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Here Are Your Options When Served With A Collection Lawsuit

collection lawsuit optionsIt’s terrifying to be served with a collection lawsuit. You know you’re in debt, but the prospect of going in front of a judge just makes it all worse.  Thankfully, you’ve got options.

Lots of my clients come to me after they’ve been sued, some while there’s still time to do something and other times after a garnishment or bank account freeze has been put into place. I wish they all got to me the day they got served, but that’s not always practicable.

If you’re served with a collection lawsuit, there are a few things you can do.

Ignore The Lawsuit

Get the papers, tuck them away, and bury your head in the sand. The sheer terror of a lawsuit may make you want to do this and, if so, I get it. I call it the “deer in the headlights” response.

This is rarely a good idea, even for those people who are “judgment proof.” The reality is that nobody is judgment proof, it’s that they’re collection proof. And you never really know if you fit the bill until you actually talk with a lawyer like me who knows about collection lawsuit defense.

Settle The Collection Lawsuit

You’re being sued, and realistically that means the creditor or collector is in a position to make some sort of a deal. There’s no telling whether you can get a good enough settlement to make it worth your while, but you can always try. It’s important to realize that if you settle the lawsuit for less than the full balance due then you may have some nasty tax implications.  Still, this is one of those options you should look into.

Defend The Lawsuit

If you’ve got a valid defense, don’t roll over and let the collection lawsuit drag you down. You can get in touch with me or, if you’re not located where I practice, someone like me. I can’t speak for other lawyers, but I typically charge a flat fee for collection lawsuit defense.

Defending the lawsuit can result in the case being dismissed or a more favorable settlement if the creditor can’t prove up the case or isn’t willing to fight back. Either way, defense is one of those options that can make the others work even better for you.

File For Bankruptcy

I know, you don’t want to do this.  But when your options run out or if this isn’t the only debt you’ve got, bankruptcy can be a good way to not only end the collection lawsuit but reorganize your finances in full.  I recommend bankruptcy for some clients, but usually if we can make the options work then we’ll go that route.

The Danger Of DIY

You can represent yourself, but unless you’ve got enough knowledge of the law and civil procedure there’s a good chance you’ll miss something.  There are lots of places to get forms, and non-lawyers will try to get you to use their cheapo services to draft what they think passes as something good enough for you to file.

Bad idea.  After all, this is your money and your financial future – not theirs.  I’m not telling you to spend a mint on a lawyer, but at the very least give one a call and get an idea of what it would entail to hire a professional.  Even if it’s not something you can afford, at least you’ll get a better idea of which option is right for you.

Image credit: chris runoff

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By |April 27th, 2012|

About the Author:

I've been a consumer protection lawyer since 1995, working to help people end their bill problems. I'm a faculty member at the Student Loan Law Workshop, a nationally recognized speaker, and a long-time member of both the National Association of Consumer Bankruptcy Attorneys and National Association of Consumer Advocates.
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