If you have incurred debt that has become unmanageable, you likely already know that many of your bills are past due. However, you probably never expected to have a lawsuit filed against you. If a debt collector has filed a lawsuit against you to recover the debt, you may be tempted to ignore it. This is the biggest mistake borrowers make.
By ignoring a lawsuit, you are forfeiting your right to defend yourself in the lawsuit. If you do not respond, the debt collector can ask the judge for a summary judgment, which allows them to automatically win their case. They may obtain a wage garnishment that allows them to take up to 25 percent of your wages, or even seize your property to repay the debt. There are defenses available that could help you and if you are successful with your case, you may not even be liable for the debt. Below, our Hollywood, FL debt attorneys explain what the most common defenses are.
Violations of the Law
There are two main laws that protect borrowers in Hollywood, Florida. The first is Florida Consumer Collections Practices Act (FCCPA) and the second is the federal Fair Debt Collection Practice Act (FDCPA). Both of these laws prohibit debt collectors from taking certain actions.
Debt collectors cannot use harassing or threatening tactics when they are trying to collect on the debt. They also cannot speak to anyone else about your debt without your permission, nor can they call you very early in the morning or very late at night. Debt collectors are also prohibited from representing themselves as an attorney, or as someone who is affiliated with a law firm when they are not.
There are many ways debt collectors commonly violate the FCCPA and the FDCPA. Once debt collectors violate the law, you can file a countersuit against them to recover your actual losses, statutory damages up to $1,000, and your attorney’s fees. A violation can also be used as leverage when you are negotiating a debt settlement with the collection company.
Legal Standing to File a Lawsuit
Any time someone files a lawsuit, they must have a legal right to do so, and that includes debt collectors. Many borrowers assume that debt collectors have a legal right to sue them, but that is not always the case. The debt accounts of borrowers change hands many times. One debt collection company may sell the account to another, so they can recover at least a portion of what they purchased the debt for from a creditor or another collector.
By the time a lawsuit is filed against you, your account has likely changed hands four or five times. The collector who is suing you may not actually own your account, meaning they have a lack of standing to sue. If they cannot produce documentation showing that they own the debt, it can serve as a defense in your case and may even get the lawsuit dropped.
This is actually one reason debt collectors are so hopeful that borrowers will ignore the lawsuit. Proving that they own the account and have legal standing is very challenging. This is a headache debt collectors do not have to deal with if you simply ignore the lawsuit.
The Statute of Limitations
Like most other legal matters, there is a statute of limitations placed on debt-collection lawsuits. This is the amount of time debt collectors have to file their lawsuits. If collection companies do not file their lawsuit before the statute of limitations expires, they lose their legal right to take legal action.
The statute of limitations on debt collection lawsuits is five years. While the law may seem fairly straightforward, it is not always so simple. The clock on the statute of limitations starts running either when the debt was incurred, or the date the last payment was made.
Many people panic when they receive notification of a lawsuit and so, they try to make a payment right away, hoping to stop it from proceeding. Unfortunately, this is not always the case. In fact, making a payment after receiving notice can actually restart the clock on the statute of limitations, giving collection companies the right to file a lawsuit when they may not have had it before.
Chapter 7 Bankruptcy
If you have too much debt and cannot manage it, you may want to consider filing for bankruptcy. The two main types of bankruptcy consumers file are Chapter 7 and Chapter 13. Borrowers have to qualify for Chapter 7 bankruptcy by passing the means test. This test essentially shows that you do not earn enough income to repay your debt while also paying for your daily expenses.
If you pass the means test and meet the other eligibility requirements, such as the residency requirement, you can proceed with your Chapter 7 bankruptcy case. If you are successful, you can discharge most or all of your consumer debt, meaning you are no longer responsible for paying it.
A bankruptcy trustee will be assigned to your case and the trustee may sell some of your property to distribute the proceeds among your creditors and repay a portion of the debt. However, Florida has some of the most generous bankruptcy exemptions in the country and many borrowers do not lose anything during a Chapter 7 bankruptcy.
Chapter 13 Bankruptcy
Chapter 13 bankruptcy is a good option for people who do not qualify for Chapter 7. Your debt is not discharged during Chapter 13 bankruptcy. Instead, it is reorganized into a repayment plan that lasts between three to five years. You do not have to pass a means test, and you will not lose any property. This bankruptcy process only makes it easier to repay what you owe, as you have a longer amount of time to pay off the debt.
Our Debt Defense Attorneys in Hollywood, FL Can Help You Determine the Right Option
When debt collectors call or file a lawsuit, you do have legal options. At Loan Lawyers, our Fort Lauderdale debt defense lawyer can review them fully with you and help you decide which one is right for you. Call us now at (954) 523-4357 or contact us online to schedule a free consultation and to learn more. We also offer foreclosure services in Hollywood FL, as well as bankruptcy defense in Hollywood FL.
