How to Stop a Lawsuit from a Creditor

When you are being sued by a creditor, it can feel like the end of the world. These creditors are trying to get money out of you at all costs which can include taking you to court over the amount they want back. Since there is no room for negotiation in these scenarios, you’ll want to follow these steps on how to stop a lawsuit from a creditor.

It is possible to settle to stop filing a lawsuit from a creditor. A law firm representing your interests may be able to negotiate a debt settlement agreement. Bruner Wright P.A. is your best choice in this situation.

Due to the rise in third-party debt purchasers, creditors are increasingly filing lawsuits. These companies purchase debts from Original Creditors, such as banks and credit card companies, for a fraction or even less than their actual value and attempt to collect them. Creditors often file lawsuits when phone calls and letters fail to work. If the creditor prevails and the judgment is entered against the defendant, serious consequences can befall the defendant, including wage garnishment in many states and the seizing of bank accounts.

Although it sounds like a nightmare story, millions of people experience this every year. In reality, in 2013, 3 percent of all U.S. workers have their wages garnished because of consumer debt.

Knowing how to stop a lawsuit from a creditor is the best way to avoid a judgment. You can take these steps to avoid the courtroom.

Review the Statute of Limitations

Creditors have a limited time period to sue you for a particular debt. This is known as the statute of limitations. The clock begins to tick as soon as you stop paying your debt. The clock will reset if you make a payment again. If you haven’t made any payments in six months, the statute of limitations will start to run. It will then be over if you make a payment in month seven.

Due to jurisdiction issues, the statute of limitations can sometimes be confusing, especially when a credit-card company files a lawsuit. Credit card companies often include a clause allowing them to choose the venue where they will file the lawsuit. These clauses are sometimes thrown out by judges. These confusing rules could lead to a lawsuit in either your home state or in the state where the card issuer is located.

Locate the state in which the lawsuit was filed. Also, check the statutes of limitations. Remember that the type of debt will determine the statute of limitations. In Florida, the statute of limitations is 20 years for judgment recovery and unpaid tax, but 5 years or less for all other causes of action.

Check if the Company Should Has the Right to Sue

A creditor may sue you for your debt. This is most likely to be the second or third collection agency that pursues it. To file a claim for debt collection and collect it, the company must be legally authorized. The debt collector will need to produce your signed credit agreement as well as evidence about the chain of custody for all debt-related paperwork. The case will be dismissed if the creditor is unable to provide the documentation.

Make a Settlement

It is possible to reach a settlement agreement with the credit company in order to avoid the lawsuit and only pay around 50% of the debt. However, you should be cautious as creditors often take advantage of those who don’t have attorneys.

First, you should not pay until you have received a written agreement accepting the settlement and agreeing that the lawsuit will be dismissed. Next, ensure you adhere to the agreement exactly as it is written. You can cancel your contract by failing to pay one payment.

Do Not Submit a Default Judgment

You might feel tired of debt collectors after a while. You might be tired of opening letters and feel that it is better to ignore them all. Aside from that, you can ignore your court summons, but that will not stop the lawsuit from proceeding. As soon as you get your summons, the clock begins to tick. Failure to respond to the summons by the deadline will result in a default judgment being entered against you. The creditor can then begin collection actions including wage garnishment.

In Florida, the deadline for responding to a debt Summons and Complaint takes only 20 days starting from the day you are served. This includes Saturdays and Sundays. Do not wait until the last minute.

If you or your attorney fail to appear for a hearing, the court may enter a default judgment.

Answer the Claim

Answering your claim will save you time and stop the judge from issuing a default judgment. Either you will answer the questions or deny them. Or you could state that you don’t have the necessary knowledge. After you have completed your answer, it must be filed with the court. The opposing attorney will also need a copy.

Consider Filing for Bankruptcy

If you have exhausted all other options but the lawsuit is still moving ahead, bankruptcy may be the best option. The court will issue an automatic stay order once you file bankruptcy. This will stop the creditor from suing you.

You can wipe out most debt with bankruptcy. This includes nonpriority unsecured debts like credit card debt. However, there are exceptions. You cannot discharge the debt if you make false statements while applying for credit.

Your credit card activity will be examined by the court and it can decide whether you are eligible for bankruptcy. The court will first check if you have taken out large cash advances within the last 70 days. Your claim could be denied if you have taken out an advance of more than $1,000. The next step is to review your credit card usage over the past three months before you file. You will be denied if you spend more than $725 for luxury goods or services during that period.

It’s not likely that you used your credit card in the past months if you’re facing a credit card lawsuit.

Get Legal Representation

Legal representation can be obtained to stop the lawsuit from going to court. To ensure the validity of your debt, your lawyer will conduct research. This includes the validity and amount due. These are only two examples of legal defenses. Legal defense can be used by your lawyer to try to have the case dismissed before it goes to court.

Act Fast

Once you get a summons, there is not much time to act. You must act quickly to stop the lawsuit from a creditor. You have legal options, whether you want to pay the debt or prove it invalid.

Get Help From a Florida Bankruptcy Attorney Today

Bankruptcy is often the only avenue for people who encounter financial crises to take. If you are drowning in debt, and feel like you have nowhere else to turn, please give us a call at Bruner Wright P.A.—we’re here to help.

Legal proceedings in bankruptcy cases can be very complicated. Many creditors will not hesitate to file a lawsuit against you in hopes of collecting the debt you owe them. But if you are in serious financial trouble and think that you might need to file for bankruptcy, it is important that you speak to Bruner Wright’s bankruptcy attorney as soon as possible. We have offices located in Tallahassee and Jacksonville, FL ready to serve you. Contact us today for an initial consultation!