Debt Collection Lawsuit: What You Need to Know

debt-collection-lawsuit-debt-collector-consumerConsumers frequently call saying they have been served with a fake debt collection lawsuit.

There’s a really good chance it is a real/actual/consequential lawsuit.

In Minnesota, you can initiate a lawsuit without filing it with the court—it’s called pocket service.

Consumers frequently get confused when they call the courthouse and are informed the court has no record of the case. Again, just because it does not have a court file number, that does not mean it is fake.

It’s still a real lawsuit. And failing to respond will have very real consequences.

You need to respond in writing within 20 days

The summons says as much, but it bears repeating. If you are served with a debt collection lawsuit and do not respond within 20 days, your case can be over before it even begins. The other side can seek a default judgment. Once they have a judgment, they can garnish your wages or your bank account. That’s not good.

When you serve an answer within 20 days, you don’t win the lawsuit, but you don’t lose it either. It’s important to understand that serving an answer means the other cannot obtain a default judgment. They will have to prove their case in order to collect any money from you.

It’s a good idea to talk with an attorney for help with your written response. Many consumers think they are handling the response properly, when in fact they are not. For example, many consumers admit that they owe a debt to a company they have never heard of, but they simply ask for a payment plan.

If you cannot afford to hire an attorney, it’s a good idea to contact Legal Aid, the Volunteer Lawyer’s Network, or another organization that may be able to offer legal services.

You may need to respond to additional questions

Some debt collection lawfirms also include discovery requests with the summons and complaint. That means not only do you have to respond to the complaint in writing, you also need to respond to discovery requests (asking you questions and asking for documents) within a prescribed time period.

If you respond to the lawsuit, but do not respond to the discovery requests, that can severely damage your defense. If you are served with requests for admission but fail to respond within 30 days, those requests are deemed admitted under the rules of civil procedure. You can make an argument as to why that should not be the case, but you want to avoid that situation if possible.

You have options for dealing with the lawsuit

Getting served with a lawsuit is not a pleasant experience, but don’t assume that you owe the debt or the amount sought in the complaint. In some cases, the creditor sues the wrong person or the consumer has a complete defense to the lawsuit. In other cases the creditor is unable to produce sufficient competent evidence to prove their claims.

I have represented a number of individuals where the case was dismissed or they were able to resolve the case for a significantly lower amount. Depending on your financial circumstances and the amount of debt, bankruptcy may also be an option.

The bottom line is that it’s a good idea to contact an attorney who specializes in debt collection lawsuits so you can understand your options.