If a creditor has named you in a lawsuit, or you have been informed by them that they plan to sue you, you should contact a debt lawsuit lawyer. Your lawyer can help you determine the best way to stop debt collectors from negatively affecting your life. Our experienced attorneys at Cleveland Bankruptcy Attorneys know how to stop lawsuits related to debt.
How Filing for Bankruptcy Can Help Stop Lawsuits
You may think because you’ve been served with a lawsuit that it’s too late to do anything to stop it. In fact, you can file for bankruptcy and include the debt from the lawsuit, even if you’ve been served and have a pending court date. Bankruptcy can stop a lawsuit in two ways:
- Bankruptcy puts a hold on the lawsuit. After you file, the court will issue an automatic stay to all of your creditors. The automatic stay prevents them from attempting to collect debts from you while your bankruptcy case is being processed. The stay also pertains to lawsuits and judgments. Debt collectors who sue you can ask the bankruptcy court for permission to continue their suit, but it’s unlikely that a debt collector will be able to convince the court that they have a good enough reason to have the stay lifted.
- Bankruptcy discharges the debt. If a debt collector is suing you for nonpayment of a credit card, medical bill, or other form of unsecure debt, you can get that debt discharged with a Chapter 7 bankruptcy. Once the debt is discharged, the creditor will have no reason to continue the lawsuit. If you decide to file for Chapter 13 bankruptcy, your debt may become part of your repayment plan instead of being discharged. In this case, the debt is paid off over three to five years, so the debt collector will no longer need to contact you for payment.
What to Do If You Are Served with A Lawsuit
If you’ve received a complaint from a debt collection agency, there are a few things you should do to protect yourself:
Contact an attorney. Debt lawsuit attorneys have considerable experience dealing with debt collectors so they likely will be more familiar with the court process than you. An attorney can help you respond and file the correct documents. Being represented by legal counsel also shows the debt collector that you’re ready to fight the suit. You may think you can’t afford a lawyer since you’re already in debt, but if you consider that a debt collector may go after you not only for the past due amount, but also court costs and attorney’s fees, hiring legal representation may actually save you money in the end.
Respond to the complaint. Being served with a lawsuit can be intimidating. You may be afraid to make the wrong move and therefore decide it’s best not to do anything. But it is imperative that you respond to the lawsuit. Failure to do so could result in the debt collector asking for a default judgment against you. If the court grants the judgment, the debt collector may be permitted to collect funds by:
- Garnishing your wages
- Putting a lien on your property
- Garnishing or possibly even freezing funds in your checking or savings accounts
Your response does not have to be very long, but it does need to be filed with the court within the timeframe permitted. It’s a good idea to refrain from admitting fault in your answer, or even saying you cannot afford to pay the debt. Admitting fault or inability to pay puts the onus on you and doesn’t force the debt collector to prove their case.
Question the validity of the lawsuit. When they file a suit, debt collectors are usually hoping you either don’t respond, or you don’t ask them to prove you owe the debt. That’s because a debt collection agency is a third party who has purchased the debt, either from the original creditor or from another agency. They are required to get all the paperwork that dates back to the original bill, so they usually just have bits and pieces of information. Ask for proof of the original debt – if they can’t provide it, their case will lose major credibility.
Consider the statute of limitations. Once a debt gets too old, it’s beyond a state’s statute of limitations, which means a creditor cannot bring a suit against you for payment. Because the debt collector likely purchased the debt, they may not actually know the original date it went into collections. If you can show the debt has reached the statute of limitations, your case can be dismissed.
File a countersuit. Bill collectors are regulated by the Fair Debt Collection Practices Act (FDCPA), which imposes strict rules on how they may interact with consumers. If you’re being contacted by a debt collector who is calling at all hours of the day, using vulgar language or threats to force you to pay, or calling you at work even after you’ve told them to stop, they aren’t adhering to these laws. You can file a countersuit against a collector for violating the FDCPA, and you’re entitled to receive damages. If you’re considering this option, you may want to hire an attorney who can discuss your issues and help determine if you have a case.
File for bankruptcy. Obviously, you won’t want to file for bankruptcy if you owe a small amount to a single debt collector. But chances are, if you can’t pay one debt, you may also be having trouble paying other financial obligations. Filing for bankruptcy can relieve you of all these burdens at once.
Speak to a Cleveland Bankruptcy Lawyer
Trying to stop lawsuits from debt collectors can be stressful, but you don’t have to do it alone. The bankruptcy law attorneys at Cleveland Bankruptcy Attorneys have experience dealing with these agencies, and they can work with you to get the best possible outcome for your case. For a free consultation, contact us online or call us at (216) 586-6600.