I've Been Sued by a Debt Collector in Colorado - What Should I Do?
Other than a few traffic tickets, a debt collection lawsuit is most people’s first experience with the legal system and it can be intimidating. This article is designed the give you an overview of the lawsuit process and potential outcomes with the expectation that as you better understand what lies ahead, you will be less likely to make the worst mistake you can commit at this time -sticking your head in the sand and hoping it will go away on its own.
The Summons and Complaint
For most people, th e lawsuit process begins when you are served with a summons and complaint. The summons contains basic information about the administrative aspects of the suit including t he court when the case was filed and some basic instructions. Probably the most important piece of information on the summons is the return date, or the date on which your cre ditor will win a judgment against you if you don’t take any action. The complaint sets out the basic argument against you and normally states the reason you’re being sued, the amount you're being sued for, and the identity of the original creditor if the party suing you is a debt collector.
In some cases, there will be a couple of other blank forms given to you with the summons and complaint. One of the attachments is likely a list of questions about where you work and bank. These que stions are designed to make it easier for the creditor to collect the debt in the event that it wins the lawsuit. Because of this, it’s generally best to avoid filling this form out unless you must. Knowing which list of questions you can ignore and which you must complete is the tricky part, especially given that the failure to complete and return court ordered interrogatories can result your being held in contempt of court and a bench warrant being issued for your arrest. Many times these forms will say optional or voluntary across the top, in which case they can be ignored. If not, or you have any question, fill it out and send it back or talk to an attorney.
Filing an Answer
Also attached may be a answer form that you can complete and return to the court setting out any reasons why you should win the lawsuit. If you plan on filing an answer, it would be wise to speak with an experienced debt attorney because they know how to draft this document in a way that minimizes the risk of the creditor using your words against you and increases the chances that the creditor will leave you alone and move on to an easier target. Regardless of whether you prepare your answer yourself or have an attorney do it, you'll probably want to hold off on filing the answer for as long as legally permissible in order to give yourself more time to look at other options such as chapter 7 bankruptcy, chapter 13 bankruptcy, or debt settlement.
What The Debt Collector Can Do To You
If you don't take any action or you move through the trial process and lose, the actions the creditor can take against you vary depending on the state you live in. The most common method to collecting on the judgment is a wage garnishment. About 25% of your take-home pay will be removed from your check each pay period until you've repaid the judgment amount, filed bankruptcy, or worked out some other arrangement with the creditor. Another popular form of debt collection is to seize the money in your bank accounts. Again, the amount they can seize varies depending on the laws of your state, but unlike a wage garnishment you can reduce the amount taken by simply limiting the amount you have on deposit. Other less common collection methods include repossession of secured assets and placing liens on property.
If you've been sued by a credit card company or a debt collector, it's not too late to seek help. Talk to a debt relief or bankruptcy attorney as soon as possible to avoid making mistakes during the lawsuit process, to learn how to protect your assets, and to come up with a plan on how to deal with your debt so you’re not sued again.
Frequently Asked Questions about Debt Collection Lawsuits
• I don’t recognize the name of the company that’s suing me – Who are they?
Many large creditors don’t bother attempting to sue you to collect what’s owed. They often sell or assign your debt to smaller organizations that only collect debts. In some instances companies try to collect debts that they have no right to enforce, so it’s important to have your case analyzed by an attorney.
• Do I have to file an answer or appear at the date and time stated?
In a debt collection matter, if you don’t file an answer or appear, the court will render a default judgment against you. This is essentially an order from the judge stating that you’ve lost the suit and the debt collector can now take your property to satisfy the debt. While in most instances you don’t need to appear or file an answer, doing nothing is generally not the best choice for the reasons set out below.
• What can the creditor do to me if they win the lawsuit?
The most common debt collection method is garnishment of wages. Most creditors can take about 25% of your take-home pay for as long as it takes to satisfy the debt, attorneys’ fees, and accrued interest. Another popular tool is the seizure of money in your bank account. If you have had money taken from a bank account, contact an attorney right away, because there’s a chance you can get a big chunk of it back. Less common collection methods are liens against your home or car, attachment of tax refunds, and others.
• How do I file an answer?
Some creditors will include a blank answer form with the summons and complaint for you to fill out. If they haven’t, you can get a one from the court’s website, or contact my office for one. Take it to the clerk of court and pay a filing fee of about $100-150. It is strongly recommended that you consult with an attorney prior to drafting your answer because the debt companies will use your answer against you if it’s not prepared in a specific way.
• What’s the benefit to filing an answer?
The greatest benefit is that, sometimes – especially when the answer is prepared by an attorney – the debt collector just stops the lawsuit. They want to collect the most money with the least amount of work, so your answer indicates that you’re not going to let them walk right over you. Another benefit is that filing an answer will give you time to either negotiate a settlement, or get your bankruptcy ready.
• Should I fill out the “Optional Information Sheet" included with the summons and complaint?
No, the creditor will just use this information against you. However, if you are presented with a similar list of questions that are not designated as optional or voluntary, you may need to answer and return them promptly or you could face a contempt of court citation. If you’re not sure which one needs to be returned, call my office for help.
• Should I still respond if I’m pretty sure that I do owe the debt?
In addition to the other benefits that come from filing an answer listed above, there are other reasons not to just give in if you’ve been sued. Even if you did incur the debt, it may be old enough that the creditor no longer has the right to sue you for it. Additionally, creditors will often try and collect additional fees and interest from you that they are not entitled to you. Because a judgment stays on your credit report for several years, it’s in your interest to resolve the matter before the end of the case.
• Can I stop a wage garnishment once it’s started?
Only a bankruptcy, loss of employment, or dramatic reduction in income can stop a garnishment.
• Can a bankruptcy help me?
It’s not too late to file bankruptcy even if you’ve been sued, have a judgment against you, or are being garnished. Bankruptcy can stop your creditors from calling you and seizing your money or property, wipe out debt, and give you a fresh start. The sooner you seek help from an experienced bankruptcy and debt resolution attorney, the better.