Don’t ignore the any correspondence from a Collection Agency. If you fail to respond or show up in court, the judge grants a default judgement against you.

In most cases, there will be a settlement conference or arbitration before the trial. This gives you and the Debt collection agency an opportunity to reach an agreement and avoid a trial and the legal fees that go along with it. The debt collector could pursue a summary judgement if none of the facts are disputed and win without a trial. Most cases will get settled or end in summary judgement.

If the case moves on to trial, you should have a consumer lawyer representing you. The case proceeds like a normal trial. Both parties give their side of the facts, and the judge decides.  If a debt collector receives a judgement against you, they are entitled to the amount owed and can use alternative debt collection techniques. They can garnish wages, seize valuable property, place a bank levy (freezing the account) or lien on your home, guaranteeing them a portion of the money on the sale of the property.

The creditor suing you is unlikely to be your original creditor. The debt may have been sold, perhaps several times over. It may be something you recognize, or it may be an old bill long forgotten – now a zombie debt – that a debt collector has revived.  Review your own records and any information you got in the mail, including the validation letter that the debt collectors must send. Always respond to the lawsuit. The worst thing anyone can do is ignore the lawsuit. That puts your wages, bank account or property at risk. Worse, you can also lose the ability to dispute that you owe the debt.

Organizing your defense and writing the response can be complicated, so you may want to consult an attorney. Often, attorneys will provide a free consultation, and if you win your case the debt collector likely will have to pay your legal fees. Many local legal aid offices offer low- or no- cost services.

Options for handling the hearing. Showing up for your hearing is crucial. This is when the judge will decide whether you must pay, and it’s your chance to make your defense or work out a deal with the creditor.

  1. If you owe the debt.
    Set up a payment plan where you make regular, affordable payments on the bill until you pay it off. Settle the debt for less than you originally owed. If you can strike a deal, be sure to get a written agreement that says the creditor will consider the debt fully settled and will report it to the credit bureaus as paid.
  2. If you incurred the debt but think you shouldn’t have to pay.
    There are several instances in which you might have standing to refuse to pay a debt. You may be able to invoke these so-called affirmative defenses if, for example:
    • What you bought was defective or never delivered.
    • The debt contract was unenforceable or illegal, or you signed it based on falsehoods.
    • You canceled the contract within the lawful time frame.
  3. If you don’t owe the debt
    When you’re sued for a debt you don’t owe or for an amount you dispute, two words can give you a strong defense:” Prove it.” At the hearing, you can ask the creditor to provide the original debt contract and to prove why you owe the amount specified. If it can’t, the judge may dismiss the case.

Adequate documentation is key, but also seek the help of a qualified legal professional to help you navigate this process.

A lawsuit for a debt you don’t recognize may be the results of identity theft, so you may want to check your credit report for activity you don’t recognize.