Before doing anything, you may want to consider if bankruptcy is the right option for you. In many cases, by the time an individual is being sued for the nonpayment of debts, bankruptcy would best suit their needs. It could very well be worth your time to discuss if bankruptcy is the best option for you.
If bankruptcy isn’t the right choice for you, you also will want to consider if hiring an attorney to represent you in a debt collection matter will be best. An attorney is typically better suited to identify potential defenses. Does the alleged creditor actually own the debt? Is that debt still yours? Has the statute of limitations expired?
1. The first thing to remember is that you have to respond to the lawsuit if you want to avoid judgment being entered against you. After the time you are served with the papers, you have 20 days to provide a written answer to counsel for the plaintiff. Your answer should be written, have the caption of the case on the top, and the paragraphs should be numbered. You will need to state whether you admit the allegations, deny the allegations, do not have enough information to answer the allegations, or if the statement does not contain a statement of fact.
You may want to consult an attorney for help if you are unsure how to compose an answer.
2. Provide the written answer to counsel for Plaintiffs prior to the expiration of 20 days. If you don’t respond in a timely fashion, you run the risk of the Plaintiff trying to garnish your wages or putting a levy on your bank account. They have to give you notice before they garnish or levy you, but remember- in Minnesota, a creditor does not need a judicial order before garnishment or the placement of a levy.
3. Check to see if the case has been filed with the court. In Minnesota, plaintiffs can do what’s called “pocket filing.” When a plaintiff pocket files a complaint, it means that it has served the summons and complaint on a defendant, but they didn’t file it with the Court. Typically, this is so they don’t have to pay the filing fee. In most cases, the creditor did this because it is hoping to settle the case and never pay the filing fee. Cases are initiated by the service of the summons and complaint- not the filing.
4. Try to engage the attorneys for the creditor in settlement negotiations. While creditors are not required to settle their claims, most are open to the idea. Many creditors will accept settlement plans that involve the payment of just a fraction of what is claimed to be owed. Of course, each creditor is different and their treatment may differ from alleged debtor to alleged debtor. You won’t know what the creditor will settle for unless you make sure they are engaged in those discussions.
5. Make sure that all settlement agreements are in writing. There is no reason for a creditor to NOT put a settlement agreement in writing to memorialize the agreement that a debtor will pay $X in exchange for the full and complete settlement of all claims a creditor may have.
Additionally, it may be worth your money to hire an attorney to negotiate a settlement on your behalf. Many times, creditors are more responsive to settlement offers coming from attorneys, rather than alleged debtors.
Is some company you have never heard of calling you, perhaps with a name including the words 'Recovery', 'Credit', or 'Services', and leaving messages regarding a debt you thought was owned by a big bank like Chase or Bank of America? Depending on the methods used, they may be in violation of the 'Fair Debt Collection Practices Act' (FDCPA)--and liable to you for $1,000, plus attorney fees!
Prohibited behavior includes (among many others):
-Harassment, including profane language, threats of bodily harm, threats of publicity
-False statements about the alleged debt, including amount due
-Representing that the collector is an attorney (when he or she is not)
-Threatening garnishment or seizure of assets if debtor exempt from that manner of collection actions
As a general rule, each party to a lawsuit is responsible for paying his or her own attorney fees. However, many statutes provide for the award of attorney fees to the prevailing party in a lawsuit. Examples range from 'Civil action[s] against a person who fraudulently deceived a senior citizen or handicapped person' (Minnesota Statute 325F.71, subd.4) to 'Wrongful disclosure of video customer records' (Minnesota Statute 325I.03). Attorney fee clauses are also common in civil rights enforcement statutes.
A judge in a civil action also has the discretion to award attorney fees where he or she sees fit. One example is awarding attorney fees to an individual collecting on delinquent spousal maintenance or child support--the reasoning being that the obligee would not have incurred the fees in retaining an attorney to collect had the obligor been in compliance with his or her support obligations.
Contractually-provided for attorney fees are another, perhaps more common, scenario. For example, in most consumer credit contracts, there will be a provision holding the consumer liable for attorney fees incurred in a collection action.
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