It’s the letter no one wants to get: a debt collection notice.
You’ve tried to keep up with your payments, but now one of your loans is delinquent and your creditor or a debt collector is taking legal action. What can you do?
First, don’t panic. You have a little time, and you have legal options. Second, take action. If you have received notice of legal action from a creditor or debt collector, contact us today to discuss your options with an experienced bankruptcy attorney. The sooner you get legal advice, the more time you will have to make a plan of action.
What follows is general information about how you might be able to respond to a debt collection lawsuit in South Carolina, not legal advice. Again, if you are being sued, you need to talk to a lawyer as soon as possible about your rights and options in your specific situation.
How to read a collection complaint
If you’ve received notice from a debt collector that they’re pursuing a lawsuit, the first thing you should do is read the complaint. Some people don’t bother with this step, thinking that it’s a legal document that they won’t understand anyway. But collection complaints are usually written in fairly plain, understandable English, and they typically are no more than a few pages long.
Here are a few things to look out for:
- The name of the plaintiff. The “plaintiff” is the person or entity pursuing legal action; in the case of debt collection, that’s your creditor. Do you recognize the name of the creditor? Is it a business you actually owe money to? If not, there’s a chance they have the wrong person.
- The amount of money (damages) they are asking the court to award. Is it close to the amount you actually owed them, or are they asking the court to award an amount larger than the underlying debt?
- The deadline to respond to the complaint. If you miss this deadline, the creditor will most likely ask the court to rule against you automatically. In South Carolina, this is normally 30 days from the date you’re served.
- Any additional allegations other than simply having a delinquent debt. If you’re being accused of something like fraud, false representation, or breach of duty, then you absolutely need to talk to an attorney before you take any other action (such as filing for bankruptcy).
Keep in mind the statute of limitations
In South Carolina, the statute of limitations (legal deadline) for collection action is three years from the date of default. In most cases, that means the debt collector must file a lawsuit within three years of the day you made your most recent payment on the debt in question. If the date of default is more than three years ago, that means the statute of limitations has expired. Your debt is now “time-barred,” and you can raise an “affirmative defense” to get the court to dismiss the collection lawsuit.
Note, however, that you can restart the statute of limitations if you either make a payment on the debt or acknowledge the debt in writing. Debt collectors know this; that’s why they’ll sometimes attempt to collect time-barred debts and pressure debtors into inadvertently giving up their legal protection. So, again, you need to talk to a lawyer before you take any action in response to a collection complaint.
How bankruptcy can protect you from lawsuits from creditors
As soon as you file for Chapter 7 or Chapter 13 bankruptcy, the “automatic stay” goes into effect. This is a court order that immediately halts collection activities, including lawsuits. So, if you are being sued by a creditor for non-payment and you file bankruptcy, the automatic stay will stop that lawsuit in its tracks. Bankruptcy can also protect you from wage garnishment and other consequences of a creditor’s lawsuit.
If you have already lost a collection lawsuit, then bankruptcy can typically clear the debt you owe the creditor due to that lawsuit. As long as the underlying debt was itself dischargeable in bankruptcy, then the debt from the lawsuit should be dischargeable, too.
However, there are some exceptions. Again, if you are being accused of fraud or misrepresentation, you absolutely need to ask a lawyer about the implications if you file bankruptcy. Moreover, bankruptcy only stops collection activities going forward; it can’t get you your money or property back after garnishment or repossession. So, the sooner you take action, the better.
Talk to a bankruptcy attorney right away
If you’re facing a lawsuit from a creditor or debt collector, the last thing you need is to try to respond on your own. You have rights under both federal and South Carolina law, but you need an attorney who can analyze your situation and explain your options.
Again, time is of the essence when you’re facing legal action. If you have received notice that you are facing a debt collection lawsuit, give us a call or contact us online today to speak with an experienced bankruptcy lawyer at Benjamin R. Matthews & Associates, LLC. We’ll review the notice with you, explain your options, and go right to work to protect your rights.