As always, before reading this post, please review my disclaimer by clicking on the link above or by clicking on this link. As always, any legal principles discussed apply only to the Commonwealth of Virginia.
Introduction
Stuff happens - that's one of the realities of life. Sometimes this means we don't pay bills we intended to, we fall behind on credit card payments, or we even forget about some bills altogether. On top of it all, sometimes we pay our bills, and the person we paid loses our payment, loses track of it, or mis-enters it into their billing system. Regardless of how you get there, however, few things can be scarier than receiving a summons to court because a debt collector has sued you. In today's blog post, however, I'll discuss some basic "tricks of the trade" on how to fight back against a debt collector's lawsuit, even if you technically owe the money.
Before I begin, if you're new to this blog, it may help to familiarize yourself with the procedures for civil cases in the General District Court. I will be discussing General District Court here since that is where nearly all lawsuits from debt collectors are filed in Virginia.
How to Tell if You're Being Sued by a Debt Collector
The first thing to do is to figure out if it's actually a debt collector who's suing you. The best way to do this is to look at the name of the plaintiff on the Warrant in Debt you've been served with. If you've never heard of the plaintiff, and especially if the plaintiff is listed as "assignee of" or "subrogee of" or something similar, followed by a name you have heard of, then you're being sued by a debt collector. If, however, the name of the plaintiff is familiar, and it's who you owe (or owed) the debt at issue to, then you are not.
While some original creditors, especially very large ones, behave similarly, most do not, so this blog post is really geared towards people being sued by debt collectors, not original creditors.
Motivations at Issue
So, the next thing to do is try to understand the motivation of the parties involved. For the original creditor, they likely made some cursory efforts to collect payment from you, and when that didn't work, gave up. They decided, probably reasonably, that they're not likely to be able to collect your debt - at least not without expending substantial effort - so they sold it to a debt collector, likely for pennies on the dollar (I've heard of debts being sold for somewhere between 5 and 35% of face value, depending on a number of factors) so as to get something.
For the debt collector, they make their money by buying up as much "bad debt" as they can, and then hoping to collect enough of it to make back their money and then some. As you can guess, though, if a debt collector only pays 15% of face value, it probably only expects to actually successfully collect somewhere around 25 to 35% of the debt it buys. This means a debt collector of this sort is generally motivated to collect as much as they can while exerting as little effort and cost as possible.
Handling the Lawsuit
Some debt collectors will simply file a lawsuit against everyone whose debt they've bought. Their hope is that a) some people will get scared into paying by the lawsuit, b) some people will get scared into paying by the judgment that's entered showing up on their credit, c) some people will actually own property and will end up paying when they sell that property due to the lien the judgment created, and d) the collector will stumble upon a person's employer or banking information and be able to do a garnishment with its judgment.
Remember, however, that a debt collector is still assuming that it will never see a dime from the majority of the people it sues. This means a collector is likely unwilling to expend substantial legal fees, or a great deal of time. If they have a judgment, they usually won't do debtor interrogatories (for more on post-judgment collections, you can read my post on the topic), and for the main lawsuit, they are hoping that you, like the vast majority of people they sue, don't show up to the return day, so they can just take a default judgment.
How to Fight Back
That last part is key - the debt collector is relying on most of its judgments being default judgments. So, your first step to fighting back is to show up at the return day. When the judge calls your case, you can usually legitimately and truthfully deny liability, because at that point you don't have sufficient knowledge to prove that the collector suing you actually owns the debt. When you challenge liability, a trial date will be set. Many debt collectors will voluntarily dismiss their lawsuit right then and there.
If, however, your plaintiff does not dismiss the lawsuit, a trial date will be set. Pleadings will likely be required, which is where they will document how they own the money. You can still, however, challenge liability in your answer and grounds of defense by simply noting that you're without sufficient knowledge of the transaction to be certain of its accuracy. Consulting an attorney will help you prepare an answer that is both truthful (actually truthful, not just technically truthful but deceptive) and effective.
Come trial, many debt collectors will give up and dismiss their case. A small number, however, might go forward. Their plan, again since they intend to expend minimal effort, is to call a witness from their own company to validate their purchase of the debt, but not to expend the effort needed to call a witness from the original creditor to validate the debt itself. They might try to have their own witness validate the debt itself, but even a defendant with very basic legal knowledge will be able to object to that validation as hearsay. Instead, they will call you to the witness stand to validate the debt itself. If, however, you have an attorney, and you have not been subpoenaed (and they almost never think to subpoena the defendant) you do not have to be at trial. If you are not there, they probably cannot validate the debt, and if they cannot validate the debt itself, they cannot win.
Important Caveats
Note, however, that while a minority, there are debt collectors who are legitimately trying to collect every single debt they own. They will go through the effort of having a trial and having their necessary witnesses there, then engaging in post-judgment collections actions. In short, what I've listed here works, in my experience, with most debt collectors, but not all. Additionally, if there's a problem with the debt (like you actually paid it, but never got credited), then you should appear at trial to present that evidence. Further, no plan is perfect, and you should definitely have an attorney if you are challenging a debt collection lawsuit in the manner described above. Finally, you must be truthful throughout the proceeding. Doing otherwise could get you in some very hot water.
Conclusion
Being sued by a debt collector is scary, but there are ways to fight back, even if you owe the money. Only an attorney can tell you what strategy is best for your case, however. If you've been sued by a debt collector, feel free to call (703)281-0134 or e-mail me at SLeven@thebaldwinlawfirm.com to set up a consultation. Our initial consultations are free for up to half an hour!
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