Can My Creditors or a Debt Collection Agency Sue Me?
If you have accounts that are in a state of default, don’t think that they will just go away. Most creditors will assign or sell your account to a debt collection agency that will attempt to get you to pay up. These agencies will call you at home, work, or may even contact relatives. If none of these tactics work, they can even take you to court over your liability.
The reason a debt collectors might sue you is to open up more legal options. Once a judgment is entered against you, creditors have the right to pursue garnishment of your wages. They can even place liens against your property. At this stage, “unsecured” loans are suddenly a threat to your paycheck and home. A deputy sheriff will accost you at home or work to give you a summons letter. This can all be very stressful, but you cannot afford to ignore this problem any longer.
A summons explains who is suing you and for what amount. You will have options. You can agree with the lawsuit, allowing a judgment to be entered against you. It is also possible to file an answer denying the plaintiff’s allegations and have a court date set for trial. Not filing an answer is the equivalent of forfeiting. If you decide to ignore it, you might as well just agree with the lawsuit because the end result will be the same. The best course of action is to file an answer and then prepare to defend yourself in court.
Make Creditors Prove That You Owe Them Money
The key to this type of lawsuit is ownership of the debt. If a creditor can prove that you owe it the money, then you will lose. However, defaulted debts often change hands many times. The original creditor sells it to a collection agency. It sells it to another after a while. Down the line, the debt will be sold to its final stop, a junk debt buyer. These are debt collection agencies specializing in trying to collect on old debts. They often acquire these debts for a fraction of the original value. according to NY Times They will use any tactic available to collect. This includes taking you to court. However, when an actual lawsuit is filed, quite a bit of time may have lapsed. Perhaps the debt passed the statute of limitations in your state. Perhaps the company suing you cannot prove that it owns the debt in the first place. You have every right to expect anyone taking you to court to prove that they own the debt, to begin with.
Defeat Collection Agencies in Court
On your trial date, expect the lawyer representing the collection agency to offer last ditch settlement. This is because they know that when it goes before a judge their chances of winning diminish. If the settlement works for you, take them up on it. However, don’t take a settlement because you are afraid to defend yourself. Once you are before the judge, demand to see proof of ownership of the debt. A printout from an agency is not proof. They need a sworn affidavit. Even if they have it, they still must prove that the title for the debt passed not just to them, but everyone before them. If all else fails, argue the statute of limitations has passed if this is true.
Remember, if the collection agency proves that you owe it, then a judgment in its favor is correct. However, if it cannot prove ownership or the debt is time-barred by law, you have the power to defeat these collection agencies in court, absolving you permanently.