What are the chances a debt collector will sue?
You have a higher chance of being sued if: The statute of limitations hasn't expired or the debt is new. You have unprotected income or assets (like home equity) and are not judgment-proof (meaning a court could garnish your wages or bank account, or place a lien on your property). The debt is large.
Collection lawsuits are less likely to be issued for debts under $1,000. In cases where a debtor is making small payments, even if those payments are below the minimum requirement of the creditor, the creditor will not file a lawsuit. Professional collection agencies can be more aggressive and lawsuit-prone.
If they win a $1000 judgement against someone and collect all of it, they may only profit a few hundred dollars in the end. Not worth the risk. Due to this risk, there is almost no chance they sue for under $500. Actual debt collectors are unlikely to sue for under $1000 due to the costs of pursuing the case.
Most consumers have about a 14.5% chance of being sued by a credit card company, as detail in a report by the Consumer Financial Protection Bureau.
TLDR: The success rate of debt collectors varies depending on a number of factors, including the type of debt, the age of the debt and the financial situation of the borrower. On average, debt collectors are able to recover between 30-50% of the total debt owed.
According to Investopedia, collection agencies prefer to sue for amounts more than $1,000. So, if you owe $5,000, a lawsuit is highly possible. Even then, remember that lawsuits are costly and time consuming, which is not appealing to debt collectors.
The creditor or collection agency (or lawyer) must serve you with a copy of the complaint and a "summons." The summons notifies you that you are being sued and usually provides additional information, such as when you need to file a formal response in court.
You must respond to the debt collector and create a plan for paying off the debt. If your debt is legitimate, this could mean paying in full, setting up a payment plan or negotiating the debt. If you don't repay or settle the debt, the debt collector can sue you.
Debt collectors are limited on when they can call you — typically, between 8 a.m. and 9 p.m. They are not allowed to call you at work. They can't lie or harass you. Debt collectors can't make you pay more than you owe or threaten you with arrest, jail time, property liens or wage garnishment if you don't pay.
Collection agencies may sue you if they believe that they have a valid claim against you. This usually means that they believe you owe a debt and have refused or are unable to pay it back.
Will a debt collector sue me for $500?
What is the minimum amount a debt collector will sue for? Most debt collectors won't sue for less than $500. However, any unpaid debt can potentially result in collections legal action regardless of amount owed if the collector determines suing worthwhile.
If you don't, the court could grant a default judgment, which means the court automatically rules in favor of the card issuer or debt collector and enforces its request to garnish your wages or bank account. A word of caution: Even if you respond to the lawsuit, the court could still grant a judgment against you.
Whether or not you get sued depends on the amount of debt you have, too. Generally speaking, you're less likely to be sued if you owe less than $2,000 and more likely to be sued if you owe more than $2,000.
Ignoring a Debt Collector's Calls and Letters When You're Judgment Proof. If you're not employed or making very little, and you don't have any valuable assets a debt collector can take, you likely don't need to worry about repaying your debts. Debtors like you can ignore creditor calls because you're "judgment proof."
According to Debt.org, there are three phases to debt collection: You are past-due, or delinquent, on your bills and your card issuer's collections representative calls you to pay your overdue balance. After about six months (depending on the lender), they will give up.
If you're feeling overwhelmed by debt and having trouble keeping up with payments, it's smart to take a breath and consider all of your options. While many people consider debt settlement as an easy way out, this strategy isn't guaranteed and has a major impact on your financial health in the following years.
If you continue to ignore communicating with the debt collector, they will likely file a collections lawsuit against you in court. If you are served with a lawsuit and ignore this court filing, the debt collection company will be able to get a default judgment against you.
Ignoring or avoiding a debt collector, though, is unlikely to make the debt collector stop contacting you. They may find other ways to contact you, including filing a lawsuit. While being contacted by a debt collector might feel overwhelming, talking with them can help you get more information about the debt.
You can sue the debt collector for violating the FDCPA. If you sue under the FDCPA and win, the debt collector must generally pay your attorney's fees and may also have to pay you damages. If you're having trouble with debt collection, you can submit a complaint with the CFPB.
How do you respond to a debt lawsuit?
In a Nutshell
If you're sued for a debt in California, you have 30 days to respond to the lawsuit by filing an answer and proof service form with the court and having an adult who isn't part of the lawsuit serve a copy of the answer on the person suing you.
After seven years, unpaid credit card debt falls off your credit report. The debt doesn't vanish completely, but it'll no longer impact your credit score. MoneyLion offers a service to help you find personal loan offers based on the info you provide, you can get matched with offers for up to $50,000 from top providers.
Don't provide personal or sensitive financial information
Never give out or confirm personal or sensitive financial information – such as your bank account, credit card, or full Social Security number – unless you know the company or person you are talking with is a real debt collector.
Demands for monetary amounts that are not contractually legal – Nearly 40 percent of all reported FDCPA violations involved creditors who were trying to collect monetary amounts that were greater than the amount that the debtor actually owed.
If you are struggling with debt and debt collectors, Farmer & Morris Law, PLLC can help. As soon as you use the 11-word phrase “please cease and desist all calls and contact with me immediately” to stop the harassment, call us for a free consultation about what you can do to resolve your debt problems for good.
