While creditors do have the option to sue for outstanding debts, they tend to attempt to resolve the issue out of court whenever possible. This is because courts typically award only a fraction of the debt owed to the creditor and it costs both time and money to prepare for a lawsuit. However, if you are sued, the first step involves finding a qualified attorney to assist you in preparing your defense and attempting to negotiate with the creditor out of court.
Unfortunately most people that find themselves with debt settlement lawsuits haven't kept up with correspondence and communication with the creditor. Often letters haven't been opened or replied to and little or no contact has been made between the debtor and the creditor.
Collect all documentation regarding the debt including the demand letters for payment, bank records, cancelled checks or other proof of payment. This documentation will be important when discussing the lawsuit and will provide information on your attempts to negotiate or to repay the debt if they occurred.
Debt settlement companies often advertise their ability to cut your payments, stop creditor calls and get your credit score back up. In reality a debt settlement company cannot provide any legal advice nor can they represent you if a lawsuit is filed. Some of these companies may offer legal services or be associated with a law firm, but typically these additional expenses will be charged directly to the client.
Working with an experienced and qualified debt reduction attorney is the best option. Not only can the attorney provide legal advice but he or she will be familiar with your financial situation, budget obligations and the legal precedents on debt collection and repayment within your geographic location. They can also represent you in negotiations pre-suit in an attempt to resolve the dispute in either mediation or arbitration hearings.
The best advice is to immediately contact a debt reduction attorney when you are dealing with debt settlement lawsuits. Experienced attorneys will review your documentation and provide information on your options for settlement and the range of possible outcomes to the lawsuit. This allows you to time to plan how to handle the situation as well as having a legal professional working with the creditor in an attempt to resolve the debt without going to court.