Is a debt collector threatening to sue you, or do you suspect they will? Debt collectors may contact or send you collection letters for weeks or even months before bringing a lawsuit, or they may file one immediately, or they may never file one at all; there are numerous considerations that go into a debt collector’s choice to sue. So, when will a debt collector file a lawsuit against you? Perhaps never.
Before filing a lawsuit to recover a debt, debt collectors will consider four primary factors:
While this is not an exhaustive list of factors that a debt collector might consider before filing a lawsuit, you can use these factors to gauge your odds of a lawsuit being filed.
Debt collection statutes of limitations exist in every state, limiting the amount of time a creditor or debt collector can sue to collect on a debt. When is a Debt Considered Time Barred? provides more information on time-barred debt.
Before bringing a case, any Plaintiff must be able to locate the Defendant. When a lawsuit is filed, the Plaintiff must serve a copy of the Complaint and Summons or a Notice of Lawsuit on the Defendant. If a Plaintiff does not have a current address for a Defendant or knows where they work, serving them correctly may be impossible, and filing the lawsuit may be a waste of time and money.
If a Plaintiff can locate the Defendant, the amount of money they might be able to recover as a consequence of a lawsuit will be the next factor to examine when choosing whether or not to file. A debt collector may conclude that suing is not worth the risk if the amount is relatively low after accounting for the present debt, court costs, attorney fees, and interest.
Once a debt collector has determined that it can locate the debtor and that the size of the debt warrants a lawsuit, the debtor’s ability to pay the obligation is assessed. Debtors receiving pensions or government benefits who do not own real estate may not be able to pay their debts or have any garnishable wages to apply to a judgment, and hence are unlikely to be sued.
Debt collectors will also consider the wishes of the original creditor and the strength of the case against the debtor when launching a lawsuit. Many small businesses may prefer to avoid the costs of a lawsuit and instead use a collection agency to try to recover the debt in any other way feasible. If the original creditor does not give any proof of the initial debt, such as a contract or other documentation confirming that a service was supplied to the debtor and the debtor has not paid for that service, the debt collector may decide not to sue.
When a loan is 30 days past due, most creditors will initiate their own collection efforts. These attempts, which may include past due invoices, phone calls, and a threatening letter or two, will typically continue until the account is 180 days past due, at which point the account will be turned over to a collection agency, or debt collector. Before resorting to the effort and expense of initiating a lawsuit, the debt collector would usually try to collect the bill for several weeks or even months. During collection attempts, the collector may threaten to sue, but this does not mean that it would. Many debt collectors threaten a consumer with a lawsuit in order to get them to pay the bill. This is a breach of the Fair Debt Collection Practices Act (FDCPA), which bans a debt collector from threatening to take action that it does not plan to conduct.
While the Fair Debt Collection Practices Act prevents bill collectors from threatening to sue if they do not intend to do so, many will nevertheless use this strategy to scare a client into paying a debt. If a debt collector threatens to sue you, you should take the following steps:
When talking with a debt collector, the first rule is to never admit that you owe the obligation. If you decide not to pay a debt for whatever reason, the debt collector must prove that you owe it in order to secure a judgment against you. It will be considerably easier to win a judgment against you if you are recorded admitting you owe the amount or if the collector obtains written correspondence from you admitting you owe it.
If a debt collector threatens to sue you for a debt you don’t believe is yours or that you feel has been paid, you should ask the debt collector to verify the debt. You can do this over the phone, but if you don’t get a response within ten days, you should write a letter asking the verification.
You should keep a record of all phone calls, including the time and date of the contact, the identity of the customer service professional you spoke with, and what they said, because a debt collector who threatens to sue may be in violation of the FDCPA, and you may have a lawsuit against them. You should also keep track of any correspondence you receive from a collection agency.
If a debt collector has sued you or threatens to sue you, you should seek legal advice from an FDCPA attorney to evaluate whether they have violated the FDCPA and preserve your rights. Please contact us at 1-800-219-3577 for a no-cost, no-obligation consultation.
How likely is it for a creditor to sue?
According to a 2017 survey by the Consumer Financial Protection Bureau, roughly 15% of Americans who have been approached by a debt collector about a debt have been sued. Only 26% of those who were summoned to court showed up, which is a major no-no.
The circumstances surrounding the decision to launch a lawsuit differ from one case to the next. However, because litigation can be costly, collection agencies often do not sue straight away. Instead, they’ll try various strategies before filing a lawsuit once they’ve exhausted all other options.
When, on the other hand, will a debt collector file a lawsuit? This can happen after several months of collection attempts or immediately after you request that they no longer contact you, depending on the circumstances.
As a result, it’s critical to be cautious as soon as you make touch.
Is there a minimum amount for debt collection?
A collection agency will normally sue you for a minimum of $1000. In many circumstances, it is significantly less. It will be determined by the amount you owe and if they have a written agreement with the original creditor to collect payments from you.
How long does it take for collections to sue you?
If you owe a substantial sum of money to a single debt collector, such as several thousand dollars, it’s more probable that they’ll seek to sue you. If the obligation is past the statute of limitations, they may choose to sue. “Once the statute of limits on a debt has expired, depending on state law, they can’t sue you, or if they do, you can show up in court and inform the judge that the obligation is outside the statute of limitations or it’s too old, and they’ll lose the lawsuit,” Detweiler explains. A collector may sue soon before the statute of limitations runs out, allowing them to collect even if the statute of limitations has run out.
Will a collection agency sue for $1000?
When a creditor files a petition with the court to start a lawsuit against a customer who owes them money, this is known as a collection lawsuit. Lawsuits for debt collection can be costly and time-consuming. When attempting to collect an alleged debt payback, most creditors will choose not to follow this method. If additional possibilities are available, creditors are more likely to choose one of them.
A creditor will usually choose the quickest means to collect money by repossessing your car, home, or shutting off your utilities. For debts under $1,000, collection lawsuits are uncommon. When a consumer makes little payments, even though these payments are less than the creditor’s minimal requirement, the creditor will not file a lawsuit.
Collection firms that are more aggressive will threaten to garnish employees’ wages as payment for a debt. The creditor, on the other hand, cannot seize your wages unless they have received a court order.
Before a lawsuit, a credit counselor can help clarify credit concerns, but make sure you’re dealing with authorized counselors. If you have a housing debt problem, look for agencies that have been approved by the Department of Housing and Urban Development (HUD). For credit card concerns and other debt problems, the Consumer Credit Counseling Service (CCCS) is an excellent option.
How long can you legally be chased for a debt?
The statute of limitations is a law that establishes a time restriction for debt collectors to prosecute consumers for unpaid debt. The statute of limitations for debt varies by state and type of obligation, and can last anywhere from three to twenty years. To get you started, here’s a list of each state’s debt statute of limitations – but keep in mind that credit card companies frequently argue in court that the law in their home state (not yours) should apply.
What happens when a small bill goes to collections?
Even when we make every effort to satisfy all of our financial commitments, life can get in the way. Our bills don’t always match our cash flow, especially when we’re hit with unexpected medical bills or a loss of income. Lenders may transfer outstanding loans to a collection agency after a certain amount of time has passed. This may come as a shock and be perplexing at first, but there are steps you can take to correct the situation and get back on track. So, when a bill is sent to collections, what happens?
Lenders often keep outstanding debts for 30 to 180 days before selling them to a collection agency. This type of debt is referred to as a “charge-off.” Once received, the collection agency notifies the three main credit bureaus that your account has gone to collections, resulting in a negative record on your account and a decline in your credit score. The specifics of the charge-off will then be communicated to you by phone and in writing.
What debt collectors Cannot do?
You cannot be harassed or abused by debt collectors. They are not allowed to swear, threaten you or your property with illegal harm, threaten you with illegal activities, or falsely threaten you with actions they do not intend to take. They also can’t phone you repeatedly in a short amount of time to annoy or harass you.
Debt collectors are not allowed to make false or misleading claims. They can’t, for example, lie about the debt they’re trying to collect or the fact that they’re trying to collect it, and they can’t use phrases or symbols in their communications to you that make them appear to be from an attorney, court, or government agency.
Debt collectors are not permitted to contact you at inconvenient or odd times or locations. They may call between the hours of 8 a.m. and 9 p.m., but you may request that they call at a different time if those hours are difficult for you.
Debt collectors are permitted to send you notices or letters, but the envelopes must not contain information about your debt or any information meant to embarrass you.
You can ask a debt collector to only contact you by mail or through your attorney, or you can put other restrictions in place. Make sure your request is in writing, that it is sent certified mail with a return receipt, and that you preserve a copy of the letter and receipt. You also have the right to request that a debt collector cease all communication with you. If you do this, the debt collector can only contact you to affirm that it will stop contacting you and to warn you that it may file a lawsuit or take other legal action against you. Remember that even if you urge a debt collector to cease contacting you, the debt collector may still sue you and disclose your debt to credit reporting agencies, damaging your credit.
See Debt Collector Contacting Your Employer or Other People for information on when a debt collector can contact your employer or other people.
Can a debt collector sue you?
Debt collectors are still entitled to ask you to repay your lawful debts, despite your FDCPA rights. There are a few things to keep in mind while you go through this procedure.
Check your credit reports for collection accounts
It’s critical to understand the age of any genuine bills you owe. This is because negative information on your credit reports, such as debt outstanding, is normally kept for seven years.
A late payment or a past due account will have a negative influence on your credit history. In fact, because payment history is the most important element in determining your FICO and VantageScore, overdue accounts with a past due balance can have a significant negative impact on your ratings.
The Fair Credit Reporting Act allows everyone in the United States to view each of their three credit reports for free at least once a year. You can check if you have any collection accounts by getting a copy of your free credit report from each of the main credit agencies Equifax, Experian, and TransUnion.
Keep in mind that even if you pay off a debt that appears on your credit reports, it may appear as a paid collection on those reports for up to seven years.
Know the statute of limitations for your debt
You can assess if you still have legal duty by looking at the age of your debt. Even though debt collectors threaten you, once the statute of limitations has expired, they will be unable to prosecute you for collection unless the debt is revived.
The statute of limitations that the debt collection agency must follow is likely determined by where you live and the sort of debt you have. According to the Consumer Financial Protection Bureau, most statutes of limitations last three to six years, though they may go longer in other jurisdictions.
Contact your state attorney general’s office if you want to learn more about your state’s debt collection laws.
Making a payment could restart the clock on your debt
Making a partial payment on your debt may restart the statute of limitations in several states. As a result, before you agree to a payment plan, make sure you’re fine with the idea of having to pay off all of your debt at some point. It’s also a good idea to write down your payback plan and double-check it for correctness.
Debt collectors may be more ready to reach a settlement with you if your debt is approaching the statute of limitations in your state, according to the Consumer Financial Protection Bureau.
Respond to lawsuit notices
It’s critical that you don’t dismiss a debt collection endeavor. If debt collectors are unable to contact you and negotiate a settlement, they may be entitled to sue you.
If you ignore a summons, even if you believe the debt is too old, the debt collector may obtain a judgment and pursue your assets or garnish your earnings, depending on your state’s laws.
If you’re concerned that you won’t be able to pay a counsel to defend you against a debt collector’s lawsuit, the Consumer Financial Protection Bureau gives information on state legal aid offices.
Send a ‘drop dead’ letter
Are you fed up with debt collectors calling you all the time? You have the right to request that they refrain from contacting you. You can do so by sending a “drop dead letter” to the debt collector, which is a formal notice alerting them that you don’t want to be contacted any more.
Debt collectors are compelled by law to comply with this request. However, keep in mind that this letter will not prevent a debt collector from filing a lawsuit against you to recover a debt.
Research debt settlement and debt counseling services
Debt settlement and counseling services may be beneficial, but don’t overpay for things you don’t require.
You might want to look into a well-known credit counseling agency that might help you with your finances. The National Foundation for Credit Counseling and the Financial Counseling Association of America are two choices.
There are other debt payback services that are for profit. According to the Consumer Financial Protection Bureau, any service that requests an advance payment or urges you to stop making payments to creditors should be avoided.
Find out more about the debt settlement and debt relief options accessible to you.
Beware of scam artists
Unfortunately, some criminal actors may try to take advantage of people who are in debt. When someone reaches you and asks for money, it’s crucial to be cautious.
Here are some telltale signals that the debt collector or debt counseling agency you’ve been contacted by isn’t who they say they are and is actually a con artist.
- They employ high-pressure techniques (such as threats of arrest, alerting authorities, physical harm or shaming).
- They refuse to answer inquiries or provide you with information such as the company’s name, address, or phone number.
- They are looking for financial information about you (such as bank account or Social Security numbers).
- They require payment methods that are less traceable (such as gift cards, wire transfers or bitcoin).
Can you go to jail for debt?
Not being able to satisfy payment responsibilities can cause anxiety and stress, but in most situations, you will not be sentenced to prison if you are unable to repay your debts.
You cannot be jailed or imprisoned just because you owe money on a credit card or a student loan. However, if you haven’t paid your taxes or child support, you may have cause for concern.
How often do Creditors sue debtors?
In around 15% of collection instances, credit card firms sue for non-payment. Debtors usually only have to worry about litigation if their accounts are 180 days past due and have been charged off or defaulted. When a credit card issuer writes off a debt and records it as a loss for accounting purposes, this is known as a write-off. Credit card issuers can still pursue debtors for repayment or sell their debt to a collection agency even after a charge-off. If the debtor continues to refuse to pay whomever is collecting the debt, the creditor may initiate a civil lawsuit against the debtor. If the debt is paid or the balance owing is less than $1,000, the creditor is less likely to do so. Furthermore, if the statute of limitations has elapsed (usually 3 to 10 years, depending on the state), they may not be able to sue successfully.
Litigation is costly in terms of both time and money, which is why lawsuits are not a credit card company’s first response in cases of non-payment. It’s also possible that the judge will rule against them. If there’s a method for creditors to get paid without filing a lawsuit, such as by lowering your minimum monthly payment to make it more reasonable, they’ll usually take it.
You certainly want to avoid litigation as a consumer. They’re costly, and a court judgment against you will appear on your credit report, negatively impacting your credit score. As a result, it’s important to understand when you might be sued for credit card debt and what to do if you are.
- You’ve been late for at least 180 days: At this point, the creditor is required to write off your debt as a loss. They can still sue for reimbursement, and they do so frequently.
- There are no alternative possibilities, according to the company: If your credit card company or collection agency can’t reach you, you’re more likely to face a lawsuit. It’s scary to face your creditors, but it’s the only way to find out a solution to avoid going to court. Unless you give them specific permission, debt collectors can only call you between the hours of 8 a.m. and 9 p.m., so make sure you’re available then or schedule an alternative time.
- The amount owing is substantial enough to support filing a lawsuit: Most credit card companies will not pursue you for a minor debt. In addition, if you owe a lot, the corporation may be ready to forgive a portion of your debt in exchange for a lump-sum payment. This is referred to as debt settlement. While it will harm your credit (since your credit record will reflect you didn’t pay your obligation in full), it may be worth it if it prevents you from being sued or filing for bankruptcy.
Credit card issuers rarely litigate for non-payment unless they have exhausted all other possibilities. While skipping payments will harm your credit, negotiating with your creditors to repay your debt will help to mitigate the impact.
Don’t be alarmed if your creditors have launched a lawsuit against you. Make contact with the creditor as well as a lawyer. The creditor may be willing to cooperate with you, and an attorney can assist you in preparing your defense. You may not be required to pay if the debt collection agency lacks the essential records or if the statue of limitations has passed.
How can I get out of debt collectors without paying?
There are three options for getting rid of collections without paying: 1) Write and submit a Goodwill letter requesting forgiveness, 2) research the Fair Credit Reporting Act and Fair Debt Collection Practices Act and draft dispute letters to oppose the collection, and 3) have a collections removal professional erase it for you.
Collections can stay on your credit record for up to seven years, making it difficult to obtain a car, a home, personal loans, credit cards, or even certain professions. It’s a wise option to do whatever you can to get rid of them as soon as possible.
