Debt Collection Lawsuit: Here's How to Protect Yourself

Most unpaid credit card debt never turns into a court case, but it could happen. A creditor or collection agency has the right to take legal action in certain situations for unpaid debts.

In recent years, more people have been finding themselves in this position, as debt collection lawsuits have become increasingly common in many parts of the country. That’s one more reason it’s important to understand your debt relief options early, so you can protect yourself and avoid unnecessary stress.

If you receive a summons for a debt collection lawsuit, it’s smart to talk to an attorney. They can talk with you about your situation and potentially help you defend yourself in court. 

If you haven’t actually been sued and are just worried about possibly getting hit with a debt collection lawsuit, you still have options. You could take steps now, before getting sued for credit card debt, that could help you protect yourself and get a better solution to your debt problems. 

Here are a few ideas for how you can protect yourself from a debt collection lawsuit before it happens. 

The information provided in this article is intended for general informational purposes only and shouldn't be taken as legal advice. For personalized legal advice, consult with a qualified attorney licensed to practice law in your state.

Before a Debt Collection Lawsuit Is Filed: Talk to Your Creditors 

If you have debt in collections, you have the right to ask debt collectors to stop contacting you. If you can’t repay the debt, don’t believe you owe the debt, or are just tired of hearing from debt collectors, you can tell them to leave you alone.  

Debt collectors have the right to take you to court with a debt collection lawsuit. If you are being threatened with a lawsuit, cutting off contact with debt collectors might not be the best choice. They might be left with no other option besides filing a lawsuit.

Instead, you might want to consider talking with the debt collectors. If the debt is legitimate—you really owe the money, it’s not a mistake, you want to take responsibility for the debt—and you can afford to make a partial payment on the debt, you could offer to negotiate a debt settlement. 

Debt collection agencies are often willing to accept less money than you owe instead of taking you to court. Debt settlement can sometimes avoid a debt collection lawsuit. You could even settle a debt after a lawsuit has been filed against you, but you might want to talk to a lawyer who can help you manage the process. 

Know the Statute of Limitations to Avoid a Debt Collection Lawsuit

Sometimes debt collectors contact people about old, outdated debts. If your debt is too old, debt collectors and creditors may not be allowed to sue you for it. This legal time limit is called the statute of limitations. 

The statute of limitations varies by state and type of debt. For instance, each state has its own statute of limitations on credit card debt, typically between three to 10 years.

So, if the statute of limitations in your state is five years and it’s been six years since your last payment on the overdue debt, your debt is beyond the statute of limitations. This makes your debt a time-barred debt, and the creditor no longer has the right to collect. That doesn’t mean they won’t try.

Here’s a trick that debt collectors might try: they often put pressure on you to pay old debts, even when the debt is time-barred. If you make a payment, no matter how small, toward a time-barred debt, this can restart the clock on the statute of limitations and could open you up to a debt collection lawsuit. Even just agreeing to make a payment could reset the clock. 

Talk to a Lawyer Before You Sign Anything 

If a debt collector is serious about bringing a debt collection lawsuit against you, you’ll receive a court summons—an official document from the government. That’s when you should talk to a lawyer. 

Sometimes, debt collectors threaten to sue you, but don’t actually go through with it. Instead, they may try to get you to agree to pay an old, time-barred zombie debt in other ways, by signing some new agreement. The paperwork could: 

• Be vague and confusing

• Have aggressive, legal language

• Say you owe more money than you expected

You might feel as if signing is your only choice. 

Don’t. If a debt collector or creditor is trying to get you to sign anything about an old debt, this is another situation when you need to talk to a lawyer. Signing paperwork you don’t understand could mean losing a lot of money or even your home. This has happened to some families who went through zombie foreclosures because of old unpaid second mortgage debts.

First, talk to a lawyer. A qualified attorney in your state can help you understand your choices and protect your rights. They might be able to help you avoid a debt collection lawsuit or defend yourself in court against your creditors. 

And even if you never get served with a debt collection lawsuit, you might need other professional help with your overdue debts. Hearing from debt collectors about overdue debts could be a sign that you’re having financial hardship and could benefit from debt relief. 

If you’re ready to learn more, get a free debt evaluation to understand your options and find out if your situation might be a good fit for a professional debt settlement program.