What Are My Options When Facing a Debt Collection Lawsuit?

 Posted on November 16, 2023 in Debt Collection

Being served with a lawsuit from a debt collector can be alarming. However, it does not necessarily mean you are out of options. There are different ways a Texas lawyer can respond when faced with debt litigation.

Evaluate the Claims in the Lawsuit

Read the lawsuit paperwork carefully. Do you recognize the debt being claimed? Is the amount accurate? Is it still within the statute of limitations? Be aware that debts can be bought and sold multiple times, so the plaintiff may not be the original creditor. If you dispute the main details of the lawsuit, make sure to contact a lawyer about possible defenses.

Negotiate Directly if Appropriate

If you do not contest the validity or amount of the debt, you may be able to negotiate directly with the plaintiff or their attorney. They may agree to a payment plan or lump sum settlement for less than the amount owed. Get any deal in writing before paying or admitting liability. However, be cautious about negotiating without guidance.

File an Answer to Avoid a Default Judgment

To prevent the court from automatically ruling against you, make sure to file a formal answer to the complaint before the deadline. Include any applicable defenses or counterclaims. You typically have just 21 days to respond after being served in Texas. Failing to respond leads to default judgment, severely limiting your options going forward.

Consider Declaring Bankruptcy if Eligible

For some Texans overwhelmed with unsecured debt, filing Chapter 7 or Chapter 13 bankruptcy may wipe out the lawsuit debt along with other debts through discharge. Meet with a bankruptcy attorney to evaluate if this path could provide a fresh start. The automatic stay triggered by bankruptcy will also halt the lawsuit temporarily.

Explore Settlement Possibilities

Settling directly or through the court often costs less than a trial. The plaintiff may agree to a lump sum payment for less than the claim amount. Or you may offer increased monthly payments on a payment plan. An attorney can help you negotiate the strongest deal possible, leveraging any defenses and the risk of losing at trial.

Contact a New Braunfels, TX Bankruptcy Lawyer

Stay proactive and explore all options if a debt collector sues you. With the right legal help, you can often reach the most favorable resolution. Do not let fear cause you to ignore the situation and lose the chance to protect your rights. Working with a San Antonio, TX bankruptcy attorney can help you determine the best option. Call Law Offices of Chance M. McGhee at 210-342-3400 for a free consultation.