My loved one has been sued by a debt collector: What’s next?


Having your family member or loved one in Alabama sued by a debt collector is a scary thing to happen — they come to you and ask what should they do next.  Here are some thoughts for you:

  • Make sure they respond in time . . . so that they do not get a default judgment.
  • Understand difference in owing a debt and the debt collector owning the debt . . . so that they understand their options
  • Go through each of their five options . . . so they pick the right option for them

Let’s look at these.

Your family member must respond in time or they will get a default judgment which is very bad

This is the first and most important thing for you to help your loved one understand.  No matter how bad the case is or how good your defenses are, if you do not respond in time, they will lose.

This is like not showing up to the football game — you lose.  Even if you are the better team with the better plan.  If don’t show up, its a loss.

In the context of being sued by a debt collector, here are the time limits from when your loved one was served:

Small Claims Court — 14 days from being served.

District Court — 14 days from being served.

Circuit Court — 30 days from being served.

If a response (typically an “Answer”) is not filed in time, the court will enter a default judgment.  This is a real judgment and it allows the debt collector and the collection lawyer to garnish wages or bank accounts.  Even force a “sale” of real property such as their home.

Solution:  answer the lawsuit in time.

But often your family will say “I owe the debt so there is no way I can fight this.  I’ll just do nothing.”  Here’s why this is a bad conclusion.

 

Mission critical for your loved one to know the difference between “owing” the debt and the collector “owning” the debt

It is natural for a family member to think owing the debt is all that matters.

But here’s the deal.

Your loved one was not sued by the original creditor (Capital One, Chase, Synchrony Bank, etc).

Instead a debt collector (LVNV, Midland, Portfolio, etc) claims to have bought the debt.

OK they claim this.

Is that the same as proving it?

Nope.

It is one thing to claim to own something but its much different to prove they own it.

So even if we “owe” the debt, the question is the collector that sued us — does that company own the debt?

If not, then it doesn’t matter if your loved one “owes” the debt.

Here’s an illustration — I owe money on my house.  No doubt about it.

But I don’t owe you, do I?

Why not?

Because you don’t own my mortgage debt.

Same thing here — we have defended hundreds and hundreds of these debt collector (debt buyer) lawsuits in Alabama and we have not seen these guys prove they own the debt.

Significance:  If the collector has to prove it owns the debt, this means your loved one has options on what to do.

So what are the options — let’s talk about that next.

 

Five options are available — your loved one needs to understand these options and pick the right one

Here are the five options (and you can read about these in more detail here):

ONE — file bankruptcy.

TWO — fight the lawsuit on their own.

THREE — settle the lawsuit on their own.

FOUR — hire a lawyer to fight the lawsuit.

FIVE — hire a lawyer to settle the lawsuit.

Here’s a brief summary:

First, you don’t file bankruptcy unless no other choice.  And for 99% of people sued, they can pick one of the other options.

Second, fighting the lawsuit on their own is a choice.  It means no help from a lawyer but it also means not having to pay a lawyer.  This works best in small claims or district court and you can see an overview of how this happens here.

Third, to settle the lawsuit means paying between 50% and 85% of the amount sued for in a lump sum or paying the entire amount over time.  The credit report of your loved one will still be impacted and there could be tax consequences to settling the case.

Fourth, hiring a lawyer to fight the lawsuit means spending money on a lawyer but you do this with the expectation that the lawyer will help improve the chances of winning in court against the collection lawyer.

Fifth, if your loved one hires a lawyer to settle, you want to make sure they know what they are paying for and that it makes sense.

(When folks hire us for a flat fee, we either settle with the collector by paying them nothing, credit reporting is deleted, and no tax consequences or we go to trial with them.  So it is a combination of options four and five.)

Bottom line:  if your family member wants help going through these options after being sued by a debt collector, have them call us.

If your loved one would like more help, contact us today

They can call and ask for Carolyn — 205-879-2447 — and she can look up their case online.  Or fill out our contact form and we’ll get right back with them.

No cost or obligation for us to go over their options and the best strategy for them.

We look forward to helping your family member deal with this situation.

Best wishes!

John Watts

 

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