What should you do if you’re facing a debt collection lawsuit?

Maybe you’ve been trying to ignore calls, letters, emails and texts from collection agencies. Then you get hit with a lawsuit or debt claim by one of them. You may be tempted to ignore that, too.

That would be a big mistake. It’s essential to respond to the notice within the timeframe you’ve been given. If you don’t, the creditor can obtain a default judgment. This could give them the ability to garnish your wages and bank accounts. They can also add court costs, attorney’s fees and interest to the amount you owe.

However, you need to know your rights and what you can do to try to prevent your assets from being taken. It’s wise to seek legal guidance so that you take the appropriate action and don’t do anything that could make matters worse. For example, you shouldn’t admit that you owe the debt, even if you do. The creditor needs to prove that.

It’s also important to make sure that the company seeking to collect the debt has the right to do so. Sometimes, debts are sold and resold to various entities. The company taking legal action to collect has to prove that it’s their right to do so. It also has to provide proof that you owe the amount it’s attempting to collect.

You also want to make sure that the claim is filed within the statute of limitations. That varies by state. According to NYCourts.gov, “The statute of limitations for filing a debt collection lawsuit for a ‘consumer credit transaction’ is 6 years, counting from the ‘date of the default.’ The ‘date of the default’ is about 30 days after you last made a payment.”

If you can’t pay the debt you’re being sued for and are facing other serious financial issues, bankruptcy may be the best option. A bankruptcy filing places an automatic stay on debt collection activity. An experienced attorney can help you determine what the best course of action is to protect your financial future.