How to Be a Dirt Bag – Debt Buyer Style

He had been sued by a debt buyer.  For three months he had been fighting a good battle on his own, but now trial was just around the corner and he was panicking.  The elderly man sitting in my office had paid his debt – in full.  That didn’t matter to the debt buyer.  Even though he had provided the debt buyer his bank statements showing that each and every payment had been made he still got sued.  And not only did he get sued, the case is headed for trial even though the debt buyer is aware that the debt has been paid.  The trial is coming up…I will keep you updated.

Who are the debt buyers?  The most common ones are Midland Funding, LVNV, and Portfolio Recovery.  Their goal is to collect money.  Period.  Too often courts are entering default judgments or allowing granting judgments after trials based upon little to no evidence.  So what do you do if you have been sued by a debt buyer?  You must act.  Here are 3 steps you must take as soon as you get served with a complaint or lawsuit by a debt buyer:

Step 1 – Write it Down!

Take out your calendar and write down the day you got served with the lawsuit.  When I meet with people to discuss their collection lawsuit the first thing I ask them is when they received the documents.  Often they can only guess as to the approximate date.  The problem with this is the court system’s deadlines are not based upon “approximate” dates.  If you miss your deadline to file an Answer to the lawsuit your risk a default judgment being enterd against you.  Most states have a 20-30 days response time.  Read the summons, find out the date when your response is due, and write it down!

Step 2 – Take Some Time to Cool Down

When people get served with a lawsuit – especially if it has never happened before – they panic.  They are humiliated, confused, angry.  Before you decide what to do or who to contact give yourself a couple of days to compose yourself.  Sometimes I see clients that get sued and then quickly prepare an Answer discussing in detail their current financial hardship and how they have tried to make payments in the past. Don’t do this.  It not only does not help your case, it actually hurts – severely.  Additionally, there is no need to call the attorney for the debt buyer at this stage.  You won’t likely be able to speak with them any way (most of these collection-type law offices are a few attorneys and 20 paralegals).

Step 3 – Start Gathering Together Documents Related to the Debt

Regardless of whether you are going to represent yourself in court or hire an attorney you need to have all the facts to properly answer the lawsuit.  Take the time to see what invoices you have, old statements, bank records and even credit reports can contain information that will help you in defending the case.  Maybe the statute of limitations has run, maybe they are calculating interest at the wrong rate.  All these things are relevant and can help you as you go forward with your case.

In the next article I am going to go over in detail how to draft an Answer to a debt buyer lawsuit and what pitfalls to avoid.