It used to be that once a creditor charged off a debt as "bad debt" and wrote it off their books, the debt was done. No more, my friend.

Today, collecting on old and even "out of statute" debt is big business.

One large collection agency or "junk debt buyer" as they are commonly referred to, is purported to file an average of 279 credit card collection lawsuits per day!
 

That's 66,960 lawsuits from just one company! Scary.

A collection lawsuit is often a final attempt to collect a debt. If the harrasing and illegal phone calls were not enough, now you have Mr. Process Server knocking on your door!

The good news is that by the time these predatory debt collectors get to you, there's a good chance your debt is out of statute. The SOL on credit card debt can range from 3 to 10 years, the average seems to be about six years from the date of last activity (DOLA) or the last time you made a payment.

Can I just ignore the lawsuit?

No! Once a default judgment is entered (which is what happens when you do nothing) all of the potential defenses to the lawsuit are lost and the collector does not have to prove their case.

The collectors are literally banking on the fact that the majority of consumers do not respond. Default judgments are goldmines for creditors as it means they do not have to prove you owe the money, how much you owe and most importantly the agent for the credit card company or other creditor does not have to come to court.

A default judgment grants the creditor the right to garnish your wages, freeze a bank account and/or put a lien on your property.

How to Respond

You need to file what is called an "Answer". However, you have to be careful. In some jurisdictions all of the defendant's (you) affirmative defenses must be filed at the same time the original response is filed with the court or the defenses are lost forever.

An example of a defense to a debt lawsuit would be out-of-statute, statute of frauds, improper plaintiff, invalid debt transfer, and violation of the Fair Debt Collection Practices Act just to name a few.

You need to file an "Answer, Affirmative Defenses" document which will line-by-line answer each numbered paragraph in their complaint with an Affirm, Deny, or Lack Knowledge Of statement. You then go on to assert your defenses to their lawsuit.

This should usually be done on 28 lines pleading paper.

If you are sued, it's best to contact an attorney to help determine what defenses might be applicable. If you are unable to afford one, you can check your local legal aid office for help.

However, it is very possible to defend yourself (called being a Pro Se litigant) in this type of lawsuit. Many people I've corresponded with have successfully "Answered" their lawsuit and had their cases dropped. If you are proactive and fight these collectors head on, they often buckle and move on to the next "default" prospect.

You have nothing to lose by fighting them and everything to gain.  To find out more about Pro Se Word templates for fighting your lawsuit CLICK HERE!

I receive e-mails every week from people who have had the misfortune of receiving a summons notice on their doorstep or the joy of having a stranger sidle up to them and say, "You've been served."

Not fun. Oftentimes, these same people tell me that the first thing they did was to pick up the phone, call the collection agent or collection attorney in many cases and try to work out a payment plan or settlement agreement. This is WRONG, WRONG, WRONG.

Once you have been served a summons, this means that the collection agency is SUING YOU. You are being sued and the collection agency is now the Plaintiff and you are the Defendant. Any and ALL communication with the Plaintiff should be done via written correspondence only.

It's too late for "I'll send you $50 buck a month, I promise." Way too late. Now is the time to take responsibility for your financial future and face your fears (debt) head on. Even if the collector was to agree to a payment plan, they cannot be trusted. While you are "working it out" they could be in the process of putting a lien on your property and searching for your bank account information in order to seize your assets.

Here's what you need to do. First of all, DO NOT BE INTIMIDATED. This is difficult, after all I'm sure you feel badly about the debt in the first place and it's probably been haunting you for years. The sad truth is that many of these debt lawsuits are brought about on out-of-statute debt and the collection agencies and debt attorneys are notorious for re-aging the DOLA or Date of Last Activity on your credit report. It's in your best interest to dig up any old credit reports and bank statements to prove the the date of the last payment you made on the defaulted account. If that date is past your state's statute of limitations on open credit card debt, they have the right to try and collect, but they cannot sue you and must drop the lawsuit.

Additionally, very rarely is a debtor sued for the actual amount they owe...penalties, interest, and other assorted fees are generally tacked on to the balance. Make them prove their case!

There are many other defenses that can be raised against one of these collectors. The key is that you need to communicate with them through the court system. They don't expect you to fight back, over 96% of debt lawsuits end in default judgment. The chances of them backing off and dropping the lawsuit are HUGE if you take the time to properly format what is called a Notice of Appearance, Answer, and Certificate of Service.

It takes some time and research to properly file these documents, but it's your financial future at stake. A default judgment can not only freeze your bank account or garnish your wages but it will also ruin your credit for a minimum of 7 years. A few states offer basic templates for the forms you will need to file with the court, a simple Google search should offer up some resources. You can purchase my Word templates from the "E-Document" tab on the top of this page or alternatively there are very helpful people on several internet "debt" message boards who can offer up advice when drafting your own documents.

Additionally, you should fax and mail (certified, return receipt) a Cease & Desist Letter to the creditor informing them that they must communicate you with via written correspondence only and now that they know how to communicate with you they must refrain from contacting any of your neighbors, friends, relatives or employees in an attempt to collect their debt. If they violate your request, you can threaten to sue them for an infraction of the FDCPA (Fair Debt Collection Practices Act) which allows $1,000 for each violation.

Now is the time to action. If you do nothing, the creditors will find your assets and take them. Bottom line. File your Answer and other supporting documents and wait and see. The best that can happen? They won't want to fight you in court and drop the lawsuit (they rarely have the supporting documentation to back up their claims) or you'll receive a courtdate and you'll be given the chance to work out a settlement agreement at that time. Either way you will have avoided a default judgement which is looked upon as poorly as bankruptcy in many cases.

Fight back! You have nothing to lose and everything to gain.