When you are in debt and the creditor is trying to collect on their money, one topic inevitably comes up: going to court. While neither side wants to go to court, it is something for which they both must be prepared. There are several things that debtors must know about being sued for debt.
First, just because a creditor threatens to sue you over the phone, that does not mean that you are being sued. Companies use two tactics, frequent calling and threats to sue, which often scare people into paying. What the company is really trying to do is get an advantage against you to try to negotiate and settle your debts. Keep in mind that you actually can be sued for debt – but this will come in the form of a written legal notice. Until you actually receive the notification, you are not being sued.
There are ways to prevent the other tactic as well. You can send a written notification to the debt collectors asking that they cease calling you, and they will have to obey. You may still be sued, but all contact will come in written form rather than through calling.
The goal of the creditor in these situations is to recoup their money without having to go to court. The legal process is expensive, and in the case of many debts, it is not economically worthwhile for them to take legal action. Therefore, using the threat of legal action is one of their best methods to enact repayment – so if you are not afraid of these threats, then you can still negotiate with them and settle your debt with a plan that works for both parties.
If you are actually sued, then you will receive a court summons. Depending on the size of your lawsuit, you will go to either a small claims court or a court of general jurisdiction. In either case, it is wise to have legal counsel beforehand, but in a small claims court you must represent yourself. Regardless, it is important that you follow through with the legal process – if you do not appear in court to defend yourself, then you will lose and have to follow a court-mandated plan for repaying your debt. If you appear in court, oftentimes the plan will be more advantageous to you. Knowing your rights is one of the most important aspects in being sued for debt, and the Federal Trade Commission’s website has a lot of information on the subject.
Note: If a collection agency is harassing or threatening you using illegal methods, then you may be able to sue the collection agency for violations of the Fair Debt Collection Practices Act.