If you’re in a financial hole, dealing with debt collectors can make an already difficult situation worse. If you have a debt collector threatening to serve papers if you don’t pay up immediately, you may be feeling terrified and desperate.
But here’s the thing: debt collectors aren’t legally allowed to inform you of a lawsuit unless they actually 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 important 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 papers? Here’s what’s legal
The Fair Debt Collection Practices Act (FDCPA) spells out your rights as a consumer. One of those rights is that they can’t lie. 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 that’s past the statute of limitations in your state. 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 that you owe, and sometimes even one 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 right now 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 fake summons from debt collectors, making them feel like they’re actually being sued when they’re not.
Again, if a debt collector is threatening a lawsuit to scare you into doing what they want and they don’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 you’ve been contacted by a debt collector about a debt you may owe, it’s important that you retain all of your communications.
For example, you can take notes during the phone call and write down the representative’s name and important details of the conversation. 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 do threaten a lawsuit but don’t send you a summons, inform the agent that they are in violation of the FDCPA and ask them to stop contacting you. Then file a complaint with the Federal Trade Commission, the Consumer Financial Protection Bureau, and your state’s attorney general office.
If you want to avoid the possibility of a 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.
In some cases, it can be unclear whether talk 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 best protect yourself.
What to do if the 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 a real summons from a debt collector, the document will let you know how much time you have to respond.
It’s crucial that you don’t ignore a real summons. If you don’t respond by the date specified in the letter, the court made enter into a default judgment in the debt collector’s favor. This means that the collection agency essentially gets what they want. That can include wage garnishment, bank account garnishment, bank account freezes, and more.
To avoid those things and any additional problems they can create in your life, here are some steps to take.
1. Verify the information
Debt collectors are required to send you a debt validation letter within five days after they first contact you. If you don’t believe the debt belongs to you or don’t owe it, you can request a verification letter. They must send this within 30 days of the validation letter.
You’ll also want to review your own records, which can further help you determine whether or not you actually 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, it’s a good idea to work with a skilled, experienced attorney who can help you navigate the process. 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 monies, 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 what 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 full amount, they can still turn a profit.
A debt attorney can help you with this process. You’ll typically pay monthly into an attorney escrow account with the firm and these funds are what is used to negotiate settlements on the accounts as money is building up every month.
4. Consider bankruptcy
If your financial situation is dire enough that even debt settlement isn’t a viable option, bankruptcy may be a path to consider. While not all debts are dischargeable in bankruptcy, check with an attorney to find out if yours qualifies. Consult with an attorney to find out 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 they do so immediately, they’re in violation of federal law. Familiarize yourself with your rights, and consider consulting with an attorney who can give you the information 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 by calling 866-890-7337.