Updated: Dec 9, 2020
The information below is for education and marketing purposes only. In no way it is intended to provide legal advice or create a client-attorney relationship. Should you have a question regarding the content or your situation, please contact a lawyer.
This article explains some of the basics in dealing with two common types of debt collection scenarios: 1) you are being sued in court over some money that you allegedly owe; and 2) collections agencies are contacting you in regards to an existing debt.
Handling a Lawsuit Against You
While this article cannot possibly offer a complete guide to defending a lawsuit, it is important to highlight a couple of basic legal principles that anyone who is being sued should be aware. You must typically respond to the suit within 30 days after the day on which you are served with notice of the lawsuit. It is therefore important that you act quickly to determine how you want to respond and obtain any legal advice that you may want to seek. Waiting until the last minute before the deadline will mean that you have less options on what strategy you choose to pursue, and any legal assistance that you obtain may be rushed.
The reason that filing a response is so important is because, if you fail to respond, the person suing you will automatically win the lawsuit. You can have the best arguments in the world as to why the person suing you is wrong and you do not owe the money, but if you don’t respond within the time window, you will never get the chance to make those arguments to the court – you will have already lost. The other party will essentially be able to proceed without you, and their claims will be deemed true without giving you an opportunity to tell your side of the story. Even if the basis for the lawsuit is entirely valid, you will want to make sure the other party plays fairly and does not claim more than the legitimate debt amount.
No matter how frustrating or silly you find a lawsuit against you, it is absolutely crucial that you do not ignore it. Hire an attorney if you can, or, at a minimum, represent yourself in contesting the lawsuit. Even poor representation is better than handing the opposing party a win without putting up any fight at all.
How to Deal With Collection Agencies
Whether or not you followed the advice above, you may still find yourself in a situation where collection agencies are contacting you to try and retrieve some money for a debt you owe. This can be annoying and stressful, having to constantly receive harassing and bothersome calls or other contacts, but it can also severely impact your credit rating and your ability to secure loans, housing, or even employment in certain fields. For these reasons, it is important that you take each opportunity available to you to deal with the alleged debts, whether or not you believe they are valid.
The first step in dealing with debt collectors should often be to contact the collector directly and notify them that you are officially contesting the debt. At a minimum, you can force the collector to turn over the details of the debt, showing that they are not just scammers fishing for information about you. The supporting details should give you an idea of how much you owe, for what, and help you to develop possible ways to further contest the validity of the debt. In some cases, it is even possible that the collectors will be unable to come up with the supporting documentation for the debt, at which point they may be forced to cancel the underlying debt altogether.
Even if the debt is valid and supported by appropriate documentation, contesting the debt can press pause on the collection agency’s efforts to contact you for payment until the debt is verified and supporting documentation is produced. Contacts by the collection agency can also be limited by request of the debtor, such as limiting the time of day at which the agency will attempt to contact you, or specifying the manner in which you are contacted. Creditors have restrictions on the ways in which they are allowed to pursue debts, and respecting certain reasonable requests by the debtor is one such limitation.
Debtors may report the collection agency for any violations of law. As noted above, debt collectors do have limits on the ways in which they can attempt to collect a debt. For example, they cannot threaten to send you to jail for failure to pay, nor can they call at unreasonable hours that are likely to disturb you. Violations of these laws can be reported to the Nebraska Attorney General’s Office and / or the Federal Trade Commission. Violations of collection laws could lead to an award of money to you, but may require the assistance of an attorney to navigate and pursue.
If you do legitimately owe a debt and the collector acts properly and has all necessary supporting documentation, it is still important that you work to dispose of the debt, even when you do not have the funds to fully satisfy the money owed. Collection agencies typically purchase debts from the original creditor for a portion of the value of the original debt. Partially for this reason, it is often possible to negotiate a settlement of the debt for a portion of the amount of the original sum owed. It is always advisable to get such agreements in writing and document any payments.
If debt collectors have already begun enforcing the debt by seizing property, it is still important to make sure they comply with relevant laws. Creditors are limited by law in what types of property they are allowed to seize, and debtors have a right to claim certain property as exempt from those collection efforts. Again, it is important to act quickly in responding to these activities because there are time limits for when you are allowed to contest certain creditor actions, such as the seizure of property.
In any case, it is important to reach some type of agreement or discharge of the debt whenever possible. You may find it difficult to be approved for housing, to apply for lines of credit, or to obtain employment in certain areas if there are pending collection actions against you. Disposing of a claim may not erase it from your credit history altogether, but it will go a long way in showing that you do take your obligations seriously. A skilled attorney can help you navigate this process and may be able to save you money in the long run.