Will You Be Sued?

Mar 26, 2015 by

courthouseIf you’re past due on a debt, you’re likely familiar with debt collectors’ favored tactics: bullying, threatening, insulting, embarrassing, and generally being as big a nuisance in your life as possible. And you’ve probably been threatened with a lawsuit, even though it’s against the law for a debt collector to threaten legal action if it has no intent to take that action.

But how can you judge whether to take seriously a threat to sue?

The Debt Collector’s Ultimate Weapon

Though a lawsuit is the debt collector’s ultimate weapon, a collector typically doesn’t roll out this Big Gun unless and until all its other options have been exhausted. (You could, however, unwittingly push the collection agency into suing you by sending it a “cease & desist” letter.) Why should the agency take the time and go to the trouble to sue you when it’s learned from experience that a few weeks of persistent harassment persuades many debtors to pay up?

Still, when you get that lawsuit threat, it’s unnerving, to say the least. Nobody wants to get sued and have to go to court. And if the debt is legitimate, you’re going to lose that lawsuit.

What’s the Collector Gain by Winning a Judgment in Court?

So what’s winning a lawsuit in court do for a collection agency? Potentially, a lot. With a court judgment in hand, the collector may then pursue a new set of particularly punishing tactics, including:

  • Wage garnishment
  • Property liens
  • Bank account seizures

But here’s the catch: Not all of these tactics are legal in every state. Further, your wages would be a bit tough to garnish if you have no wages. And putting a lien on your house couldn’t happen if you don’t own a house.

If a debt collector knows because of the specifics of your situation that it has little leverage to gain by successfully suing you, then it won’t go to the trouble to sue you.

How to Judge Whether a Debt Collector Will Follow Through on a Threat to Sue

To get a better sense of whether you’ll be sued by a debt collector, you need to think through what the collector stands to gain by winning a lawsuit against you.

For example, as noted above, if you don’t have a job, your wages can’t be garnished. (Of course if get a job, you could be subject to garnishment.) Also, if you live in North Carolina, Pennsylvania, Texas, or South Carolina, garnishing your wages to collect “commercial” debt (credit card debt, for example) is against the law.

How about property liens? Once a debt collector has a court judgment in hand, it can put a lien on your house. That effectively means you can’t sell your house, because any potential buyer will learn of the lien and tell you it must be dealt with by you before he or she will buy your house. But obviously if you don’t own a house or other valuable property, you needn’t worry about the prospect of a lien.

After winning a lawsuit a collector may also be able to seize cash in your bank accounts. How you can insulate yourself from this tactic I think is clear: don’t keep a lot of cash in your bank accounts.

Aside from the potential to garnish, if the collector sees that you have no job and no assets, it may not see much point in suing you, on ‘can’t get blood out of a turnip’ grounds.

Finally, if you don’t know what’s on your current credit report, have a look. If your report shows that you’ve paid past due accounts in the past without the creditor resorting to a lawsuit, a collection agency after you now may be inclined to continue with the usual harassment tactics. But if a lawsuit was required to force you to pay delinquent debts in the past, the agency might now jump to that option.

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