Michael D. Hart, P.C.

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What happens when a collection company sues you?

| Nov 12, 2020 | Bankruptcy |

The companies whose primary function is the collection of unpaid debt can become incredibly aggressive. Collection agents might make borderline threatening statements, insult someone or otherwise try to bully the people that they contact into paying despite their current financial circumstances. 

These companies can become increasingly aggressive when they don’t get the results that they want from their repeated calls and frightening letters. One of the tactics that collection companies and creditors sometimes use to compel someone to pay is to file a civil lawsuit. When that happens, you’ll need to take prompt action or run the risk of losing when you go to court.

What happens in a debt-related lawsuit?

When a collection company or creditor sues you, they will first attempt to prove to the court that you have a valid debt and have failed to pay it. They will then ask the courts to facilitate them in recovering their money. 

In some situations, legal proceedings might result in the repossession of assets. Other times, creditors will ask the courts to garnish your wages. If they are successful, you will have a much more difficult time budgeting your money when a portion of your income goes directly to repay that business.

Can bankruptcy can stop a lawsuit?

When you get served with notice of a pending lawsuit, you need to take action before you go to court to best protect yourself. If you file for bankruptcy before your court date, the chances are good that at least the scheduled hearing, if not the entire lawsuit, will wind up dismissed. 

Depending on the outcome of your bankruptcy, the courts may discharge the debt that led to the lawsuit, which will free you from future collection efforts.