Creditor Lawsuits

Before a creditor can collect on money owed to him, he must first file a lawsuit in the state and county that the debtor resides. (If not in the debtor’s state or county—then in the state identified in a contract.) To start the legal process, the creditor files two documents, a Summons and Complaint. The summons is a legal document that gives the debtor notice that a lawsuit has been filed and that gives notice that the defendant (debtor) has 30 days to file a response—else risk losing his or her legal rights. The Complaint is the document that outlines the “cause of action”. The complaint identifies who the parties are, the reason for the lawsuit and the amount owed by the alleged debtor.

In accordance with the law, the creditor’s legal counsel it required to personally serve the alleged debtor with the Summons, Complaint and any other paperwork in connection with filing the Summons & Complaint. The problem, however, is that for many debtors, the first time they learn about the lawsuit is when the judgment creditor is attempting to collect on the debt via a wage garnishment or bank levy.

For many who learn of the lawsuit, it is not uncommon for the individual to then run to bankruptcy court and file for bankruptcy. While a legitimate option to solve the problem, it should not be the first option. Some alternative options include:

  1. Defending against the lawsuit

  2. Negotiating a settlement with the creditor

  3. Filling out and submitting a timely Claim of Exemption form
To Defend or Not Defend Against the Lawsuit—that is the Question

A difficult decision that a debtor needs to promptly make, after he has been served with the Summons and Complaint, is to determine whether or not it is in his best interest to defend against the lawsuit. Some questions the debtor needs to consider are as follows: 1) Is there a mistake in identity? 2) is the debt more than four (4) years old—from date of default? 3) is the amount claimed to be owed incorrect? If the answer is “yes” to any of these questions, then there is strong motivation for the alleged debtor (Defendant) to defend himself. In addition to considering these questions, the debtor needs to weighs the pros and cons of defending against the lawsuit. For example, is it worth for the debtor to stress for several months, incur lost time away from work, family, friends, etc. to defend against a $1,000 lawsuit? For some, the answer is yes; and for others, the answer is no. This is a personal decision. The point here is to make an informed decision before jumping in or doing nothing.

Alternatives To Responding to a Lawsuit

Debt settlement is an alternative to a trial or filing a response (“Answer”) to the lawsuit. A debt settlement is something that is negotiated between the debtor and the creditor or the creditor’s lawyer. Many companies heavily advertise on TV that they will negotiate the consumer’s debt on the condition that the (desperate and frightened) debtor pays the company large sums of money over a period of time in order to build up the funds to negotiate settlement. Almost all attorneys, including Ms. Garrett, strongly discourage hiring such a company. Why? These companies charge hefty non-refundable fees; also, the debtor can negotiate directly with the creditor—for free!

If the debtor is too fearful or intimated by the creditor to negotiate settlement, it is then recommended the debtor hire an experienced and licensed attorney to negotiate on the debtor’s behalf. One of the benefits of hiring an experienced attorney is that he or she will be able to negotiate a better settlement than if the debtor negotiated on his own behalf or hired a non-attorney agency to negotiate on his behalf.

How Can Ms. Garrett help?

If you or someone you know was served with a Summons & Complaint, Ms. Garrett is available to provide a for-profit consultation for that individual. During the paid consultation, Ms. Garrett will do the following:

  • Explain the legal significance of the legal paperwork;
  • Provide an overview of the litigation process;
  • Identify and explain important dates and deadlines;
  • Explain the pros and cons of defending against the lawsuit and not defending against the lawsuit;
  • Help the debtor understand his various options—to include the pros and cons in connection with filing bankruptcy; and, finally;
  • Evaluating the debtor’s risk in connection with bank levies and wage garnishment.
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