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Sued for Debt? Here's What You Should Expect

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Sued for Debt? Here's What You Should Expect
Make sure you act quickly if you're being in court for the amount owed. You have options.
By Sean Pyles Senior Writer | Personal finances, credit, and personal finance Sean Pyles leads podcasting at NerdWallet as the producer and host of NerdWallet's "Smart Money" podcast. On "Smart Money," Sean talks with Nerds across NerdWallet's NerdWallet Content team to answer the questions of listeners about their personal finances. With a focus on shrewd and practical advice on money, Sean provides real-world guidance that will help consumers improve in their finances. In addition to answering listeners' financial concerns on "Smart Money" Sean also interviews guests who are not part of NerdWallet and also creates special segments to explore topics like the racial inequality gap, how to start investing and the background for student loans.
Before Sean took over podcasting at NerdWallet, he covered topics that dealt with consumer debt. His writing has been featured on USA Today, The New York Times and elsewhere. When he's not writing about personal finances, Sean can be found working in his garden, going for runs and taking his dog on long walks. He is based at Ocean Shores, Washington.





Feb 13 Feb 13, 2019


Written by Kathy Hinson Lead Assigning Editor Personal finances, credit scoring managing money and debt Kathy Hinson leads the core personal finance team at NerdWallet. Previously, she spent 18 years at The Oregonian in Portland in positions such as copy desk chief and team leader for design and editing. Previous experience included news and copy editing for several Southern California newspapers, including the Los Angeles Times. She earned a bachelor's degree in journalism and mass communications from The University of Iowa.







The majority or all of the items featured on this page are provided by our partners who compensate us. This affects the products we write about and the location and manner in which the product appears on a page. But this doesn't influence our evaluations. Our opinions are our own. Here's a list of and .



A letter is sent from a law office warning of a lawsuit to collect for an unpaid bill. It's upsetting, but hardly unusual.
You could be hit with an action if you've got past due medical, credit card or other consumer debt. If you don't pay on time or appear at the court hearing, the creditor is likely to win -- and may get rights to take a portion of yourwages or bank account.
Watch your debts dwindle
Register for an account that allows you to connect your credit cards, loans and accounts to keep them all in one location.






In this article:
What happens if you are accused of debt?
The use of lawsuits is a popular and effective debt collection strategy. In New Jersey, for example that debt collection lawsuits were responsible for 48% of civil judgments in 2011, according to an . One attorney at a debt collection company had filed 69,000 lawsuits in one year, it found.
A debt collection suit is filed when the creditor files a lawsuit with a state civil court in which you are listed as a defendant along with your co-signer , if you have one. The complaint should explain the reason why the creditor is suing you and what it is seeking. Typically, that's the money that you owe in addition to interest or attorney fees, as well as court fees.
The creditor, collection agency or the attorney for it will then notify you about the lawsuit by "serving" you by giving you a copy complaint and a court summons. The summons contains information about when and how you can submit a formal response to court, as well as the date of the court hearing.
They are betting that a majority of people won't show up for their hearings, which leaves the judge with the task of filing a default judgment. With a default judgment the creditor may be able to:
.
Place a lien against your property.
You can try to freeze a portion or all the money in your account.

This is why you must answer the summons as well as summons. Here's what to do.
Gather information
The person that is suing you will not be your original creditor. The debt may have been sold, perhaps several times over. It could be something you know about, or it could be an old bill long forgotten creditor or debt collector has been able to revive.
Review your own records and any information that you receive from the mail, which includes the that the debt collectors must send. Determine:
Who is the creditor, how accurate the amount is and whether you actually have to pay the debt. The errors can be discovered when debt is sold and resold; names and amounts may be inaccurate.
The debt must be paid off by the . Once that passes, the debt is considered "time-barred." That means that you cannot legally be sued -- but collectors may still try it, in violation of your . The obligation to pay the time-barred loans remains, however, and the unpaid debt will continue to hurt your credit.

Don't delay. You generally have 20 to 30 days from the time you get served to respond.
Respond to the lawsuit
"The most dangerous thing you can do is ignore the suit," says Ira Rheingold as executive director of the National Association of Consumer Advocates. It puts your salary, bank account or property at risk. In addition, you could lose the ability to dispute that you are owed the debt.
The process of organizing your defense and writing your response may be difficult, so you may want to speak with an attorney. In most cases, lawyers will offer a free consultation If you win your case, the debt collection agency likely will be responsible for the legal costs. A lot of offices provide free or low-cost services. Members of the military can seek assistance through their local general office of the judge advocate.
An attorney could:
Make sure you point out defenses you didn't know about.
Help you write the formal reply.
You can be represented in court, if necessary.

Guidance from an attorney will help you draft an effective response, which could make the creditor more likely to negotiate an agreement with you. If you go further and attend this hearing with an attorney, Rheingold says, the collector "likely won't be able verify the debt and it could be dismissed."
It's likely that you'll have to pay a fee to respond. Contact the court clerk for information about fee waivers in the event that you cannot afford the fee.
Options for handling the hearing
Being present for the hearing is essential. The judge will decide if you have to pay, and this is your opportunity to present your case or negotiate a settlement to negotiate with your creditor.
How you handle it depends on whether you owe the amount.
If you are in amount
You have a few options. Contact the creditor prior to the hearing begins and see whether you can reach an agreement on:
Create an installment plan that allows you to make regular, affordable payments on the bill until you've paid it off.
Settle the debt for less than you originally were owed. If you can strike a deal, be sure to sign a contract which states that the creditor will consider the debt to be fully paid and declare it to credit bureaus as having been paid.

An independent credit counseling agency can help you comb through your finances in order to fund a payment plan or settlement. If you still can't afford to pay the amount due, you may consider pursuing a different option , such as , for the chance to make a fresh start.
if you made the loan, but think you shouldn't have to pay it
There are a variety of situations in which you might have the right to refuse to pay a debt. You may be able to invoke these affirmative defenses if you are, for instance:
What you bought was defective or never arrived.
The debt agreement was invalid or unenforceable, or you signed it on untruths.
You canceled the contract within the legal timeframe.

There are a variety of the possible affirmative defenses. If you suspect that you have such a defense, seek legal advice on the best method to take.
If you don't have the amount
When you're sued for a debt you don't owe or for a amount you dispute two words can provide you a strong defense: "Prove it." At the hearing you could demand the creditor provide the original contract for debt and also to show that you owe that amount. If it can't be proven, the judge can decide to dismiss your case.
Adequate documentation is key however, it is also important to seek the help of a qualified legal professional to guide you through this process.
A suit for a debt that you aren't sure about could be an outcome of identity theft, and you could be able to file a lawsuit for activity you don't recognize.
>> MORE:



About the author: Sean Pyles is the director of production and host on the NerdWallet's Smart Money podcast. His writing has appeared on The New York Times, USA Today and elsewhere.







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