Debt Lawsuit Q&A: Your Questions Answered (July 2023)

You can respond to a debt lawsuit. You can fight back. You can even settle before court.

Our team answers real questions from people facing debt collectors. These solutions work. People use them every day to protect themselves.

Note: The following content provides general information only. George Simons, the speaker, is not an attorney. You should consider speaking with a lawyer about your specific situation.

How Debt Lawsuits Work

Debt collectors start lawsuits with a Summons and Complaint. You receive papers in the mail or through a process server.

Your job is simple: respond with an Answer document. You have a deadline printed on your Summons. Miss that deadline and you lose automatically.

After you file your Answer, you gain leverage. You can negotiate. You can settle for less than you owe.

Our partner Solo helps you create your Answer in about 15 minutes. Attorneys review your document. They file it in court for you.

The Settlement Path

Once your Answer is filed, settlement becomes possible. Recent settlements show real results:

• One person saved $4,421 on an American Express lawsuit
• Another saved $667 with a major debt buyer
• A third saved $1,451 in a similar case

Settlement wraps everything up. No more court dates. No more stress. Just a payment plan you can afford.

Being Sued for Debt You Don’t Recognize

Question: I received a Summons from a debt collector I never heard of. They say I owe money on a Care Credit card I never used. What should I do?

You might be facing identity theft. Someone may have stolen your Social Security number and opened accounts in your name.

The collector might also have the wrong person. Maybe someone with your name owes this debt.

Here’s what matters: You still need to respond. Even when you don’t owe the debt, you lose if you ignore the lawsuit.

File an Answer. Include identity theft as a defense. Make the collector prove their case.

You can also file a Motion to Compel Arbitration. Most credit card agreements include arbitration clauses. Our partner Solo can help you create this motion.

Chapter 7 vs Chapter 13 Bankruptcy

Question: What is best: Chapter 7 or Chapter 13?

Chapter 7 is usually better if you qualify. You don’t have to pay back most unsecured debts. The debt gets discharged completely.

Most people don’t qualify for Chapter 7. Income limits prevent many from using it.

Chapter 13 requires a payment plan. You pay back debts over three to five years. Many people don’t complete these plans. They default and owe everything again.

After 2008 bankruptcy reforms, fewer people found relief through bankruptcy. More people turned to debt settlement instead.

Consider bankruptcy when unsecured debt exceeds 40% of your annual income. A $100,000 salary with $40,000 in credit card debt qualifies.

When Statute of Limitations Matters

Question: When does the statute of limitations for debt start in Texas?

The statute of limitations clock starts from your last payment date. In Texas, you have four years on most credit card debt.

Making a payment restarts the clock. If three years pass and you make a payment, the four-year countdown starts over.

Every state has different rules. The general principle stays the same: last payment date matters most.

Use caution when collectors contact you about old debts. Don’t make payments on expired debts. You’ll restart the clock.

When Creditors Reject Your Settlement Offer

Question: I was served last month. I tried to settle but they declined my offer. Their counteroffer was too high. What should I do?

You need leverage. Professional negotiation changes outcomes.

Make your settlement offers through secure channels. Protect your financial information. Document everything.

Consider getting legal representation for your settlement. Attorneys know how to negotiate with collectors. They get better results than most people can get alone.

People with representation save thousands on their settlements. The cost of help pays for itself.

Responding to Summary Judgment

Question: I need to respond to a summary judgment request. The format of legal documents is challenging. Software for legal docs seems unavailable to regular folks.

Summary judgment requests require proper responses. Courts sometimes accept documents even with formatting issues.

Templates exist for common legal documents. Responses to debt lawsuits are the most common documents people need.

You can request templates for summary judgment responses. Professional help ensures proper formatting and filing.

When You Can’t Afford to Pay

Question: I have a $1,600 lawsuit. I became ill and disabled. I have no extra income beyond necessities. I can’t settle. I cannot pay. What do I do?

Illness and disability matter to collectors. They call this “hardship information.” Collectors legitimately consider hardship.

Some Social Security payments are protected from collection. Rules vary by state and payment type. Research your specific situation.

File an Answer to protect yourself. See the lawsuit through if necessary.

Some people settle for zero. Serious medical illness sometimes results in complete debt forgiveness. Explain your hardship clearly.

Our partner Solo can connect you with attorneys who understand hardship situations.

Settlement During Discovery

Question: I responded to Discovery requests. Can I ask the debt collector for documents too? Am I still able to negotiate or settle?

Discovery works both ways. You can request documents from collectors. Send them requests for admissions and interrogatories.

You can settle at any point during a lawsuit. Discovery doesn’t prevent settlement. Many cases settle during discovery.

Professional representation helps during discovery. Attorneys know what documents to request. They know how to use those documents in settlement negotiations.

Bankruptcy vs Lawsuit Response

Question: Should I file for bankruptcy or respond to a lawsuit?

Many people respond to lawsuits while preparing for bankruptcy. Filing an Answer buys you time.

Bankruptcy creates an automatic stay on lawsuits. Your bankruptcy attorney must file proper paperwork for this protection.

Consider bankruptcy when unsecured debt significantly exceeds your income. Online calculators help you decide.

If debt equals or exceeds your annual income, bankruptcy might be right. If it’s 40% or more of annual income, consider it seriously.

Debt Past Statute of Limitations

Question: I received a letter from a collector about a Discover Card debt that’s past the statute of limitations. They mentioned this fact. Should I settle?

Collectors can’t sue you for expired debts. The statute of limitations prevents legal action.

If they sue anyway despite knowing the debt expired, you might have a counterclaim. They may have violated the Fair Debt Collection Practices Act.

Collectors can still contact you about expired debts outside of court. You’re not obligated to respond.

Don’t make payments on expired debts. Payments restart the clock.

Settlement does end the collection activity permanently. If you settle an expired debt, settle for a very small amount.

Checking Statute of Limitations

Question: I’m being sued for a debt from 2007. The amount was $300. I don’t remember the debt. I’m in Alabama. What should I do?

Alabama’s statute of limitations is three years. A 2007 debt expired in 2010.

If the statute expired, collectors can’t win in court. You have a defense.

File an Answer document. Include the statute of limitations as a defense. The case should be dismissed.

Even for small amounts like $300, you must respond. Ignoring the lawsuit means automatic loss.

Being Sued in the Wrong Location

Question: I received a Summons from Gurstel Law Firm for a loan from Crossbank. This debt was obtained in South Carolina, but now I live in Minnesota.

Venue matters in lawsuits. You can raise improper venue as a defense.

Check where you’re actually being sued. If the lawsuit is in South Carolina but you live in Minnesota, venue might be improper.

You still must respond regardless of venue issues. File your Answer. Include improper venue as a defense.

Settlement remains an option wherever the lawsuit was filed. Our partner Solo works with Gurstel Law Firm frequently.

After Filing Motion to Compel Arbitration

Question: I filed a Motion to Compel Arbitration for a $9,500 Amex debt after the judge didn’t approve my motion to dismiss. What happens next?

The other party files a counter-motion. They’ll include a memo explaining why the judge should deny your motion.

You can file a memo supporting your motion. Explain why arbitration should be required.

The judge may schedule a hearing. Both sides present oral arguments. Then the judge decides.

Most arbitration clauses require the plaintiff to pay arbitration fees. These cost several thousand dollars.

Many collectors drop cases rather than pay for arbitration. They often just stop pursuing the lawsuit.

You Can Win Your Debt Lawsuit

People beat debt collectors every day. They respond to lawsuits. They negotiate settlements. They save thousands of dollars.

You have the same power. You just need the right information and tools.

Start by responding to your lawsuit. Protect yourself from default judgment. Then explore settlement options.

Our partner Solo stands in your corner throughout the process.