How to Get a Debt Lawsuit Dismissed?

How to Get a Debt Lawsuit Dismissed?

Getting a debt lawsuit dismissed can be a challenging process, but there are several strategies you can consider. Here are the key steps on how to get a debt lawsuit dismissed:

Request Proof of Possession of Debt

• If your debt has been sold to a collection agency, request documentation that proves they have the right to collect the debt. This includes proof that the debt is yours, that they own the debt, and the original credit agreement you signed.
• Ask for documentation showing the "chain of custody" – how the collection agency obtained possession of your debt.

Ask for Alternative Forms of Repayment

• If you receive a notice before the lawsuit is filed, reach out to your creditor to discuss alternative repayment options.
• Request a break in payments if you're facing a financial hardship or propose a settlement where you pay a reduced lump sum.

File a Countersuit

• If you have legitimate complaints against the collection agency, consider filing a countersuit. This can be effective if the agency has violated your rights under the Fair Debt Collection Practices Act.
• Ensure your complaints are valid and not merely based on annoyance.

Check the Statute of Limitations

• Verify if the statute of limitations on your debt has passed. If it's close to expiring, the collection agency may not have enough time to pursue the case in court.
• Be aware of the deadline, as once the statute of limitations expires, the case may be dismissed.

What is a Debt Lawsuit?

A debt lawsuit occurs when a creditor, to whom you owe money, initiates legal action by filing a petition with the court to recover outstanding debts. Typically, such lawsuits are filed after a significant number of missed payments, as the associated costs and time involved can be substantial. Original lenders or debt collection agencies may file these lawsuits, aiming to recoup funds owed.

The likelihood of a lawsuit may increase for larger debts, where the potential gains outweigh the expenses. Possible outcomes, determined by the court, include wage garnishment, involuntary bankruptcy, immediate repayment orders, or the option of reaching a settlement with the creditor.

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Who Files a Debt Lawsuit?

In the context of debt lawsuits, various entities may initiate legal action to recover outstanding debts. Typically, original lenders may file a lawsuit when borrowers become delinquent on payments.

However, in many cases, the original lender may sell the debt account to a debt collection agency. These agencies, driven by the goal of profit, employ tactics such as filing debt lawsuits to recoup the owed funds. Regardless of the entity filing the lawsuit, whether the original lender or a collection agency, the party in possession of the debt account has the legal right to initiate legal proceedings to collect the outstanding amount.

What Are the Possible Outcomes of a Debt Lawsuit?

When facing a debt lawsuit, several possible outcomes can occur, and the specific results may depend on factors such as the creditor involved and the size of the debt. Potential outcomes include:

Wage Garnishment

• Creditors may seek wage garnishment if immediate repayment is not feasible. This involves a portion of your paycheck being automatically deducted and paid directly to the creditor until the debt is fully satisfied.

Involuntary Bankruptcy

• In rare cases, creditors may request involuntary bankruptcy, particularly when they believe the debtor has the means to repay but is refusing to do so. For individuals, this typically involves Chapter 7 bankruptcy, where assets are liquidated to repay creditors.

Immediate Repayment Orders

• The court may issue an order for immediate repayment, requiring the debtor to settle the entire debt promptly. This is not a negotiated repayment plan or settlement.

Settlement

• Creditors might offer a settlement before the case reaches court. This could involve a reduced total amount to pay off the debt or new installment arrangements. Accepting a settlement can be a viable option if you have the means to make the agreed-upon payments.