Your 5 options when sued by an original creditor
Your 5 options when sued by an original creditor
Being sued by an original creditor — such as American Express (AMEX), Bank of America (BOA), Capital One, Discover Bank (Discover Card), etc. — can be incredibly scary.
Whether you owe the debt or not, what do you do?
Do you file bankruptcy, fight the lawsuit or settle? How do you do this and how do you pick what to do?
The video above (and the written portion below) will walk you through your five options and also give you answers to many common questions we receive.
Welcome to our video on your five options when sued. The point of the video is to help you discover the right answer for you — not for anyone else — so that you know what to do now that you have been sued.
Sometimes when we have a problem — here being sued — we jump to one answer. But let’s be willing to explore this problem and go through each of your five options. You may know these options (we’ve been preaching these options for years so you may have seen something similar) or you may not — either way go through these. I know it will be worth your time.
What we will discover together
We’ll talk about the biggest danger you face.
Then we’ll cover the statute of limitations for suits in Alabama.
Next we’ll cover your five options (two of which don’t involve hiring a lawyer):
- File bankruptcy (very rarely the best choice)
- Fight the lawsuit on your own (don’t hire a lawyer)
- Settle the lawsuit on your own (either in a lump sum payment or in monthly payments)
- Hire a lawyer to fight the lawsuit for you
- Hire a lawyer to settle the lawsuit for you
We represent consumers all over the state of Alabama who are sued by original creditors
Our main office is in Birmingham and we have a satellite office in Madison County. But we can do a phone consultation anywhere (no need to come into our office) and if we can help you we can do everything by phone and email/mail so it is very convenient for you. We do this as we have a statewide practice in literally every part of Alabama.
The biggest danger you face in your collection lawsuit
The biggest danger is simply . . . doing . . . nothing. 80%+ of those sued by original creditors do nothing.
If you do nothing.
You will lose.
The creditor/plaintiff will get a default judgment against you.
What does a default judgment do to you?
It allows the creditor to garnish your wages. As I’m writing this we had a call from a lady who just had her entire bank account wiped out from an old judgment that she thought was no big deal — it is a big deal now.
So not only your wages but also your bank accounts can be garnished.
And a lien can be placed on your home or your home could even be sold to satisfy the judgment.
Even if you truly did not owe anything — it doesn’t matter if there is a default judgment against you.
So avoid this.
Don’t “do nothing” — instead take action.
You have time after you are served to file an answer to the lawsuit.
If sued in small claims or district court — it is 14 days.
If sued in circuit court, it is 30 days.
Our purpose here is to help you gain knowledge AND take action. Without action, knowledge is worthless.
But knowledge PLUS action is real consumer power.
But I thought there was nothing to do when sued — you can’t win a case, can you?
Hopelessness and helplessness are your enemies. These feelings will steal your motivation and cause you to do nothing.
It is NOT hopeless — instead there is hope to win your case or to work out a reasonable settlement.
You are NOT helpless — instead you have the ability to help yourself or hire a lawyer to help you to get a good solution.
While there are no guarantees — what is guaranteed is if you do nothing, you will lose. So give yourself a chance of being successful.
Look, it is natural to feel down about being sued. To feel these negative feelings.
OK, you felt them. But you are doing something about them — you are watching the video or reading this text. So keep on keeping on and learn what to do.
What about the time period to sue me — the statute of limitations.
There is a lot of controversy over this. I’ll give you my thoughts on it.
For credit cards, the statute of limitation is 3 years. Now the collection lawyers say 6 years.
For many car type loans, it is 4 years.
As a practical matter, original credit card companies (AMEX, BoA, Capital One, Discover, etc) will normally sue you before 3 years anyway.
But we always check — sometimes we find these guys suing too late. So no harm in talking about this to see if we have a great defense to the lawsuit.
Your five options when sued by an original creditor
Let’s briefly summarize them and then we’ll go into a bit more detail.
First, you can file bankruptcy — rarely appropriate but it is ok to check out this option.
Second, you can fight this lawsuit without a lawyer — you defend yourself.
Third, you can settle this on your own and not hire a lawyer.
Fourth, you can hire a lawyer to answer the lawsuit, go to court for you, and in general fight for you.
Finally, you can get a lawyer to help you settle the case.
Bankruptcy — hardly ever the right answer to a suit
You are probably overloaded with letters offering to file bankruptcy for you. Maybe it is right for you but that is unlikely.
Bankruptcy is what we use when we have no hope and there is no other way out of this jam.
On the positive, it wipes out the debt.
But the negative is we have to live with the consequences of a bankruptcy — to our credit, our ability to buy things, and simply having to say “Yes I filed bankruptcy.”
When appropriate it works great.
But I see it mis-used so often.
Here’s the illustration.
My finger is broken. It hurts. So what would you think of a doctor who said “Hey John, the solution to your finger hurting is to file cut off your arm.”
Well that will stop the pain in my finger.
But is that appropriate?
Is it smart?
So definitely check out the option of bankruptcy — I can chat with you about this. I have used bankruptcy as a tool.
Let’s make sure we use it when it is the right tool — not the old “To a man holding a hammer everything looks like a nail” which is how many bankruptcy lawyers seem to be with bankruptcy.
Fight the lawsuit on your own without a lawyer.
I’ll be blunt — doing this in an original creditor suit is harder than if it was a debt buyer (debt collector) suing you.
It is not impossible.
The good news is there is no attorney fee.
The bad news is you don’t have a lawyer helping you.
What’s the objective? To win your case. If you do this, you have lots of good choices on what to do next.
If you lose, then you will have a judgment against you.
So not a perfect solution (hint: there are no perfect solutions) but it is a valid option.
Settle the lawsuit on your own
Instead of fighting it, you can settle the lawsuit.
Either in a lump sum (one time payment) or paying on a monthly basis.
The advantage is there is no attorney fee and when you are done paying, the case should be over.
The disadvantages are:
- Will you get the settlement terms clear in writing
- What happens to credit reporting
- Will you get hit with tax consequences
Again this is not a perfect solution but for many folks this can be an excellent choice.
Hire a lawyer to fight the lawsuit for you
You are facing a collection lawyer representing the creditor — a lawyer who does this all day long. So it is natural to at least consider hiring an attorney to represent you.
The downside is lawyers cost money.
The upside is if you hire a lawyer who you feel comfortable with and who you have confidence in his or her abilities, this can bring you great peace of mind. And presumably you are hiring someone who you think will give you a better chance of success than handling the lawsuit in court on your own.
Final option — hire a lawyer to settle the case for you
With this option, you spend money on an attorney to help you settle. Usually when we do this, our fee to settle is contingent on us actually settling the case so you only spend money if we can settle it.
But still you have to spend money.
So you need to see if the benefit to hiring an attorney is worth the cost — either in terms of getting a better deal or the peace of mind from having an attorney handle this for you.
So which option is the best for you and what do you do right now?
I don’t know which is the best option. People often expect me to say “You must hire me as a lawyer because I’m the best consumer lawyer and you are crazy to do this on your own!”
I don’t and can’t make that claim. I’ll let you decide if I am skilled as a consumer lawyer.
And sometimes it doesn’t make sense to hire me — I have advised a lot of consumers to handle their case on their own and save their money by not hiring me.
But sometimes it is best to hire a lawyer.
Here’s the way to figure out — we do a free consultation by phone and go over your options. You know the options so we don’t have to spend time going over them. Instead we spend our time talking about the best option for you that fits your unique circumstances.
So let’s talk (call 205-879-2447 and Carolyn will set us up a call) and figure out what is best for you.
Have this handy when you call:
- Who sued you (this is the plaintiff — the company that filed the suit)
- Where did they sue you (county and type of court — small claims, district, or circuit)
- Case number (listed on complaint)
- When you were served (remember you have 14 days to answer from service date in small claims or district and 30 in circuit court)
- Have you pulled your credit reports (we need this as it helps us evaluate the strength of your defense)
- What questions do you have (I want to make sure you get off the phone and have your questions answered).
You can set up a call by calling us at 205-879-2447 or filling out our contact form.
I look forward to helping you any way possible where ever you are in Alabama.
PS — on the video starting at about 13:26, you will fine about 20+ minutes of questions and answers that we consistently get over the years. Right now I’m not going to include these in the text but if you are interested take a look at the video above.
Thanks and talk to you soon!