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Bankruptcy May Be Your Option

Considerations if your creditor sues to collect a debt

If you have fallen behind on your payments or defaulted on a credit account, the risk of being sued cannot be ignored. Although filing a lawsuit is usually a last resort for creditors, who would much rather work with you on repayment of the debt than to go to court, if you do not take action to settle with your creditor then it may eventually resort to legal action. This post provides a brief overview of what that action may look like.

The first notice you will get regarding a creditor’s lawsuit will come in form of "service of process," which describes the formal procedure for delivering the legal complaint and a summons to appear in court to defend yourself against it. The complaint will inform you of the total amount you owe, and the summons will give you the date on which the hearing will be held. 

If you do not appear to defend yourself a default judgment may be entered against you, after which the creditor can use legal means to collect.

If you decide to defend against the lawsuit, you may want to seek the services of a debt relief attorney, to help verify whether the lawsuit against you is valid, and what legal defenses may be available to you.

Some of the procedural questions that are important in determining a lawsuit’s validity are:

  • Whether it has been filed within the appropriate Oklahoma statute of limitations;
  • Whether the company that has acquired the debt can properly document its ownership of the claim; and
  • Whether the creditor has included a copy of the account or contract, and whether that contract requires arbitration instead of a lawsuit.

If the lawsuit does not fail on procedural grounds, and settlement out of court is not possible, then defenses at court may include:

  • Mistaken identity, (that is, you are not the person who actually owes the debt);
  • Filing a bankruptcy petition, which may preclude the lawsuit from going forward; and
  • Fraudulent use of the account (particularly in the case of credit card debts).

This post provides only a brief overview of the subject of a creditor lawsuit, and is not intended as legal advice. Every case must be explored on an individual basis. Depending on the unique circumstances, an attorney can advise a person of their rights and legal options.

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