Sued by debt collector? What to do if a Debt Collector Sues You

Take a debt collection lawsuit seriously. If you don’t, you may risk summary judgment. You or your attorney can mount any of several defenses, including allegations of FDCPA violations, mistaken identity, time-barred debt, debt discharged in bankruptcy, and lack of standing to sue.

This article was written by Lemberg Law staff, and reviewed by Sergei Lemberg, the managing attorney of Lemberg Law.

How to handle a lawsuit by a debt collector?

First things first. If a debt collector sues you, don’t panic. Debt collectors count on consumers’ fear to manipulate them into paying debts that they might not owe. If you are served with court papers, take it seriously. Avoidance when dealing with a debt collection lawsuit is never a good idea. If you (or your attorney) fail to appear in court, the debt collector can be granted a summary judgment for the amount that they say you owe. This means that they can potentially garnish your wages, take the money in your bank account, or place a lien on your property.

Some states have shored up their laws to make it more difficult for debt collectors to automatically receive summary judgments. These actions arose out of debt collection agencies’ rampant abuse of the court system to collect debts. In Sykes vs. Mel S. Harris and Associates, LLC, a debt collection law firm, a debt buyer, and a process serving company were accused of fraudulently obtaining default judgments against more than 100,000 consumers. How? They never notified the consumers that they were being sued, so the consumers couldn’t defend themselves. The defendants allegedly engaged in “gutter service,” a reference to throwing summons in the gutter rather than properly serving the consumers with legal papers, and then submitting fake documentation to the court.

While some courts require debt collectors to provide proof of the debt owed when asking for summary judgment, debt collection records are notorious for being inaccurate. If a debt collector sues you and receives a summary judgment, it may be for much more than the amount you owed. If that’s the case, then it’s a laborious legal process to vacate that summary judgment. It’s better to face the lawsuit head on and have your day in court.

How to beat a debt collector in court?

If you are sued by a debt collector, it’s best to have an attorney represent you. Fair debt attorneys are well-positioned to defend against debt collection lawsuits. Often, they can allege or prove that the debt collection agency violated the federal Fair Debt Collection Practices Act (15 U.S.C. 1692). If that’s the case, then the lawsuit is often dropped and the debt wiped clean.

In addition to asserting FDCPA violations, a number of defenses can be mounted in response to a debt collection lawsuit. For example, if the last payment on the debt is past your state’s statute of limitations, you could argue that it is not legally enforceable and the lawsuit is therefore inappropriate. You might also assert that you were improperly served court papers, or that the debt is unenforceable because it was discharged in bankruptcy. If a debt buyer has purchased the debt, you could argue that they do not have legal standing to sue you. The paper trail for purchased debt is often lacking, and the debt collector might not be able to fulfill the burden of proving that the agency owns your specific debt.

Other defenses include:

  • They have you mixed up with someone else and are suing the wrong person.
  • The debt was incurred as a result of identity theft or fraud, and you’re not liable to pay it.
  • You already paid the debt, either to the creditor or a different collection agency.

Often, there’s only a short time between when you receive the complaint and summons from the debt collector and your actual court date. It’s critical to respond to the suit in a timely manner and put forth your defense.

Lemberg Law has a team devoted to representing people who have been harassed, threatened, deceived, or sued by debt collectors. Call 475-277-1600 and receive a free consultation, or submit our online request form.

Case citation

Sykes vs. Mel S. Harris and Associates, LLC, No. 09 Civ. 8486 (S.D.N.Y.)

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