Dealing With Creditor Issues

Posted by Laura Robbins, Esq. on November 1, 2012 

 

Dealing With Creditor Lawsuits

We’ve all heard about the struggling economy. Some of us may even be experiencing it firsthand – whether it is from lack of employment, foreclosure issues, or mounting debt. Creditors can often become aggressive in their attempts to collect past-due debt. In Pennsylvania, they may even file a lawsuit to collect the debt at either the Magisterial District Judge’s office or the Court of Common Pleas.

It is important that you do not ignore your creditor’s attempts to collect a debt. If you do, then your creditor may end up getting a judgment against you. This can greatly affect your credit score. Furthermore, if your creditor obtains a judgment against you, they may use several means to enforce it. These means may include, but are not limited to, a levy upon your property or freezing your bank accounts.

There are several steps you can take to mitigate your creditor issues. These steps may allow you to avoid having a judgment placed against you at the Magisterial District Judge’s Office or the Court of Common Pleas. They may also allow you to preserve your personal property, real property, or bank account balance. Here are a few steps you can take to try and prevent a judgment, or at least mitigate the damage a creditor lawsuit can have against you:

1.       Attempt to Negotiate With Your Creditor:  All creditors have one goal in mind – they want your money. Specifically, they want money they believe you owe them. With that in mind, creditors are often willing to negotiate with you in order to gain money without going through a lawsuit or collection process, as that would cost them significant time, energy, and attorney’s fees. Here are a couple of negotiation ideas you can try:

A.      Ask your creditor to close your account and accept monthly payments towards the balance. Sometimes, a creditor will agree to close your credit card account, and essentially ‘freeze’ the amount you owe them, so that you do not continue to incur interest and late fees. Please note, however, that if you ask your creditor to close your account, this would be reflected in your credit report and may affect your credit score. However, eliminating interest and late fees may end up improving your score in the long run, and it’s definitely better than having a judgment placed against you, or continuing to rack up fees and penalties.

  B.      If your creditor has already sued you at the District Court or the Court of Common Pleas, call your creditor or their attorney and try to settle the debt. Often, a creditor will agree to settle a debt for less than the amount they are seeking in their lawsuit. However, keep in mind that if you want to try and negotiate down your debt after you have been sued, try and do so before your creditor gets a judgment placed against you. Otherwise, your creditor will have less incentive to settle the debt for less than their requested amount, since they already have a judgment against you for the full amount.

2.       Show up for your hearing

        A.       If you are sued by a creditor at the District Court, you should inform the District Court immediately that you wish to defend yourself from the creditor’s lawsuit. Then, attend the hearing. If the creditor does not appear at the hearing, then their lawsuit will most likely be dismissed. Sometimes, creditors do not appear for these hearings, as the creditors may be located outside the Commonwealth of Pennsylvania.

  B.      If you are sued by a creditor in the Court of Common Pleas, then make sure you respond to the lawsuit. You can do so in a number of ways. You could file something called an Answer, essentially answering whether or not you believe what the creditor says in the lawsuit is true. You could also file something called Preliminary Objections, essentially objecting to whether or not the creditor followed the proper procedure for filing their lawsuit, and whether or not necessary information was included in their lawsuit. It may seem daunting to file legal papers on your own behalf, and you may want to consult an attorney to ensure you file them properly, but filing these papers may make the difference between having a judgment placed against you or not.

3.       Challenge the Amount

        A.      Remember, if a creditor files a lawsuit against you, it is not enough for them to show that you used one of their credit cards. They need to prove that the amount they are seeking to recover is accurate. Their amount may not be accurate – for example, did you fully consent to the interest rate they charged you on your credit account? Did you review all of your bills fully and do you agree that you are responsible for all of the charges? Did you fully agree to the cardmember agreement?    

      B.      Ask for proof: Do not be afraid to ask your creditor to prove what they say is true. You can ask for this proof at a hearing, or in pleadings you file before a hearing. If your creditor cannot prove you owe them the specified amount, then your creditor will most likely not receive a judgment against you for that full amount.

Please click here for a link to contact information for the Centre County District Judges.

In conclusion, it is important that you know and understand your rights when facing a creditor issue. The above list is not a full and complete list of steps you can take to challenge a debt, but rather they are representative of the issues I frequently see come through my office. Here’s wishing all of you a happy (and debt-reduced) upcoming winter season. 

Please be advised that this article is not intended to provide legal advice on any specific legal issue. 

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