Can a Debt Collector Take Me to Court? What You Need to Know

Yes, debt collectors can take you to court for unpaid debt. But lawsuits won’t be their first move.

Debt collection agencies will first call you repeatedly. They’ll send letters demanding payment. Collection companies typically make several attempts over many months before filing a lawsuit.

Understanding when and why collectors sue helps you protect your rights. You have more power than you think.

Can Debt Collectors Sue You?

Absolutely. Many people are shocked when they receive court papers for unpaid debt. Debt collectors frequently file lawsuits for breach of contract.

They’re claiming you didn’t pay a debt you agreed to pay. The contract might be a loan agreement or credit card agreement. You signed these documents with the original creditor.

If they charge off the debt, they can sell it to a collector. That collector then has the right to sue you.

Can You Be Sued After a Charge-Off?

Only debt collectors who own delinquent accounts can file lawsuits. Collectors become owners when they buy the rights from original creditors.

Many creditors sell unpaid accounts for pennies on the dollar. Once a debt is 90 days past due, it becomes attractive to buyers.

Check your credit report to see if your debt was charged off. The account will be listed as a charge-off on your report.

A charge-off means the creditor closed your account due to non-payment. You’re still liable for the debt. You just owe a different company now.

Good news: you may have more power to negotiate a settlement. Debt collectors often accept less than the full amount owed.

When Will a Debt Collector Sue?

There’s no guaranteed timeline for when collectors will sue. It depends on several factors:

• The debt collector’s internal policies
• The age of the debt
• The amount you owe
• The type of debt

Credit card debt lawsuits often happen faster than medical bill lawsuits. Legal action isn’t usually the first choice.

Lawsuits are expensive and time-consuming for collection agencies. They’ll try phone calls and written notices first. Expect months of contact attempts before a lawsuit.

How Long Does a Debt Collector Have to Sue You?

Debt collectors must sue within a specific time frame. Your state’s statute of limitations sets this deadline.

Each state has different rules. The time limit ranges from 3-10 years in most states. The clock starts on different dates depending on state law:

• The date you made your last payment
• The date of your first missed payment
• The most recent date you admitted owing the debt

The statute of limitations doesn’t automatically dismiss old lawsuits. You must respond to the lawsuit and use this as a defense.

Even after the statute expires, you legally owe the debt. Limit what you say to collectors about old debts. You don’t want to accidentally restart the clock.

You can also send them a cease and desist letter. They must stop contacting you after receiving your written request.

What Do You Do if You Are Sued by a Collection Agency?

You’ll receive a complaint and summons in the mail. These court papers explain why you’re being sued. They also tell you how long you have to respond.

Review these documents carefully. Make sure everything in the complaint is accurate.

Verify These Key Details

• The debt is actually yours
• The amount of money is correct
• The statute of limitations hasn’t expired
• The debt collector actually owns the debt

Send a debt validation letter if you haven’t already. If the collector can’t prove they own the debt, you can use this as a defense.

Review your protections under the Fair Debt Collection Practices Act (FDCPA). Federal law prevents third-party collectors from using unfair or harassing tactics.

If a collection agency violated the FDCPA, you have a strong defense. You may even be able to countersue for damages.

Report FDCPA violations to the Federal Trade Commission, Consumer Financial Protection Bureau, and your state attorney general’s office.

Don’t Ignore the Lawsuit!

Ignoring a debt collection lawsuit is the biggest mistake you can make.

You must answer the complaint within a specific time frame. The summons will state your deadline. Most states give you a few weeks to one month.

You can hire a debt collection attorney for legal advice. You can also fight the lawsuit yourself.

Our partner Solo helps you draft and file your response to debt lawsuits. They’ve helped over 280,000 people respond successfully.

What Is a Debt Collection Attorney? Do You Need One?

Debt collection attorneys specialize in debt collection laws and lawsuits. You can hire one to represent you in court.

The company suing you may also hire a lawyer. Having an attorney can relieve stress and provide guidance.

That said, you can represent yourself in court. Our partner Solo offers an affordable alternative to expensive legal fees.

Consumer protection attorneys can help if a creditor is unlawfully harassing you. Keep in mind that attorney fees add up quickly.

What Happens if You Ignore a Debt Collection Lawsuit?

Ignoring the lawsuit doesn’t make it disappear. The creditor or collector will likely win by default.

The court will issue a default judgment against you. A court order allows for aggressive collection measures:

• Wage garnishment
• Property seizure
• Bank account levy

Ignoring the lawsuit means giving away all your power. Answering the lawsuit gives you defenses and bargaining power.

You may be able to settle your debt for less than the full amount. But you have to respond first.

How Do You Deal With Out of Control Debt?

If you’re being sued or worried about lawsuits, you’re likely struggling financially. You have several debt-relief options available.

Consider these solutions:

• Credit counseling
• Debt settlement
• Debt consolidation
• Bankruptcy

Credit Counseling

Credit counseling is a good starting point for anyone exploring debt relief. Nonprofit credit counselors offer free 45-60 minute consultations.

The counselor will help you explore options and create a budget. Watch out for scams that charge money for consultations.

Our partner Cambridge Credit Counseling offers free consultations to help you manage your debt.

Debt Settlement

Debt settlement works well if you have extra money available. The process allows you to pay less than you owe. You usually need to pay in one lump sum.

Settling can take a long time. Some creditors may sue during the process. Make sure you’re a good candidate before entering a settlement program.

Debt Consolidation

Debt consolidation may work if you have good credit. You combine multiple debts into one monthly payment. Generally, your monthly payment will be lower.

You can take out a new loan to consolidate. You can also work with a nonprofit credit counseling agency. They’ll construct a debt management plan for you.

Bankruptcy

Bankruptcy is a powerful debt-relief option. It can immediately stop all debt collection efforts. The automatic stay stops lawsuits, wage garnishments, and collection calls.

If your bankruptcy is successfully discharged, you won’t be liable for those debts. All collection and judgment actions tied to discharged debts will cease.

You can speak with a bankruptcy attorney for free to explore whether Chapter 7 or Chapter 13 bankruptcy is right for you.