BMO Harris Bank Lawsuit? Here's What Debt Collectors Can (and Can't) Do

BMO Harris Bank doesn't typically sue you themselves. They sell your charged-off debt to collection agencies like Midland Funding or Portfolio Recovery Associates, who file the lawsuit. By the time you see court papers, BMO has already written off your account and moved on. The collector owns your debt now, and they want a judgment.

Here's what happens: You miss payments for 120-180 days. BMO closes your account, reports it to credit bureaus, then sells it for pennies on the dollar. The buyer—often a junk debt buyer,files a lawsuit in your county court. If you ignore it, they win by default. That judgment lets them garnish your wages or freeze your bank account.

This guide covers how BMO Harris debt collection works, what to do if you're sued, and whether bankruptcy or settlement makes more sense for your situation.

How BMO Harris Bank Handles Delinquent Accounts

BMO Harris follows the standard timeline most banks use. After 30 days past due, they call and send letters. At 60 days, they report the delinquency to Experian, Equifax, and TransUnion. At 90 days, they escalate internally. By day 120-180, they charge off the account,an accounting term meaning they've given up on collecting it directly.

Once charged off, BMO sells your debt to a third-party buyer. These companies pay 2-4 cents per dollar of debt. If you owed $8,000, they might pay BMO $240. Now they own your debt and can sue you for the full $8,000 plus interest and fees.

Common buyers of BMO Harris debt include:

• Midland Funding (Encore Capital Group)
• Portfolio Recovery Associates (PRA Group)
• LVNV Funding
• Cavalry SPV I
• Jefferson Capital Systems

These companies file thousands of lawsuits monthly. Most defendants never respond, so they win 80-90% of cases by default.

What to Do If You're Sued Over BMO Harris Debt

You have 20-30 days to respond depending on your state (21 days in most states for small claims, 30 for general civil court). Missing this deadline means you lose automatically. The collector gets a default judgment without proving anything.

Step 1: Confirm the Debt Is Yours

Request debt validation within 30 days of first contact. The collector must prove:

• You are the person who owes the debt
• The amount they claim is accurate
• They own the debt or have legal authority to collect it
• The statute of limitations hasn't expired

Many junk debt buyers lack proper documentation. They buy spreadsheets with names, amounts, and account numbers but no original contracts or statements. If they can't prove the debt, you can get the case dismissed.

Step 2: File an Answer

Draft a response to the lawsuit (called an "Answer") within your state's deadline. Deny allegations you don't recognize. Raise affirmative defenses like:

• Statute of limitations (3-6 years in most states)
• Improper service of the lawsuit
• Lack of standing (collector can't prove they own the debt)
• Account was paid, settled, or discharged in prior bankruptcy

File your Answer at the courthouse and mail a copy to the collector's attorney. This forces them to prove their case instead of winning by default.

Step 3: Attend the Hearing

Show up on your court date. Bring any evidence you have: bank statements, letters from BMO, payment records, or correspondence with the collector. Ask the judge to require the collector to produce:

• The original signed agreement with BMO Harris
• A complete chain of ownership showing they bought your debt
• Itemized statements of the alleged balance

If they can't produce these, request dismissal. If they do have documentation, you can still negotiate.

Your Options If You Can't Beat the Lawsuit

Most defendants settle. Collectors know going to trial costs them money, so they'll often accept 40-60% of the balance to close the case. Some accept monthly payments.

Settlement Negotiation

Offer 30-50% of the amount they're suing for, paid in a lump sum. Make it contingent on them dismissing the lawsuit with prejudice (meaning they can't refile). Get the agreement in writing before you pay anything.

If you owe $8,000, start by offering $2,400 paid within 30 days. They'll counter. Settle around $3,200-4,000 if you can. Never agree to a payment plan unless it's short (3-6 months). Longer plans increase the chance they'll get a judgment anyway if you miss a payment.

Bankruptcy as a Defense

If BMO Harris debt is part of a larger problem,multiple credit cards, medical bills, or personal loans,bankruptcy might make more sense than settling.

Chapter 7 bankruptcy wipes out unsecured debts like credit cards and personal loans in 3-4 months. It stops the lawsuit immediately. You qualify if your income is below your state's median or you pass the means test. Filing costs around $338 in court fees plus attorney fees (typically $1,000-2,000).

Chapter 13 bankruptcy creates a 3-5 year repayment plan based on what you can afford. It also stops the lawsuit. You might pay 10-30% of unsecured debts over time, then the rest is discharged. This works if your income is too high for Chapter 7 or you're behind on a mortgage or car payment.

BMO Harris debt is dischargeable in both chapters. Once you file, the automatic stay stops all collection activity. The collector must dismiss the lawsuit and can't contact you again.

Take our bankruptcy screener to see if you qualify and whether Chapter 7 or Chapter 13 fits your situation.

Statute of Limitations on BMO Harris Debt

Debt collectors have 3-6 years to sue you depending on your state. This clock starts from your last payment, not when you opened the account. Once the statute expires, they can still contact you, but they can't win a lawsuit.

State-by-state limits on credit card and personal loan debt:

• 3 years: California (written contracts), Illinois, Louisiana
• 4 years: Arkansas, Florida, Georgia, Idaho, New Hampshire, New York, North Carolina, Ohio, Pennsylvania, Texas
• 5 years: Colorado, Michigan, Minnesota, Montana, Nebraska, Nevada, New Jersey, Oklahoma, Oregon, South Dakota, Tennessee, Washington, West Virginia, Wisconsin
• 6 years: Alabama, Alaska, Arizona, Connecticut, Delaware, Hawaii, Indiana, Iowa, Kansas, Maine, Maryland, Massachusetts, Mississippi, Missouri, New Mexico, North Dakota, Rhode Island, South Carolina, Utah, Vermont, Virginia, Wyoming

If they sue you after the statute has run, raise it as an affirmative defense in your Answer. The case gets dismissed.

But watch out: Making even a $5 payment can restart the clock in some states. So can acknowledging the debt in writing. Don't admit anything until you verify the debt's age.

What Happens If You Ignore a Judgment

Ignoring the lawsuit means the collector wins by default. The judgment is good for 10-20 years depending on your state. They can renew it indefinitely in some places.

With a judgment, collectors can:

• Garnish wages: Take 25% of your disposable income (less in some states). This continues until the debt is paid or you file bankruptcy.
• Freeze bank accounts: They can levy your checking or savings account without warning. The bank holds the money for 10-30 days, then turns it over to the collector.
• Place liens on property: In some states, they can attach a lien to your home or car. You must pay the judgment before you can sell or refinance.

Federal benefits like Social Security, SSI, and VA disability are exempt from garnishment. But if those funds mix with other money in your bank account, you'll need to prove the source to get them released.

Once a judgment exists, your options narrow. You can still negotiate a settlement (often for less since they know collection is slow), or you can file bankruptcy to discharge it. Bankruptcy eliminates judgments just like it eliminates the original debt.

Learn how to file bankruptcy if you're facing wage garnishment or already have a judgment against you.

BMO Harris Personal Loans vs. Credit Cards: Does It Matter?

Both are unsecured debts, so collectors use the same tactics and you have the same defenses. The difference is how BMO structures the agreement and what interest rates apply.

BMO Harris personal loans range from $1,500 to $35,000 with fixed rates and set repayment terms. Credit cards have variable rates and no fixed end date. Both are dischargeable in bankruptcy.

If you're sued over a personal loan, collectors must prove you signed the original loan agreement. Credit card lawsuits are easier for them because they can rely on your account statements and payment history. But in both cases, they still need to show the debt is yours and the amount is correct.

One quirk: Personal loans sometimes include arbitration clauses that force disputes out of court. Check your original agreement. Arbitration can work in your favor (lower costs, informal process) or against you (no jury, limited appeals). If your agreement has an arbitration clause and they sue you in court anyway, you can move to compel arbitration and dismiss the lawsuit.

How BMO Harris Affects Your Credit

A BMO Harris charge-off stays on your credit report for seven years from the date of first delinquency. Even if you settle or pay it off later, the original delinquency date doesn't change.

Lawsuits don't appear on credit reports, but judgments sometimes do (less common since 2017 when credit bureaus stopped including most civil judgments). The charge-off itself tanks your score by 100-150 points. Adding a collection account makes it worse.

Settling the debt updates the status to "settled for less than owed" or "paid settled." That's better than an open collection, but it doesn't remove the negative mark. Only time or bankruptcy removes it entirely.

Bankruptcy also stays on your report for 7-10 years, but your score starts recovering within months because your debt-to-income ratio improves. Many people see their scores rise 50-100 points within a year after discharge.

When to Talk to a Lawyer

You can handle small debt lawsuits yourself if the amount is under $5,000 and you have documentation showing the debt isn't yours or is too old. But hire a consumer rights attorney if:

• The debt is over $10,000
• You're facing wage garnishment or a bank levy
• The collector violated the Fair Debt Collection Practices Act (FDCPA)
• You're considering bankruptcy but aren't sure which chapter
• You've already lost a judgment and want to fight garnishment

Many consumer lawyers work on contingency for FDCPA violations,meaning they only get paid if you win. For bankruptcy, most offer free consultations and payment plans.

Don't wait until the day before your court date. The earlier you act, the more options you have.

The Bottom Line

BMO Harris Bank sells most delinquent accounts to junk debt buyers who sue aggressively. You have defenses, including demanding proof of the debt, asserting the statute of limitations, or filing bankruptcy to wipe it out entirely. Ignoring the lawsuit guarantees you lose. Responding puts you back in control.