still have options.

Begin by reviewing the paperwork you’ve received regarding the lawsuit. Identify the parties to the suit and make sure you understand who is filing the lawsuit against you.

Is the plaintiff listed in the documents one you recognize as a creditor? If not, does the complaint explain how the plaintiff has come to have the power to file a case against you? Debt can be passed around, so it might take a bit of investigating to determine whether the complaint against you is legitimate.

Note the date you received the notice of the lawsuit from the process server. In most cases, you’ll have only 30 days to respond to the lawsuit, so you need to act relatively fast. If you fail to meet this deadline you’ll lose the case.

Next, You’ll Want to Investigate the Debt.

Assuming it’s legitimate, you’ll want to check the last activity on the account. If the last activity took place years ago there’s a chance the creditor or collector has lost its chance to collect on the debt. Each state has a statute of limitations that prevents collection after a certain period of time. So, for instance, in Florida, the statute of limitations is five years and if you’ve done nothing with the account in five years the collector cannot force you to pay.

If you just received service of a lawsuit on a debt you last made a payment on in 2010, the statute of limitations has passed and you are no longer obligated to pay. All you need to do is file an answer to the lawsuit proving the statute of limitations has passed and you’ll win the suit. To learn more about the statute of limitations on debt collectors, check out this information from The Balance.

Paying anything on debt beyond its statute of limitations reactivates the time frame collectors have to come after you. Avoid doing this at all costs.

Filing Your Answer

Now that you’re familiar with the complaint against you, it’s time to file your answer. Your attorney can help you with this step.

Contesting the lawsuit slows the creditor’s effort to be granted a judgment, so even if you know you are responsible for the debt it’s still important to answer. Doing so buys you time. Filing an answer can also put you in a better position to negotiate a settlement and gather the funds to make a payment.

What’s Next?

Once you’ve taken care of filing your response and come up with a general plan for dealing with this specific debt, it’s time to assess your overall situation.

Was this lawsuit just a single misstep on a credit card that got out of hand or is it a symptom of a growing debt problem? Are additional lawsuits likely to follow? Has an account already been levied?

You might need to take more drastic action than simply responding to this lawsuit and resolving this single matter.

For more information on what to do if you are sued for what you owe on a debt or if you are concerned your financial situation is out of control, contact the Bankruptcy Law Offices of Robert M. Geller at 813-254-5696 for a free consultation.