If you’re in a financial hole, dealing with lenders or debt collectors can worsen an already difficult situation. If you have a debt collector threatening to serve papers if you don’t pay up immediately, you may feel terrified and desperate.
But here’s the thing: debt collectors aren’t legally allowed to inform you of a lawsuit unless they intend to sue you. They can’t use that threat to harass you. A fake summons from debt collectors is also a huge no-no.
As such, it’s essential to know your rights as a consumer. And if you have a debt collector threatening a lawsuit because they’re planning to sue, it’s crucial to know which steps to take to protect yourself.
Debt collector threatening to serve court papers? Here’s what’s legal
The Fair Debt Collection Practices Act (FDCPA) spells out your legal rights as a consumer. One of those rights is that they can’t lie about the money you owe or make up other information. In other words, they can’t say they’ll take legal action against you unless that’s true.
Additionally, debt collectors can’t take or threaten to take your property unless it can be done legally. This primarily refers to debt past your state’s statute of limitations. They can technically still attempt to collect a time-barred debt but can’t file a lawsuit.
But debt collectors will often do and say just about anything to get you to pay a debt you owe, like credit card debt, and sometimes even debt you don’t. And while the FDCPA explicitly states how they can and can’t treat you, collectors are often caught flouting those rules by regulators.
For example, you may get a phone call from an agent who says they’re standing outside the courthouse and will file a lawsuit unless you agree to pay. Or, you may receive a letter from the collector saying they have the right to sue you and may be forced to if you don’t pay. Some have even received a scam or fake summons from debt collectors, making them feel like they’re being sued when they’re not.
Again, if a debt collector threatens to scare you into doing what they want and doesn’t intend to sue you immediately, or if you’ve passed the statute of limitations on your debt, that threat violates the FDCPA.
What to do if you have a debt collector threatening to serve papers
Once a debt collector has contacted you about a debt you may owe, you must retain all of your communications.
For example, you can take notes during the phone call and write down the representative’s name and important conversation details. You may also tell the collector only to contact you in writing. Both options give you a record of what they say and how they say it in case you need to file a complaint against them.
If they threaten a lawsuit but don’t send you a summons, inform the agent that they are violating the FDCPA and ask them to stop contacting you. Then file a complaint with the Federal Trade Commission (FTC), the Consumer Financial Protection Bureau (CFPB), and your state’s attorney general office.
If you want to avoid the possibility of a scam or false threat entirely, you can even ask them to stop contacting you from the beginning. This is a request they have to comply with by law. They can only contact you after you submit this request to confirm they’re ceasing communication or to file an actual lawsuit.
Sometimes, it can be unclear whether talking about a lawsuit is a threat or simply providing information. If you’re not entirely sure, consider hiring a debt attorney who can help you understand the nuances of the law and how to protect yourself best.
What to do if the debt collection lawsuit is real
Debt collection agencies sometimes falsely threaten to take you to court, but they can also do it for real. If you receive an actual summons from a debt collector, the document will let you know how much time you have to respond.
You mustn’t ignore an actual summons. If you don’t respond by the date specified in the letter, the court may enter a default judgment in the debt collector’s favor. This means the collection agency gets what it wants through a court order. That can include wage garnishment, bank account garnishment, bank account freezes, and more.
Here are some steps to avoid those things and any additional problems they can create in your life.
1. Verify the information
Debt collectors must send you a debt validation letter within five days after they first contact you. You can request a verification letter if you don’t believe the debt belongs to you or if you don’t owe it. They must send this within 30 days of the validation letter.
You’ll also want to review your records, which can help you determine whether or not you owe the debt. Potential responses include:
- The debt never belonged to you in the first place.
- You already paid the agreed-upon amount.
- The amount they’ve listed is incorrect.
- The debt is past the statute of limitations.
If you can prove that you don’t owe the money, you can use the details and documents you gathered in court. If not, you may need to pursue other options.
2. Hire an attorney
Whether or not you owe money, working with a skilled, experienced attorney who can help you navigate the process is a good idea. An attorney can help you understand and protect your rights and respond effectively.
A good attorney can also inform you of other potential options you can pursue to avoid a lawsuit altogether.
3. Try to negotiate a settlement
If you owe the money, you may be able to negotiate a settlement in exchange for the debt collector dropping the lawsuit. With debt settlement, you’ll agree to pay less than you owe.
This arrangement can be good for both you and the debt collector. After all, lawsuits are expensive for both parties. Also, debt collectors typically buy debt from the original creditors for pennies on the dollar. So, even if you settle for less than the total amount, they can still turn a profit.
A debt attorney can help you with this process. You’ll typically enter a payment plan and pay monthly into an attorney escrow account with the firm. These funds are used to negotiate settlements on the accounts as money is building up every month. This option may impact your credit report and your credit score, but the impact may be less severe than alternatives.
4. Consider bankruptcy
If your financial situation is dire enough that even debt settlement isn’t viable, bankruptcy may be a path to consider. While not all debts are dischargeable in bankruptcy, check with an attorney to determine if yours qualifies. Consult an attorney or law firm to determine if pursuing bankruptcy is the right decision for you.
The bottom line
Having a debt collector threatening to serve papers for a lawsuit can be a stressful experience. But unless the debt collector sues you immediately, they may be violating federal law. Familiarize yourself with your rights, and consider consulting with an attorney who can give you the legal advice and support you need.
Tayne Law Group has decades of experience protecting consumers from debt collectors. You can get a free debt relief consultation by submitting a request through our website or calling 866-890-7337.
