The average American has about $38 million in personal debt.
First things first, taking out a loan isn’t a bad thing. Debt is an effective way to build credit, sort out financial emergencies, and pay for big-ticket items such as a car, education, and a house.
However, things can take a nasty turn if you’re unable to service your loans. A lender can sell your account to a debt collection agency. The agency will attempt to collect the debt, but if their efforts fail, they can sue you.
So, if you’re facing a debt collector lawsuit, you now know how it came about. But what are your options?
Keep reading for more insight.
Do Not Ignore a Debt Collector Lawsuit
If you’ve never been sued before, it’s easy to dismiss a lawsuit against you, especially if it has nothing to do with criminal charges or impending arrest. Don’t do this.
A lawsuit means the matter is before a court of law. It’s not going to go away on its own. Neither is the plaintiff going to withdraw it because you aren’t responsive.
What’s more, ignoring the suit could cause the court to issue a default judgment against you. This is a classic example of silence being an admission of guilt.
With the judgment, the collection agency will likely have the legal authority to take more drastic recovery measures, such as garnishing your wages.
Hire a Debt Defense Attorney
You probably have no idea about the process of filing lawsuit responses. This is why you need to hire a debt defense attorney as soon as you know that you’re being sued.
An attorney will evaluate the suit, establish the merits of the case, and file a suitable response on your behalf. They will even challenge the debt collection company’s right to sue you, considering the fact that you have no credit agreement with them.
Sure, spending money on an attorney when you’re struggling to pay a debt doesn’t look like a financially prudent move, but it’s the right thing to do. An attorney will offer you adequate legal protection from a debt collection lawsuit. You’ll have the peace of mind you need to get your act together.
Take Note of Unfair Collection Practices
Debt collection agencies have a reputation for relentlessly hounding down their debtors. While they might have a legal right to collect what you owe, they must do it in accordance with the Fair Debt Collection Practices Act.
As such, it’s important to pay attention to the collector’s practices. If they have been calling you before 8 a.m. or past 8 p.m., published your personal details anywhere, or harassed you in any way, you might have a case against them. You can also file a complaint against them with the Consumer Financial Protection Bureau.
Know How to Handle a Debt Collector Lawsuit
Facing a debt collector lawsuit isn’t an ideal situation to be in. You’re certainly already stressed by your inability to pay up what you owe. However, things can spiral out of your control.
But here’s the thing. A lawsuit against you isn’t cast in stone. With the tips fleshed out above, you can fend it off successfully.
Good luck and keep reading our blog for more tips and hacks on personal finance.
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