According to reporting from CNBC, American credit card debt hit a record high in early 2018. Collectively, Americans owe more than $1 trillion — with an average of $6,375 per adult.
Falling behind on credit card debt is obviously something that no person wants to deal with. It is stressful, and debt collection companies are notoriously aggressive.
Should you default on an unsecured loan — such as a credit card — you may eventually face a court summons. If you are being sued for credit card debt, you need to know how to respond. You have important legal rights.
In this article, our Waco, Texas bankruptcy attorneys explain how to answer a lawsuit for debt collection in Texas.
How to Answer a Summons for Debt Collection: Three Choices
As a starting point, you have three general choices when you get a debt collection lawsuit in the mail:
- Ignore the letter;
- Reach out to the debt collector and try to settle; and
- Prepare to go to court.
The first option is a huge mistake. You should never ignore a credit card lawsuit. It is not the same thing as ignoring other letters from debt collectors. While you should not ignore those either, ignoring a court summons is far worse. The lawsuit will still proceed even if you do not respond. Almost certainly, a default judgement will be entered against you. Soon, you could face a wage garnishment, a bank levy, or even a property lien.
Settle a Debt Collection Lawsuit or File an Answer?
Knowing that ignoring that lawsuit is not a viable option, you have to decide if you are going to try to settle the lawsuit or if you are going to answer it directly. Whether or not settlement negotiations are a viable option will depend entirely on your specific financial circumstances and the total amount of the debt. If you acknowledge the validity of the debt, and you can make some payments going forward, settlement may be advisable. You should consider hiring an experienced attorney to represent you in settlement negotiations.
If you are prepared to answer the court summons, you need to know exactly how you are going to present your side of the case. You can acknowledge the debt, deny the debt directly, or state that you lack knowledge of the debt. In some cases, acknowledgement can actually be an effective defense strategy. For example, if the statute of limitations on the credit card debt already expired, admitting the debt but clearly pointing out the fact that it is no longer collectable could result in the lawsuit getting dismissed.
Debt collection lawsuits are complex and they should always be handled on a case-by-case basis. If you are being sued for a substantial amount of credit card debt and you are not in a financially solvent position, it may be a good time to discuss your options with a Texas bankruptcy attorney. You may be able to shed some, or all, of your debt. Talk to a lawyer before a judgement is entered against you.
Get Help From a Waco, TX Bankruptcy Lawyer Today
At the Law Office of Simer and Tetens, our Texas bankruptcy lawyers are committed to helping our clients find solutions. If you are facing a summons from a debt collection company, we can help. To get a free, fully private review of your case, please do not hesitate to contact our law firm today. From our office in Waco, we serve communities throughout Central Texas.