Recently on our legal forum a user asked, “I took out a personal, unsecured loan three years ago. Last year I lost my job and I have not been able to make any type of loan payments. I have talked to the company and requested that we come to some type of settlement agreement, but they have refused. What are my options if I cannot repay the loan?”
This personal bankruptcy question was posted on the internet in 2011 in a bankruptcy discussion: “How long does it take for a collection agency to sue you to repay a debt?”
In an attempt to regulate the collections industry, Congress passed the Fair Debt Collection Practices Act (FDCPA) in 1978 as Title VIII of the Consumer Protection Act. Its purposes was to eliminate abusive practices in the collection of consumer debts, to promote fair debt collection, and to provide consumers with an avenue for disputing and obtaining validation of debt information in order to ensure the information’s accuracy.
Some people believe today that the ultimate weapon against some of the new collection agencies is debt validation. Debt validation is a legal term whereby any debtor who is confronted by a collection agency for collections has the right to validate the debt claims being made by the agency. That means, basically, you have the right to know several things about the debt you allegedly owe: what legal documents the agency has for collecting the debts; what amount the original debt was being claimed and the specific interest and fees they are claiming; whether any of these debts including interest and fees are legitimate; where the debt is in the accounting of the claim; and who you actually owe the debt to.
If a collection agency refuses to provide you with this information or cannot provide you with the information, there is a good chance a judge will dismiss a lawsuit on a debt claim against you. That means you may not owe the debt. Without a judgement against you, a collection agency has very little leverage in debt collection.
When a collection agency validates a claim and then tries to sue you for a court judgement, there is a legal process the collection agencies has to follow. This process will vary from state to state in time consumption depending on how busy the court dockets are for that state. In addition, collection agency legal teams can also be busy, and they are the ones who handle the legal work for the agencies. So, how long it takes for a collection agency to sue you to repay a debt can vary greatly.
What may be the most important thing in facing a lawsuit from a collection agency is to respond to the summons. Through discovery, you and your lawyer can make sure to demand every bit of their proof you owe a debt. Often times, they do not have legal proof.
Many collection agencies do not expect you to show up at court when they file, and many even count on the fact you will not. When you do, most times it will add unexpected costs to the agency which might encourage the agency to drop the case.
A reasonable length of time to expect to get sued after negotiations with a collection agency has ceased is between three months and a year.
If the collection agency is successful in getting a judgement, you can still file for bankruptcy protection. Bankruptcy laws can be complicated, and common sense indicates you might need a bankruptcy lawyer in order to help you understand how these complex laws may apply in your particular situation.