Being sued by a debt collector is often terrifying and may seem catastrophic, but it's important to know that it is a common occurrence in courts throughout the nation. It's crucial not to ignore a debt collection lawsuit. Once you're served with a legal summons, avoiding these three common mistakes will help you on the road toward resolution.
Failing to Respond
It's typical for debtors to feel that there is nothing they can do once served with a legal summons. A common mistake is to do nothing, but avoiding your debt collection lawsuit means you'll have a default judgement placed against you. Once a judgement is in place debt collectors may levy your bank account and/or garnish your wages. Avoid this mistake by filing a formal response to the lawsuit, which is called an "Answer." Consult with a debt defense attorney, like the ones at Brackett & Strunk LLC, to determine the best way to respond to the complaint based on your unique situation.
Failing to Request Proof
It's estimated that as many as 95 percent of consumers fail to get involved once they've been sued, according to Fox Business. When you fail to participate in the legal process in your own defense, you make it easy for debt collectors to obtain a judgement against you without having to do much work. It's crucial for you to demand that the debt collector provide the original signed agreement and the balance and payments on the account from inception up to the present time. It's not uncommon for debt collectors to have inadequate documentation, especially if the debt has been bought and sold multiple times, or if the debt is old.
If you only owe a small amount of money it's often best to negotiate a settlement with the debt collector, or original creditor. However, if you owe a large sum that you're unable to pay back then it's likely time to consider filing bankruptcy. Consumers often avoiding bankruptcy after receiving a summons because they mistakenly believe it will completely destroy their credit worthiness. To the contrary, after successfully filing bankruptcy, you will have very little debt, making you a better credit risk to creditors because you will have freed up funds to make payments on new debt. While filing bankruptcy may lower your credit score over the short-term -- about 1 to 2 years -- if you pay your debts on time you'll likely see your score rise after that.