5 Reasons Why You Should Defend Yourself Against a Collection Lawsuit

Debt collection is big business these days. Nearly 1 person in 7 is being pursued by a debt collector.  These collectors are often large national junk debt buyers who make billions suing on old debts they purchased for pennies on the dollar. In many cases the debt buyers win without having to prove anything, simply because the alleged debtor doesn’t show up to defend himself.  If you are being sued on a debt, don’t just roll over and let a debt collector get a default judgment. Here are 5 reasons why you should stick up for yourself:

1 – The case against you may not be as strong as you think.

As I mentioned in the introduction, a good chunk of the collection suits are being filed by companies who literally buy millions of old defaulted accounts from the original creditors.  Often the debt buyers receive minimal information on each account and don’t have copies of contracts or accurate transaction information, let alone original documents.  In the case of an older debt, the account may have been bought and sold two or three times so it isn’t uncommon for the collector to lack even basic account information. Information they couldn’t get if they tried.

Unfortunately, a lousy case can still win if the alleged debtor doesn’t bother to respond to the summons and complaint.  These companies correctly predict that most of their lawsuits will go undefended and make a fortune on default judgments. Even if you believe you owe something, the debt collector has the burden to prove that any alleged debt amount is valid and that they are solely entitled to collect it. Something they often are unable to do.   Defenses strong enough to dismiss your case are often available; don’t ignore a lawsuit until it’s too late to use them.

2 – You may have counterclaims that could result in the recovery of damages and attorney fees.

As debt collectors become more aggressive, they often run afoul of state and federal consumer laws.  The Fair Debt Collection Practices Act (FDCPA) and the Fair Credit Reporting Act (FCRA) are two examples of federal statutes that allow for the recovery of damages suffered as a result of each violation along with statutory damages as high as $1000 per violation. These laws also provide for the recovery of attorney’s fees so an attorney may be willing to represent you even if you can’t pay for one.  Claims under these laws must be made within a year of the alleged violation so it’s better to contact an attorney sooner than later.

3 -Avoiding a judgment will improve your credit rating.

A default judgment can wreak havoc on your credit score and will take years to repair. If your case is dismissed, you can have your credit report indicate that you owe a zero balance.  If you can prove that you never owed the debt, you can have the information deleted all together.  Even if you can’t win outright, you may be able to negotiate a settlement that has a more favorable impact on your credit rating.

4 – Protect your assets.

Unlike the pesky neighbor kid, a collection lawsuit won’t go away if you ignore it. A judgment for a collector can have serious financial consequences.  Bank accounts can be temporarily frozen, wages can be garnished and even your car and property may be seized. Don’t get me started about post-judgment interest.  Even if a default judgment has been entered, it may be possible to set aside the judgment, or at least limit its impact.

5 – Help stop debt collector’s abuse of the justice system.

The explosive growth of the debt buying industry has led to a flood of junk lawsuits being filed in state courts around the country.  As previously discussed, many of the cases lack even the most basic evidence necessary to prove the existence or amount of a debt, who owes it, or who should be collecting on it.  Unfortunately, our overburdened courts don’t have the time or resources to thoroughly review a case each time a collector requests a default judgment.   Standing up to a careless debt collector will expose their abuse of our judicial system, will help educate our judges and their staff and might even result is consumer friendly case law.

If you are the 1 in 7 being pursued by a debt collector, don’t let them get away with deceptive, abusive or illegal behavior.   If you have been the victim of harassment or are being sued on old debt, talk to an attorney about your options and your rights.

You can’t win if you don’t try.

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