You answer the door to a process server or Sheriff’s deputy and suddenly realize, “I am being sued for credit card debt!” Having received numerous letters and countless phone calls during the dinner hour, you knew this was a possibility but it is still a shock. You have got to protect yourself, and hiring a lawyer is one option to consider. There are other possibilities also.
First of all, understand that I cannot tell you whether or not to hire a lawyer. Only a licensed attorney can provide legal advice and it is up to them to tell you how confident they are that they can represent you and make it worth their fees.
You have to really understand what the risks are when you are being taken to court over a debt. Those risks vary greatly by state due to variations in state laws that regulate the collection of debt, legal options available to creditors and legal protections available to debtors.
One important aspect to consider is the statute of limitations on your credit card debt. The creditor, their agent or the new owner of the debt has a certain number of years in which they can expect the courts to render an order for you to pay. The statute of limitations varies by state, and it begins on the date of first delinquency.
Judgments are damaging enough, since they can remain on your credit report for 10 years. While a judgment can make many types of credit unavailable or prohibitively expensive, it can also block your dream of homeownership as long as it remains on your credit report.
Another consideration are the legal options that a creditor has once they have won a judgment against you. Wage garnishments, levies on your bank accounts and liens on your personal property are all possibilities to a victorious plaintiff, but some are limited by state law.
When you are facing judgment day, you need to defend yourself. Sometimes you may be able to work out a compromise with the agent and avoid court altogether. If you do not take this option, then you need to voice your rights in court. One common suggestion by legal experts is to request actual proof from the agent that you owe the debt. It is reasonable to ask for a true copy of your actual contract or some other original document that proves that you entered into contract with the original creditor. Some courts require that agents that bring suit must provide copies of the original contract and any other proof of the debt. North Carolina enacted a law in 2009 that requires precisely that of any debt collector that files for judgment.
Due to the complexities of legal processes and the potential consequences of losing your case, it is recommended that you at least consider the option of hiring an attorney to represent you. For smaller debts, it may be cheaper to just use your money to settle with the debt collector. Larger debts may carry bigger risks, making attorney representation more attractive.
A Good Defense is Worth It
A study by MFY Legal Services found that debt buyers received $1.1 billion in judgments and settlements over a roughly 2 1/2 year period. They concluded that in 87% of the cases, they won default judgments because the debtor never showed up in court. It was determined that debtor absence was not always due to apathy or fear, since 71% of the debtors were either served improperly or never served any notice at all of legal action. They won 94% of the cases.
Terry Carter wrote in ABA Journal about a public employee union that represented members in New York City that were being sued for debt. District Council 37 Municipal Employees Legal Services reported that in 94.5% of the cases where they represented their members, the debt collectors walked away from the cases. They chose to skip them and instead focus on the easy cases where no defense was made. Of the 5.5% of the cases that proceeded in court, debt collectors failed to produce proof that money was owed 95% of the time.
What we are finding is that legal action is often pursued on such a massive scale involving hundreds of debtors at a time, that the debt collectors often choose not to actually go to court on a case-by-case basis. They instead focus on pushing a maximum number of default judgments through in a short period of time simply because the debtor and/or their attorney never contests the action.
So as you ponder whether to hire an attorney, consider these thoughts. If you are well organized and can present a case to defend yourself, you might do quite well on your own. For complicated cases or situations where you do not feel comfortable in court, consider Abraham Lincoln’s statement:
Whatever you decide, make sure that you defend your rights and make a debt collector do their job properly. Otherwise, your realization that “I am being sued for credit card debt” is only the tip of the iceberg, with the consequences of judgments, garnishments, liens, levies and bad credit following you for the next 10 years.
Note: In severe cases of debt collection where a collector is overly aggressive, you may find it helpful to consult with attorneys that specialize in FDCPA lawsuits. This is especially true when you have documentation that proves the debt collector violated one or more of your rights. You just might be able to fight back by suing your debt collector.
Long is a graduate of the University of North Carolina at Chapel Hill with a B.A. in Industrial Relations. He subsequently received his Certificate in Nonprofit Management from Duke University. His Certificate in Financial Planning was issued by Florida State University.
Long has achieved the Accredited Credit Counselor and Accredited Financial Counselor certifications through the Association for Financial Counseling, Planning and Education. Long originally achieved the Certified Credit Counselor designation through the National Institute for Financial Education.
In addition to years of nonprofit leadership, Long has been an innovator in the field of volunteer tax return preparation programs. He assists volunteer associations and nonprofit organizations who seek to integrate credit counseling and asset-building programs with free personal income tax preparation. His approach to using free credit reports as both an incentive and a screening tool for placement into asset-building programs has been shared with members of the National Community Tax Coalition, the EITC-Carolinas Initiative of MDC, Inc. and nonprofit groups across the Carolinas.
Long assists members of our armed forces in the Carolinas, Iowa, Rhode Island, Georgia and Germany with financial readiness. Please support our Soldiers, Marines, Airmen and Sailors!
"The democracy will cease to exist when you take away from those who are willing to work and give to those who would not."