If you have any outstanding debt, you may have received calls from a debt collection agency or letters stating information about what you owe – and demanding you pay it. It is easy to block the calls or toss these letters aside. But when someone knocks on your door and serves you with a lawsuit, it is time to pay attention.
Nobody wants to see their name listed as the defendant in a lawsuit. Unfortunately, though, it happens. And when it does – you need to know what to do.
If you have received a summons and complaint, here are your next steps.
Discover Who Is Suing You
Debt commonly moves from one creditor to the next. For instance, if you had a credit card with ABC Bank and you stopped paying it, it will eventually get charged off and possibly sold to another creditor. And, who knows, they may have then sold it to another creditor. So even if the account was with ABC Bank, it may be 123 Collection Company who has brought the lawsuit against you — and they are now the ones claiming to be the rightful owners of your account.
Do a little research to figure out who is who. It is also important to determine whether or not they have the legal right to file a lawsuit. Look through your records to see if you have received a validation letter from the company suing you. This is a letter that would have been mailed to your home, stating that they are the new owners of the debt, who the original creditor is, and the amount owed.
Make sure this information matches the lawsuit and, more importantly, your records from ABC Bank. Charged off accounts change hands a lot and information can easily be inputted into new systems erroneously.
Look at the Statute of Limitations
Creditors only have a certain amount of time to file a lawsuit against you. This typically goes from the date of your last payment or first missed payment.
The statute of limitations gives you the time they have to file – and this will vary from state to state. Be sure to speak to an attorney or develop a good understanding of your consumer rights. Once the statute of limitations passes, legal action cannot be sought.
Never Ignore a Lawsuit
When you are served with a lawsuit, the summons will state the specifics of your next step. This usually will include either appearing at a hearing or giving you a certain number of days to respond to the allegations in the complaint. These are orders of the court and something that you must follow through with.
What happens if you ignore the lawsuit?
Ignoring the summons and complaint you were served with and not either appearing or filing an answer can put you in default. This gives the plaintiff – the creditor – the right to move for a default judgment.
Due to your lack of response, this default judgment will likely be entered against you in the amount stated in the complaint, often further adding court costs, attorney fees, and even interest. This gives the other party a right to uncover your assets and find ways to collect the amount on the judgment, such as through bank garnishments, property liens, etc.
Continuing to ignore this post-judgment activity can land you in contempt of court.
Hire an Attorney
You need to respond to the lawsuit. Though knowing how to respond and what your defense should be is something that is best left up to an attorney. An experienced lawyer can help review your records, examine the lawsuit, and determine the best way to protect your consumer rights.
If you find yourself served with a lawsuit and unsure what to do next, contact Debt Legal Defense today.