Creditor Lawsuits Creditor Lawsuits

If a Lawsuit Is Filed

First things first: this is a long and relatively detailed section.

But don't worry, you don't have to memorize all the material, earn a law degree, or even play a lawyer on TV. My goal in this section is to make sure you understand the process and some of the steps you can take to defend yourself from creditors who file a debt collection lawsuit against you. Remember, the more hoops you make them jump through, the more likely they are to give up or mess up. For additional help, listen to the recorded tutorials in the Resource Library and consider enrolling in our Lawsuit Defense Partner Program.

Of course, you can always hire an attorney who specializes in this area, but if the debt is yours, an attorney is most likely going to advise you to settle (that is, unless you have documented affirmative defenses). You may be able to go it alone with the help found on this website, but you should consider enrolling in our Lawsuit Defense Partner Program—an educational membership organization that has been helping people like you defend themselves against debt collection lawsuits for close to 10 years. They know all the players and their tricks and can teach you how to mount a proper defense.

Back to what to expect. Let's start with the summons.

As you know, if a creditor files a debt collection lawsuit against you, you must be notified of that lawsuit in the form of a summons. The summons is usually accompanied by a complaint generated by the plaintiff (the party doing the suing) and must be answered or else a default judgment will be entered against the defendant (you!). Serving jail time is not a possibility—there is no debtor's jail!

We've talked about proper service, but the subject bears a little repetition. "Proper" service depends entirely on your state's laws. In Ohio, for example, the sheriff's department generally executes service. The collection attorney filing the suit goes to the courthouse, pays filing and service fees, files the lawsuit, and the court gives a service copy to the sheriff. The sheriff sends the Summons and Complaint out by certified mail; the same day he files a return of service saying he has served the summons, whether you receive it or not (ouch).

On the flip side, in Michigan if the summons is not placed in your hand, then you haven't been served. In Illinois, when you are served you'll find out a court date has already been set and you will have to appear.

Keep in mind the entire legal process cannot begin until you have been served. If you receive a card from the Post Office stating you have a certified letter that you must sign for but you do not respond, then you have not been served. Or, if you find a notice from the Sheriff's Department taped to your front door asking you to call because they have "important documents" they wish to give you, again, you do not have to respond and you haven't been served. There is no law that says you have to make it easy for a process server to serve you with a summons and credit lawsuit.11

To find out how the process works in your state, check out the state and county rules in your locale. Find out what constitutes proper service, and what you are required to do once you have been served. Check with your state and county—or consult a local attorney—for the most updated information. We have also put together a list of State Debt Collector Laws for each state for your reference.

Why? Because once you are served, you'll need to take action. You must answer the complaint within the specified time period or you will lose by default. The clock starts ticking on that time period usually the day after you have been served.

In every state there are things that must be done immediately. In Maryland, for example, you must file a Notice of Intent to Defend within 15 days and start the process of discovery within another 15 days.

Things can happen quickly, so don't delay and never, ever, just stick your head in the sand. Non-responsiveness is deemed an admission of guilt and you will lose 100% of the time. Go to the courthouse and file your response in person using the original documents; that way you'll be sure your response was received. Keep a copy of your response for your records, and also send a copy to the law firm listed on the complaint.

Because the rules vary so drastically by state, we recommend that you either hire an attorney or enroll with our Lawsuit Defense Partner Program immediately upon getting served. To get you started, however, we have compiled a list of state-specific information on our website. Alternatively, you can perform an Internet search for "yourstate civil court rules." Don't worry if it all seems overwhelming at first. The more time you spend with the information, the easier it will be to understand (and again, you don't have to understand the minutiae, just the broad strokes on service, response times, and such).

Not all creditor lawsuits are created equal. Four different creditor situations could exist to form the basis of the suit:

  1. You are sued by the original creditor (the credit card company)
  2. You are sued by a successor creditor (such as when one bank buys or merges with another bank)
  3. You are sued by a debt-buyer who has purchased your account from the original creditor
  4. Your account is assigned to arbitration

Arbitration is when your case does not go to trial but is heard by a neutral third-party called an arbitrator; some credit card agreements stipulate arbitration as the means for settling a debt dispute instead of litigation. Though it is important to note that the NAF (National arbitration Forum) and AAF (American Arbitration Forum) will no longer hear or rule on consumer arbitration issues thanks to the aforementioned lawsuit filed by the Minnesota Attorney General, arbitration is now used by local courts as a form of what they call ADR (Alternative Dispute Resolution), which could also include mediation. The good news is that court-ordered ADR is non-binding and can therefore be challenged.

11. Again, in some states the creditor need only make a reasonable effort to serve you before you are deemed served. Make sure you check your state's service laws.

> Answering the Complaint

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