If you have a mountain of unpaid debt, then looming at the back of your mind, you probably have the question “when a debt collector might sue for their money back?” repeating itself over and over and over again.
This time in your life can feel daunting, with the pressure to pay always on your mind, but one way to combat the anxiety you are feeling is to know your facts.
We are going to walk you through what your debt collector might do while you still owe them money.
Take a breath and learn the process, so you are prepared for the path that lies ahead.
A debt collector will sue you for your unpaid debts if they believe they are more likely to receive their payments by force.
The first option with a debt collector is to pay them back in monthly installments, but if your collection agency believes you can pay more, they may sue you to receive that money.
The most common items that a collector will be looking for are properties, vehicles, and savings accounts.
Certain states don’t allow those three items to be collected if taking them away would put you in danger. For example, if you had no money and no job, but you did have a house, taking that house would make you homeless without the chance to rent.
Not all states have these laws in place, so you should research what your state does and does not allow to be sued for.
If you are past due on multiple accounts, you are more likely to be sued as the banks will see that you are unlikely to pay.
If you have savings accounts or investment accounts with a bank that you owe money to, that bank will be very likely to sue depending on your savings accounts worth. This is because your savings could significantly lower your debt to them.
The average ‘lowest amount’ that a collection agency will sue for is $5,000, but that value doesn’t mean that a $2,000 debt is free from a lawsuit.
Each collection agency is different, and depending on the state you are in, they will have different ‘lowest amounts’ to sue for. Some will sue for as little as $1,000, and others would not want to waste their resources on such a low amount.
A company can change its policy too. This means that whenever your debt holders email you or send you a letter to inform you that their policy has changed, you should look out for any changes to their lowest suing amount.
Unfortunately, the answer is yes, and there are a couple of reasons why.
The first reason is rather apparent. If you are in a settlement program and break your contract with them by not paying your monthly payments, then the debt collectors can sue. This is because you have proved that you cannot keep to the program.
Another reason you can be sued while in the settlement program is because you have received a lump sum of money. This could happen if you win the lottery, inherit money, or are given money.
When this happens, your settlement agreement will become incorrect, and your debt collectors can use this as a way to get the cash you have newly received.
And lastly, the settlement is an agreement between you and the creditors. If your creditors decide they want your money faster, they can bypass the program and reach for their legal attorneys.
This doesn’t happen often, especially if you can make your regular payments, because your creditors would rather not pay for the legal fees if their money is slowly returning to them.
The first thing you will receive is a pre-legal letter. This letter isn’t the actual lawsuit. It is just advising you that the account has gone to the office.
At this point, you can still resolve the conflict by paying a portion of what you owe. The amount might be anywhere from 50% of your debt to 100% of your debt.
If you don’t agree, the attorney can then send you legal documents with a scheduled court date.
At this point, you can try and clear your balance before arriving at court, and you can also give the judge a reason for your inability to pay.
The judge may put you in a new settlement program if your reasons are seen as valid, or they can judge against you.
If a judgment has been granted against you, then your property and assets might be taken from you, your savings accounts might be taken from you, and your paychecks might be docked to pay the creditors automatically.