Dealing With Debt Buyers in Bankruptcy

TRI Writer • March 17, 2021

 If a debt buyer sues you to collect a debt, it is usually best to respond to the lawsuit by challenging their right to collect.  

What Should You Do If a Debt Buyer Sues You? 

In many cases, when a debt buyer sues to collect a debt, there’s a good chance that the borrower can successfully challenge their right to collect. To challenge a debt buyer’s right to collect on a debt, you have to respond to the lawsuit seeking payment. The last thing you will not want to do is skip fighting it in court by calling their lawyer and “working it out” over the phone. You will likely have a default judgment rendered against you, and you will be stuck with a judgment to you might have otherwise been able to have defeated had you fought it in court. 

How to Challenge a Debt Buyer’s Right to Collect: 

  • File an answer to the complaint filed by the debt buyer seeking payment. 
  • Demand proof of the amount owed. 
  • Demand proof that the debt buyer owns the specified debt. 
  • Present any evidence to the judge. 

Due to the complexity of the issues involved, this is something most defendants are incapable of executing without a lawyer. After all, it’s complicated. The rules of evidence will frustrate you if you try to go it alone.

Debt buyers generally seek payment by filing thousands of lawsuits every year. Their success depends on the fact that most consumers don’t fight the lawsuit. Due to their general business practices, a challenge to a debt buyer’s right to collect is likely to succeed. With a little prep work, you could persuade the debt buyer to drop their efforts to collect from you and persuade the judge to rule in your favor. When defending these types of cases in state court, and without the defendant ever filing a bankruptcy case at all, Ken Rannick has never lost a case against a debt buyer and every such case he has handled has been dismissed in the defendant’s favor. 

Filing an Answer to a Debt Buyer’s Complaint: 

When a debt buyer files a lawsuit against you, you’ll receive a summons and complaint (usually from certified mail or a process server). The summons indicates the time you are allowed before a response is required. If your answer is not filed with the court that date (and a copy mailed to the debt buyer’s attorney), a judgment is automatically entered against you for the amount the debt buyer requests. Don’t allow an automatic judgment to be entered. Instead, go through each allegation in the complaint and admit that the allegation is true, deny the allegation, or state that you do not have enough information to admit or deny it. The debt buyer is required to prove any allegation you do not admit. Include any affirmative defenses you may have. An affirmative defense is a defense that you must prove (such as the date of the original debt indicating the statute of limitations has expired), failure to state a claim upon which relief may be granted (this general defense applies when the complaint does not offer enough facts to support the claim), the plaintiff lacks standing (this applies in situations where the debt buyer cannot prove they own the debt), etc. 

If you are dealing with debt buyers seeking payment and have questions about how bankruptcy could help , please don’t hesitate to contact Ken Rannick. Most bankruptcy offices in the Chattanooga area don’t have a single Consumer Bankruptcy Specialist on staff. Ken Rannick has been certified as a Consumer Bankruptcy Specialist for over 25 years, and has achieved “Senior Specialist” status. You are in good hands with Kenneth C. Rannick P.C.

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