File Response to Lawsuit Even When You Owe the Debt

By Sam Turco on December 2, 2015

Posted in Collection Agency Lawsuits, Debt Buyer Lawsuit, Debt Settlement, Default Judgment, Garnishment, Medical Debts

I see way too many Default Judgments being awarded to creditors. Judgments are wrecking balls that obliterate the walls of your financial house.

Judgments give creditors the power to garnish up to 25% of your paycheck and 100% of your bank account. Once that happens it becomes impossible to pay the rent, daycare, or car payment. A financial death spiral ensues and that is when I meet a lot of new clients–at the breaking point.

There is a terrible assumption that it is somehow dishonest or wrong to fight against a lawsuit when you know you owe the money. It seems like lying to oppose a lawsuit that is basically correct–you owe the money.

Here is why you need to file a written response to a lawsuit even when you owe the money:

YOU NEED TIME. For no other reason, filing a written response to the lawsuit will delay a judgment for at least 60 to 90 days. When you fail to file a response the creditor gets a default judgment within 30 days, but if you file a response they have to go through extra steps that drag out the process. With that extra time you may be able to pay off the debt before it becomes a judgment or perhaps you will be able to work out a payment plan with the creditor.
THE AMOUNT THEY SAY YOU OWE IS INFLATED. Does a single aspirin really cost $20? Are medical creditors “piling on” the charges? Has the credit card company charged excessive interest? Even if you agree that you owe a debt, are they suing for the correct amount? Filing a response gives you the opportunity to challenge their accounting.
HEALTH INSURANCE SHOULD HAVE PAID THE BILL. Are you being sued for a debt that health insurance should have covered? Was a claim filed? Have you appealed the denial of a claim? A recent client had to be transported by a medical helicopter and the insurance company denied the $30,000 flight as being “unnecessary.” Creepy, right? The client appealed and won. If you can drag out the lawsuit perhaps you will find enough time to get insurance to pay the debt.
NEGOTIATE THE DEBT. Collection companies just want to get paid, and they want to be paid with the least amount of effort. By filing a response you make their job more difficult and expensive. After filing a response reach out to the collection attorney and offer a settlement. Offer 50% of the balance payable in 30 days or whatever you think is fair. Start a conversation. They best way to start the process is to email the collection attorney.
STATUTE OF LIMITATIONS HAS EXPIRED. Most debts expire after 4 to 5 years of no payments being made on the account. Perhaps you are being sued by a junk debt buyer who purchased a credit card account you held 7 years ago during a prior marriage. The Nebraska statute of limitations laws give you an affirmative defense. In fact, if you have been sued on an expired debt you may have a claim against the collector for violating the Fair Debt Collection Practices Act (FDCPA) and you may be entitled to damages plus reimbursement for attorney fees. However, you must respond to the lawsuit and specifically claim this defense.