For many people struggling financially, it is easy to get behind on paying bills such as credit cards, car payments or mortgages. If these debts remain unpaid for a period of time, a company or debt collection agency can initiate a lawsuit against a debtor to collect the money owed. If they receive a judgement, they can, and often do, take steps to collect the debt by garnishing wages or attaching a lien to your unexempted property.
If you are falling behind, there are a few strategies you can employ. First and foremost, if you receive a summons or complaint, be sure to respond because not doing so may result in the creditor getting a default judgement enabling them to start collection efforts more immediately. Oftentimes, if a debtor responds within the time limit, the debt collection agency may choose to negotiate a settlement with the debtor rather than have to go to court to prove the debt.
If your debt dates back a long time, you may be able to argue that the statute of limitation to file a lawsuit for the debt recovery has expired. If the debt has gone uncollected for a period that exceeds the statute of limitation, you may be able to get the case dismissed.
Another tactic a debtor can consider is to challenge the creditor’s standing to bring the lawsuit in the first place. Debt often changes hands, where a debt collection firm purchases debt at a discount from the original creditor. In order to sue for collection of the debt to make a profit, the most recent creditor will have to establish the right to collect by providing the necessary documentation.
When creditors are seeking a judgement against you, there are various strategies you can consider. However, if you owe a substantial amount of money, filing for bankruptcy might be your best option. It can provide an automatic stay regarding the collection of most debts, so you can determine if you are eligible for a reorganization of your debt which will allow you to keep some of your property or, perhaps, even a liquidation of some of your debt.
