What if I am being sued for a false debt?

Being sued for a debt you do not actually owe can be a scary situation. You may wonder how this could ever happen, but it does. The sheer volume of credit card accounts in active use around the country, coupled with the rise in identity theft and the explosion of "junk debt buyers" has led to many lawsuits being filed where the creditor cannot actually prove that the person it is suing owes the money.

Debt buyers are companies that purchase large numbers of unpaid accounts in bulk from the original creditor for pennies on the dollar and then collect the debt as if the debt buyer was the original creditor. This is perfectly legal, so long as the debt buyer can prove the chain of title for the purchase of your account. Sometimes accounts are sold off several times from one debt buyer to another to another. This can result in some very shoddy record-keeping. In addition, the amount of information transferred from the original creditor to the debt buyer is often very limited. Usually, the debt buyer only receives computer data containing your name, address, phone number, social security number, account number, date of default, interest rate, etc., but not the actual records reflecting how the balance due was calculated.

Most importantly, if you are sued for collection of a debt, do not ignore the lawsuit. The worst thing you can do is nothing. If you do not answer the creditor's complaint as required by your state's laws and local court rules, a default judgment can be entered against you. This means the court can enter a finding against you that you owe the money the creditor is requesting because you have failed to defend the case. A default judgment can lead to wage garnishments, bank account attachments, seizure of property and negative credit report entries. After a judgment has been entered, you may no longer be able to dispute the debt in court.

Ultimately, the creditor or debt buyer has the burden of proof in court. This means they must prove by a preponderance of the evidence that you owe the money they are requesting. In most situations, you would be entitled to a jury trial in your case, although local court rules can vary depending upon the amount for which you are being sued. An entire book could be written about how to defend a debt collection lawsuit, but there are many methods which we have found effective in the representation of our clients. Proper representation by an attorney can often lead to a settlement of your debt at a substantial discount. Debt collection attorneys usually handle their cases much differently when they know you are represented by a competent lawyer, rather than if your are trying to defend the case yourself.

The Fair Debt Collection Practices Act (FDCPA) prohibits debt collectors from making any false, deceptive or misleading representations in connection with the collection of a debt. This includes all statements, either oral or written, made in conjunction with the prosecution of a debt collection lawsuit. The FDCPA also requires that a debt collector must sue you in a court which is located in your local judicial district – usually either the city or county in which you live – or in the district where the contract was signed which is the basis of the debt. If a lawsuit is filed in the wrong judicial district, that does not necessarily mean the case is invalid, but it does mean that the debt collector (the attorney and/or law firm) has violated the FDCPA.

If you have been sued by a debt collector, we offer a free case review. Find out if the debt collector has violated the FDCPA, or we may be able to assist you in resolving the lawsuit. If you think a debt collector has contacted you in violation of the law, or even if you are not sure, call to speak with one of our experienced fair debt collection attorneys for a free case review.