Collection Lawsuit Defense: Best Practices

Collection Lawsuit Defense: Best Practices

Many aren’t aware of collection lawsuits until it comes time to address them. By being proactive, you’ll set yourself up for success if you experience a similar situation in the future. Let’s go over collection lawsuit defense best practices.

How Collection Lawsuit Defense Works

When a debt collector or creditor doesn’t receive payment according to the terms of a credit agreement, they can file a debt collection lawsuit against the debtor. However, few people know that this is a breach-of-contract lawsuit asking for a court to intervene and award a judgment and can come with additional claims and consequences.

If you have been served with notice that this type of lawsuit has been filed against you, do not ignore it. Instead, you should contact an experienced judgment collection attorney near you right away to discuss your lawsuit defense.

There are strict timeframes and procedures involved in debt collection lawsuits, and it is essential to take them seriously to protect your rights. You may be wondering, ‘how can a collection lawsuit defense lawyer near me help after I have already been sued’ or ‘what can a collection lawsuit defense lawyer do when I already am in debt?’

The answer is that there is hope, and your competent collection lawsuit debt attorney may be able to negotiate a settlement of your case without them (or you!) ever having to see the inside of a courtroom. Below, we discuss some best practices for dealing with debt collection lawsuits.

Best Practice #1: Answer the Lawsuit

The number one mistake borrowers make when they are sued for a debt is failing to respond to the lawsuit, which usually arrives in the form of a “summons and complaint.” Unfortunately, just because you can’t pay the debt doesn’t mean you don’t have to participate in the lawsuit. In fact, if you fail to respond, the debt holder or collection agency can obtain a default judgment against you. With this default judgment in hand, they will be able to apply for garnishment of your wages, liens on real estate and personal property you own, levies on your bank accounts, and more. Worse yet, the collector may be able to add attorney’s fees, court costs, or interest to the balance.

Once the plaintiff files a lawsuit, the matter is put before the Court, and you have to respond via legal pleadings called an Answer or a Motion to Dismiss. Remember these tips when it comes time to respond:

  • Don’t admit liability for the debt; instead, force the creditor to prove the debt and your responsibility for it.
  • File the Answer or Motion with the Clerk of Court, pay all fees, and make sure to request a stamped copy of your pleading.
  • Send the stamped copy certified mail to the plaintiff.

Best Practice #2: Make the Plaintiff Prove the Case

One way to respond to a debt lawsuit is to challenge the plaintiff’s right to file the lawsuit, the jurisdiction, or the legal basis of the suit.

By the time a debt reaches the point of someone suing you, it may have been years since you last were able to make a payment. During this time, your debt has potentially been sold – once, twice, or many times over – to a revolving door of banks, buyers, and even to law firms. The entity that owns the debt today is legally required to prove that they have a right to sue you by verifying the chain of ownership.

The burden of proof remains on the plaintiff, who must prove that you owe the claimed amount. For example, suppose a collection agency is suing you for $4,000 related to a credit card account. In that case, you should ask for documentation that starts with the opening of your account and ends with the last activity on the account. The goal is to demand that the plaintiff accounts for every dollar they say you owe by showing:

  • The balance was increased when you made purchases.
  • The balance was increased via fees and charges that were a part of the original credit agreement signed by you. If you didn’t agree to fees, they don’t have the standing to sue you for them.
  • The current balance is accurate and reflects all previous payments and adjustments.

Accounts often change hands multiple times before a lawsuit occurs. Therefore, it’s not uncommon for this type of documentation to be impossible for creditors to drum up in a timely manner. This can result in a dismissal of the lawsuit or an agreement for a settlement at a much lower total (discussed more below).

Collection Lawsuit Defense

Judges won’t ask for information proving the plaintiff’s case; that must be part of your collection lawsuit defense strategy. However, if you ask for information through discovery or during a hearing, the judge will likely back your request.

Best Practice #3: Settle Out of Court

Many if not most creditor lawsuits are resolved before ever reaching the dramatic heights of films like “A Few Good Men” or “The Rainmaker.” In fact, the notion of a debtor and debt settlement attorney screaming in a courtroom over which of them can “handle the truth” is closer to a parody than reality.

The reality is that debt settlement is a volume business for creditor attorneys who are often more than happy to accept a reasonable offer and preserve the court’s time and resources.

With that in mind, here are some techniques for debtors when making a settlement offer:

  • Start with a lower offer with a higher offer in mind, hoping to reach a middle ground.
  • Offer a lump sum in exchange for the best payment terms.
  • Come to the table with payment plan suggestions over months or years, and only promise to make payments you can realistically cover.
  • Warn the potential for bankruptcy if the debt can’t be resolved.
  • Only make payment through a secure third party, like a money order or through your attorney. You do not want the creditor to know where you live or work, as this could lead to unpleasant calls and embarrassing consequences.

Best Practice #4: Learn Your Statutes of Limitation (They Might Be Your Best Friend)

Statutes of limitations govern how much time creditors must bring a lawsuit regarding a debt. The rules vary by state and specific situation, but in Texas, a creditor usually has four years from the time of the last payment to bring an action.

This means that yet another weapon in your collection lawsuit defense arsenal might be the defense of the statute of limitations having run out for the creditor.

Finding the Best Collection Lawsuit Defense Near You

When facing a collections lawsuit, you will need Texas lawyers who possess the right knowledge and resources to help your defense. For the best collection lawsuit defense near you, contact us online today or call us at 713-775-3050  to discuss your case.

Phone: 713-775-3050
Fax: 713-929-2019
Houston, TX 77002
440 Louisiana, Suite 1440