When Will a Debt Collector Sue?

A creditor might sue you directly, or they may use a debt collection agency or debt collection law firm to sue you. Typically, a creditor or debt collection agency will sue a consumer when they have been unsuccessful in collecting the debt through more traditional means.

Worried about getting sued by a creditor?

If you’ve received debt collection calls and letters, you may wonder if and when a debt collector will sue you. While there’s no guarantee that you’ll be sued, a debt collector may have the right to do so. And even when they don’t have the right to sue you, they may file a lawsuit anyway. That’s why it’s important to be vigilant.

Typically, a creditor will try and collect a debt that they believe is owed to them. If they’re unsuccessful, they may turn the debt over to a third-party debt collection agency. The debt collection agency usually receives a percentage of anything they’re able to collect. If they’re not able to collect on the debt, the collection agency may recommend filing a lawsuit against the consumer. If the creditor opts to sue, then the agency may file suit on behalf of the creditor (if it has an in-house attorney) or refer the account to a debt collection law firm.

Can a credit card company sue you?

A credit card company can sue you. Most credit card companies contract with debt collection law firms to file suit against consumers. When a credit card company – or any other creditor – sues you, they are required to serve you with notice of the lawsuit. That notice is an official document from the court, and outlines what your next steps should be. Don’t refuse the notification, and don’t ignore it. At the same time, it’s important to verify that it is an official document from the court.

Illegal practices in debt collection lawsuits

The federal Fair Debt Collection Practices Act (FDCPA) and state laws protect you from unsavory debt collection practices. For example, one section of the FDCPA (15 U.S.C. 1692e) prohibits debt collectors from making false or misleading statements or representations when collecting a debt. This means that a debt collector can’t threaten to sue you if they don’t have the ability or intention to do so. It also means that a debt collector can’t provide you with fake court documents or papers that lead you to believe they’re from the government. In Commonwealth of Pennsylvania vs. Unicredit America, the debt collection agency was accused of hiring people to dress as sheriff’s deputies. These people then served fake subpoenas to consumers, telling them that they had to appear in court before a judge. Unicredit America had a fake courtroom and a fake judge to hear these so-called cases.

When you are sued by a debt collector, the law requires you to be served with official papers. In Sykes vs. Mel S. Harris and Associates, LLC, a debt collection agency, a law firm, and a process serving company were accused of “sewer service,” whereby they didn’t actually serve legal papers to the consumers being sued, but still told the court that they did. As a result, the consumers didn’t know they were being sued and so didn’t show up to defend themselves. When the consumers didn’t come to court, the debt collection agency was able to obtain default judgments against them. That meant that the debt collection agency could garnish their wages, place liens against their property, and try to freeze money in their bank accounts. The companies settled the class action lawsuit without ever admitting guilt.

What are common defenses to a debt collection lawsuit?

It’s common for debt collection agencies to sue consumers, and then to meet them at the courthouse in a last-ditch effort to get the consumer to pay the debt in question. When consumers don’t appear for the court date, it’s easy for debt collection agencies to get judgments entered against consumers and then go after their money or property.

Consumers sometimes offer these defenses to a debt collection lawsuit:

  • The debt is legally unenforceable because it’s beyond the statute of limitations.
  • The debt has already been paid, either to the plaintiff or to the creditor.
  • The debt is uncollectible because it was discharged in bankruptcy.

If you are sued by a debt collection agency, you should contact a fair debt attorney. If a debt collection agency has violated the FDCPA, then there’s a good chance that the debt collection lawsuit will be dismissed.

Lemberg Law has a team devoted to representing people who have been harassed, threatened, deceived, or sued by debt collectors. Call 844-685-9200 and receive a free consultation, or submit our online request form.

Case citations

Commonwealth of Pennsylvania vs. Unicredit America, Inc., Court of Common Pleas of Erie County, No. 14914-2010.
Sykes vs. Mel S. Harris and Associates, LLC, No. 09 Civ. 8486 (S.D.N.Y.)

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