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What steps can I take to avoid a lawsuit from a collection agency?

Boston, MA |

state: MA
I've already been sued by one recently and spent nearly a grand to settle it. I don't have a job and I don't want to part with any more money. Are there any steps I can take to prevent them from suing me? With the last case, they sent me a letter to disclose assets and I didn't respond. If I were to respond to that letter explaining my income/asset situation would a debt collector still be likely to sue? And if they did sue me, how could I protect my exempt assets? Thank you.

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Attorney answers 4

Posted

Realistically, if a collection attorney is contacting you, the only way to keep them from suing is to come to some sort of settlement agreement. However, if you are sure the debt isn't yours, the debt is more than 6 years old, or there is some other reason you can prove you don't owe the debt, you may be able to preempt a collection suit by asserting a fair debt collection claim. Any time you are first contacted by a debt collector or collection attorney, be sure to assert your rights to validate the debt.

Filling out the asset form won't help, it's primarily used to see what assets you have that can be seized or garnished to pay the debt, and even if it showed you didn't have any collectable assets, they will likely still file suit in order to preserve the debt through judgment.

If you own a home, you should file for homestead protection. As for your other assets, exemption laws automatically protects them. The burden is on the creditor to show you have non-exempt assets.

Hope this answers your questions, good luck to you.

Posted

Getting sued by them isn't the worst thing in the world. If they are a third party debt collector (debt buyer) they often can't prove that they own or that you owe the debt. The filing fees all have to be paid by them and the burden of proof falls on them. I don't know the rules in MA (although I am originally from there), but in my jurisdiction you do not have to pay court costs to defend a suit. If you are able to where you live, try contacting a local legal aid if you end up getting sued to try to qualify for free legal help.

Best of luck and Go Sox!

Posted

I agree with my colleagues who have answered your question.
I would add filing bankruptcy can stop a creditor from suing you, at least for a period of time. When a person files bankruptcy, all creditors have to immediately stop all collection actions. This is due to what is called the Automatic Stay. The Automatic Stay allows a person who is being hounded by creditors to have some room to think and make better decisions while they go through the bankruptcy process.
If this is a small debt and you don't have much more debt then bankruptcy is probably not the answer for you. Also, if you don't want to spend any money then you won't want to spend the $306.00 filing fee for a Chapter 7 bankruptcy or the $50.00 or so to take a credit counseling course before filing, not to mention attorney fees.
So, in short, the Automatic Stay can halt a creditor from suing you for a period of time. Whether bankruptcy is for you is another story. Here is a link to some information provided by the bankruptcy court.

Michael Lincoln Metzner

Michael Lincoln Metzner

Posted

When getting sued by a debt collector, your entire strategy as a defendant, should be the cost benefit analysis of legal representation versus an immediate settlement. Clearly, a competent attorney can defeat the claim in court by virtue of the Hearsay Rule. In other words, all of the Plaintiff's financial work product in support of the claim was performed by someone other than the Plaintiff, so the collection agency can almost never substantiate its claim in accordance with the applicable Rules Of Evidence. The above nothwithstanding, going to trial is always a risk, and some judges are not exactly sympathetic towards to defendants. Of equal significance is factoring in the cost of hiring an attorney. Accordingly, if you're being sued by a collection agency for less than five thousand dollars and you're being offered a settlement of under 50% which you can indeed afford, then settle the case without a lawyer if this debt is your only bad debt and if getting it settled will remove the only remaining black mark on your credit report. Conversely, if the debt collector lawsuit represents a multitude of bad debts, then your first step is to see if you qualify for a Chapter 7 Bankruptcy. If so, then you should file for bankruptcy so that you can achieve the financial fresh start required to get your life back on track. If, however, you don't qualify for a Chapter 7 Bankruptcy, or if filing for bankruptcy will negatively affect your employment, then hire a lawyer to enter his or her appearance, but make sure your Retainer Agreemeent with this lawyer contains a pre-trial flat fee, with additional legal fees only required if the case does not settle before trial. For a reasonable flat fee, most good lawyers should be able to negotiate a pre-trial settlement of a debt buyer case for between twenty (20) and thirty (35) percent (20-35%) of the purported balance. If you are being sued outside of small claims court (for an amount in excess of five thousand dollars ($5,000) by a debt buyer, for a debt which is not your only credit issue out there, then you should certainly consult with an attorney. If bankruptcy is not the appropriate financial remedy for you, then an attorney who is seasoned in negotiating with debt buyers should be able to negotiate a very reasonable settlement with any third-party creditor. Debt collectors are only imposing when they're negotiating with an unrepresented debtor in a pre-suit setting. However, once suit has been filed and the debtor has a lawyer demanding strict proof of the claim, the debt buyer almost comes back with a decent settlement offer because "when the intimidator can no longer intimidiate, he becomes the intimidated."

Ryan Sherman Loughlin

Ryan Sherman Loughlin

Posted

Very well said! Thank you.

Posted

The best way to avoid creditors, collection agencies, and lawsuits is to pay your debts.

Asker

Posted

how about when you are practically on the streets because you have no income? try again

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