Sued by a debt collector? Your first 30 days can decide the case
CBS News says borrowers served with a debt collection lawsuit should move fast, verify the claim and file a court response before the deadline.
By Deshawn Carter · Sports Writer
3 min read
A debt collection lawsuit is not a bill you can toss in a drawer and deal with later. CBS News reports that the first month after being served can shape whether a borrower keeps control of the case, negotiates from a stronger position or risks a default judgment.
The warning comes as household debt remains at record highs, according to CBS News, with elevated interest rates, persistent inflation and years of costly borrowing squeezing many budgets. Missed payments can start as a household cash-flow problem, then become a legal one once a creditor or debt buyer files suit.
Being sued over unpaid credit card debt does not automatically mean the collector will win, CBS News notes. It does mean court deadlines are now in play, and ignoring the papers can make the situation far worse.
Days 1 to 3: Read the lawsuit, every page
CBS News advises borrowers to start by reviewing all documents received after service. The key details are who is suing, how much they claim is owed, which court is handling the case and the deadline to respond.
That response deadline varies by state and may be only a few weeks after service, according to CBS News. Borrowers should also check whether the case was brought by the original creditor or by a debt buyer that purchased the account, because documentation of the debt may later become an issue.
Days 3 to 7: Check the debt against your own records
Before deciding what to do next, CBS News says borrowers should gather account statements, payment records, letters, settlement agreements and any other documents connected to the account.
Those records should be compared with the lawsuit’s claims. CBS News lists several possible problems to look for:
- An incorrect balance
- Payments that were not properly credited
- Identity theft or fraud
- A lawsuit filed against the wrong person
- A debt that may be outside the state’s statute of limitations
Even when a borrower believes the debt is real, CBS News says checking the details can show whether the claimed amount is accurate and whether the collector has the paperwork to support the case.
Week 2: File a response on time
One of the costliest moves is failing to answer the lawsuit, CBS News reports. If the court deadline passes without a response, the collector may be able to obtain a default judgment.
After that, collection powers may expand depending on state law, potentially including wage garnishment, bank account levies or property liens, according to CBS News.
Filing an answer does not guarantee a win. CBS News says it preserves the borrower’s chance to raise defenses, challenge the claims or negotiate with more leverage. Borrowers who are unsure how to respond are advised to consider a consumer debt attorney or local legal aid group.
Weeks 3 and 4: Negotiate, document and prepare
After a response is filed, CBS News says borrowers may be able to negotiate a lump-sum settlement, a payment plan or another agreement before the case reaches court.
For people with more than one unsecured debt, CBS News says a broader debt relief strategy may be worth reviewing. It also cautions that debt relief is not right for everyone, and borrowers should understand fees, program rules and possible credit effects before enrolling.
CBS News also urges borrowers to keep copies of court filings, save all collector communications and track future dates. If a settlement is reached, the agreement should be in writing before any payment is made.
The broader financial work should not wait either. CBS News recommends reviewing the budget, prioritizing high-rate debt and building an emergency fund over time to reduce the chance of another collection action.
This story draws on original reporting from CBS News.