#1 - What can you do if you are sued by a collection agency?


The biggest mistake borrowers make when they are sued for a debt is failing to respond to the notice, which frequently arrives in the form of a “summons and complaint.” If you owe the debt and can’t pay it, then you may be coninced that their is not much you can do. If you do not give a response, however, the collection agency will get a default judgment against you. That opens up new avenues of collection for them, including wage garnishment or the ability to take money from your bank account, depending on state law. Not only that, but the collector may be able to add attorney’s fees, court costs, or interest to the balance. In some cases, the balance can double or triple due to these additional costs.

Responding to a debt collection lawsuit is a must. “Even if you owe the plaintiff money, a two-sentence response denying liability to the lawsuit filed in court will likely lead to a negotiated settlement that will save you money,” advises Ginsberg. “If you do respond and force them to work, they will either back down or offer a settlement on favorable terms.” He also implies that it is not sufficient to simply send a letter to the plaintiff (the person bringing the lawsuit). “You must file your response to the lawsuit, called an “Answer,” in the court where you were sued within the amount of time to respond — usually 20 to 30 days after service — and you need to send a file stamped copy of your answer to the plaintiff’s lawyer.” You can get a file stamped copy from the court where you filed the answer.

When you do respond, don’t just state that you can’t afford to pay the debt. “If you admit liability then 90% of the fight is over and they are not forced to prove their case,” warns Billy Howard, attorney and head of the consumer protection division of Morgan & Morgan. He likens it to a criminal case where the defendant says, “I did it!

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