How to Win a Debt Collection Lawsuit?
Very often, it appears that every which way you turn there is someone who wants your money. Sure, there are the important everyday bills the majority of us have to pay in order to live. We all have our rent or mortgage payments, car payments, electric bills, and fuel bills, the funds spent every week on food and other home and family necessities.
Yet, when it comes to debt – especially debt that you owe or are behind on paying – the truth is someone (and oftentimes, more than a single someone) does want your money.
And they want it now.
How to Win a Debt Collection Lawsuit?
Managing debt is, and always has been, a delicate juggling act. One wrong move can all too quickly start the avalanche of phone calls and threatening-sounding letters and knocks on your front door.
So, are you ready to avoid the stress of that kind of debt burden?
More importantly – are you ready to know how to win a debt collection lawsuit if one (or more) sneak up on you?
Let’s dive right in!
And let’s help you accumulate debt intelligence: the best way you can know how to win a debt collection lawsuit if you’re facing one now. Or if you’ll be facing one in the future.
First, Some More Solid Understanding of Debt
Knowledge is power. And there’s no exception to that rule here as we lay out some vital financial literacy basics. Read on. Gain power!
What exactly is debt? (Don’t laugh; you would be surprised how many millions of people don’t know the true meaning behind the word).
Quite simply, debt is money that is owed.
Debt is NOT credit: credit is basically money given to you for your use as you see fit to use it. Should you use your credit – and then are unable to pay it back under the repayment terms – THEN it becomes debt.
If you or a family member owes a debt, the term for that is the “debtor.” The financial institution or organization (or even a person you borrowed money from) is called the “creditor.”
There are numerous examples of debt. Car loans, student loans, monies that are owed on any of your credit cards, home mortgages, and more.
The examples mentioned above are some examples of “personal debts.”
Are Credit Card Debts Considered a Loan From the Creditor / Card Issuer?
The answer here is simple.
Yes.
Although credit cards tend to have more open-ended, rolling repayment dates (unlike other loan agreements, such as car payments, which need to be paid back by a very specific date before debt looks likely!) credit card funds are most definitely loans.
Credit card loans, so to speak, include agreements from the creditor (and signed and agreed upon by the debtor) regarding how often payments will be made toward funds used through the credit card (typically, but now always, monthly payments).
These credit card “loan agreements” also always include the amount of interest that will be charged on top of the regular monthly payments. In a nutshell, interest is what you as the debtor pay the creditor in order to use the money they give, or rather…LEND, to you.
It’s important to know the difference between “good debt” and “bad debt.”
Is There Really “Good Debt”?
Yes! And It’s As Real As “Bad Debt”
It does sound odd, but there is indeed good debt and bad debt. Here is a little bit of helpful information about them both:
Bad Debt
Bad debt occurs when you use any type of loan or credit for the purchase of impulsive and unnecessary items. Bad debt also becomes a part of your life when you buy things that lose their value quickly. Car loans are considered bad debt; I think most of us know that a car begins to plummet in value the moment you drive it off the new-car lot. Taking out consumer loans also racks up bad debt.
Good Debt
Believe it or not, there is such a thing as “good debt” too. Taking out an (affordable!) mortgage in order to buy and build equity in a house … any type of education-related or student loan (great foundations for a better future!) … and business loans are just several examples of good debt. And because these types of loans are meant to improve your goals and your life in general (no pretty trinkets can be acquired with a student loan – except for a degree at the end of your studies!), you will notice these “good debt” loans tend to have lower interest rates.
Buying things just for the sake of being a “good American consumer” – especially when a loan is involved – can have you facing debt collectors before you know it. Remember – knowledge truly is power. And in the case of debt management, knowledge is a true super power!
Keep in Mind
☛Bad debt, good debt, or a combo of both can still lead to a very unwanted case of “too much debt.”
We will delve into how to win a debt collection lawsuit should that happen to occur in your life. But first things first. Let’s try to avoid ever even getting to that debt collection lawsuit point!
How Much Debt is TOO MUCH Debt?
Even if you are a high income earner, too much debt and making those constant on-time monthly, weekly, or bi-monthly payments can catch up with you quite quickly. The more debt you accrue, the higher your interest payments will climb as well.
Before you know it, you can be in a debt-sticky situation!
Stop. Take a breath. And sound the anti-debt collection alarm. It’s easier than you think!
First, take a look at your DEBT to INCOME ratio by comparing your monthly earnings to your monthly debts.
Is your DTI too high for bill-paying comfort? If not, keep up the good work! But if it is, it’s a good idea to stay far from any debt collection problems by closely thinking about your spending habits. And the sooner you do this kind of financial examination, the better.
Do you rely on the use of your credit cards too much? If so, why? And how can you use more readily available cash or a debit card instead of debt wielding plastic credit?
You may very well have more than one (or two or three…) credit cards that you use regularly. Think about which one (or two or three…) you can pay off and get rid of. This will supply you with a much stronger sense of financial security. What’s more, the fewer credit cards or loans you have, the better your credit score will be!
Visit Budgetry to help you better keep a handle on your money. The new and super-smart, easy-to-use and understand site will help you.
- Find and utilize just the right budgeting tool for your needs
- Control spending and create healthier money management habits
- Find your largest income and spending categories, and review your historical spending patterns
- Set up a daily, weekly or monthly spending budget, and receive notifications when you’ve reached your decided-upon spending budget
- Open new saving goals and manage existing ones
- And so much more!
Some Hot Tips For Keeping Those Debt Collectors Far, Far Away
The goal of figuring out your DTI is important: it will keep debt collectors and potential lawsuits out of your future!
What’s more, there are several savvy tricks you can implement right away in order to make sure you never get to the point of having to figure out how to win a debt collection lawsuit!
Have cash, will travel! You don’t (and shouldn’t) carry a wallet stuffed with cash. However, whether you have one bank account or more, you are sure to have a debit card attached to each account. Using debit cards is like using cash in real time. So…use them! You’ll be glad you did.
When you do use your credit cards, make absolutely sure you pay your monthly bills on time. Not making timely payments will result in extra fees and penalties, higher interest rates, lower credit scores, and the list goes on!
Develop Some Strategies Today to Keep the Debt Collectors Away
Who wants to be involved in a debt collection lawsuit? Not me. And I’m certainly not you, either.
Be proactive and develop some smart strategies for staying on budget and ensuring you don’t fall into a future debt collection sinkhole.
An easy and quick way to strategize the lowering of your budget spending? Try out a balance transfer.
If you have a credit card with a high interest rate, search for another card with a lower rate and then transfer your high interest rate balance to the new and better card.
No More Stressing Over Money.
Financing Made Easy.
Join Debtry.
Has A Debt Collection Agency Called or Mailed You a Letter? Don’t Panic!
According to the New Economy Project, your right to dispute any type of debt collection action is your most powerful tool. “Once you dispute the debt, the debt collector must stop all debt collection activities until it provides you with proof that you actually owe the debt. If the debt collector can’t provide you with that proof, it will never bother you again. If the debt collector does provide proof of the debt, you will be in a better position to decide what to do about it.”
And there are plenty of things you can legally do about it!
If you are being called, or texted, or emailed, or communicated with in any way regarding a debt collection issue, know these important facts about how to win a debt collection lawsuit. And perhaps make the impending lawsuit go away altogether.
Under the FDCPA, your right to dispute the debt has three separate components:
Right to notice of the debt
Right to contest the debt
Right to verify the debt
There are time limits on some of these rights, so it is important to stay alert
For example, “within 30 DAYS of receiving notice of the debt from the debt collector, you can send a letter to the debt collector disputing the debt and requesting the name and contact information of the original creditor. The debt collector must stop all debt collection activities until it can “verify” the debt.”
This verification does not always happen, so stay calm, informed, and strong!
The dispute process continues...
“A debt collector verifies the debt by giving you enough information about the debt so that you can tell whether you actually owe it.
In most cases, verification should include, at a minimum: the amount of the debt, the date of the debt, and the name and contact information of the original creditor.
If you contest the debt on grounds of identity theft or mistaken identity, verification should include a copy of the original signed contract or note.
If you contest the amount of the debt, verification should include information about payments made, and interest and fees charged and/or waived.”
Dispute the Debt, and the Collector Cannot Report it to Any Credit Reporting Agency Until The Debt Is Completely Verified
Did you know that when you dispute the debt, “the debt collector cannot report it to a credit reporting agency unless, and until, it thoroughly verifies the debt? If the debt collector has already reported the debt (before it received your dispute letter), it must notify the credit reporting agencies that the debt is disputed. After verifying the debt, the debt collector can report it, but only as a disputed debt.
And if you never get an opportunity to dispute the debt within 30 days? Have no worries.
Though you will most likely lose your right to verify the debt, you can still stop the debt collector from contacting you by sending the debt collector a letter, called a “cease letter.” Check online for various samples of these types of cease letters.
So how to win a debt collection lawsuit?
You just need to know your rights. And you have rights!