Debt collectors representing credit card companies and other lenders sometimes file lawsuits to collect delinquent debts. Lawsuits lead to the delivery of a legal document known as a summons and complaint. The summons is the notification of the lawsuit, and the complaint is the lawsuit itself. Usually in debt matters, attorneys for debt collectors file suit against debtors. However, debtors can file lawsuits against debt collectors in certain situations.
Considerations
A lawsuit is usually a last resort for a debt collector attempting to collect a debt. The collections process begins with the original creditor, such as a credit card company. Credit card companies usually close accounts after payments are six months behind, but the action can happen sooner. After closing accounts, lenders list them internally as charge-offs -- an accounting term that does not relieve the debtor of responsibility for the loan. Then the account is eventually sold or assigned to a debt collector.
Timeline
It's impossible to predict when -- or if -- a debt collector will file a lawsuit and send the notice. Legal action could take place a few months after charge-off or a few years. One possible tipoff to a potential lawsuit is the placement of the debt with an attorney in the debtor's state. By law, debt collectors must file suit in the state and county the debtor lives in. However, placement of a debt with a law firm in the debtor's home state increases the chances of a lawsuit but doesn't guarantee the filing of a suit.
Process
Debt collectors initiate lawsuits by paying a filing fee in small claims court in the debtor's county. The fee allows an official court filing of the lawsuit. The court then schedules delivery of the summons and complaint, usually by a courier, although delivery is possible in some states by certified mail.
Delivery
Couriers serving a summons and complaint can deliver the documents to the defendant anywhere in public, including the defendant's home or place of employment. People receiving lawsuits should pay special attention to the summons. The summons describes important next steps, such as a date for appearing in court to answer the lawsuit. A failure to appear in court or follow other instructions in the summons could lead to an automatic victory for the debt collector called a default judgment. Judges issue default judgments, which require the debtor to pay the debt collector a specific amount of money or risk garnishment of the debtor's bank account or wages.
Violations
Debtors can file lawsuits against debt collectors for violations of the Fair Debt Collection Practices Act, a federal law. Debt collectors must follow federal laws while attempting to collect a debt. If they violate the laws, the debtor can sue for damages. Debtors filing suit against debt collectors usually seek assistance from a consumer affairs attorney.
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