Of all the financial entities to be sued by, banks represent the most difficult to fight against. Banks are usually the original creditor for the indebted accounts they manage, which may include credit card accounts, home loans and auto loans. As such, they normally have all of the documentation they need to legally prove the debts they pursue. This means the defendant won’t have much luck trying to catch the bank in a case of missing information. Fortunately, there are other ways to combat these lawsuits, especially when the case is managed by a reputable debt defense attorney.
For most people, the first sign that they are involved in a lawsuit is delivered via complaint. The complaint is a formal indication that the bank is pursuing the debt using the legal system, and it includes the relevant details regarding the type of debt and how much is owed. Along with the complaint is a summons, which notifies the defendant that they are to appear in court on a certain date. The initial response to the complaint and summons is likely going to be shock or dismay.
And that’s why many people ignore the complaint, hoping that it will eventually evaporate. But, of course, it’s never that easy. It’s extremely important – more important than any other step during the legal process – to answer the complaint. Yet, more than 90 percent of people don’t provide that answer.
Why is it critical to answer the bank? If the defendant does not show up to court on the summons date, the bank will receive a default judgment in its favor. A default judgment gives the bank extra tools to make your financial life miserable, including garnishing wages and bank accounts, in some cases. Don’t let this happen.
Providing an answer is easy enough, and can be done in just a couple sentences. It must be provided soon, though, usually within 20 to 30 days after being served with the complaint.
All is not lost if a default judgment is in place. Defendants can request that the court remove the default judgment. If the lawsuit was mistakenly served to someone else, if the defendant was experiencing a particularly difficult life circumstance, or if details in the complaint were factually incorrect, the court may be amenable to lifting the judgment. Effectively fighting a lawsuit depends heavily on mitigating a default judgment, so if one is in place, it’s best to consult with a debt defense attorney regarding how to deal with it.
Once the complaint is answered, it’s time to build a defense. There are times when someone may attempt to fight the suit without an attorney, such as when the debt is so low that it would cost less to pay it, rather than seek legal representation. In the vast majority of instances, though, it is prudent for the defendant to work with an attorney. Debt defense attorneys have experience taking on banks, including the most powerful banks in the world. Their experience in these matters will be decisive and can form several lines of defense, including:
1. Combing through any contracts attached to the account – When setting up a bank account, consumers are required to sign a contract, detailing the bank’s policies regarding how the account is managed. Though this is infrequently the case, some of these contracts require any account disputes, including past due balances, be managed through an arbitration process, instead of a legal process. Again, this is usually not the case, but if such a provision exists in the contract, then there may be no legal standing for the suit.
2. Verify the debt is actually owed – Compared to other financial service institutions, banks do an effective job of keeping accurate, up to date records. But they still make mistakes, and some banks have filed lawsuits against people who don’t even have an account with them. If a major financial institution can make a mistake that profound, then it can certainly make mistakes regarding account details and amounts owed. If there is a discrepancy between your records and the bank’s, or more importantly, if the account is one you have no involvement with, a debt defense attorney will spot the issue.
3. Check the statute of limitations – Banks only have a certain amount of time to pursue legal action for a debt, known as the statute of limitations. It’s not always clear when the statute of limitations begins ticking down with a particular account, but it is usually timed from the last payment made on the account.Once the statute of limitations is up, the bank can no longer go after the debt through a lawsuit. The statute of limitations is different in every state, with some states placing the limit at two or three years, and others stretching it out to six years. Further, some states have a variety of statutes for different types of debt, so it can be confusing to get a grip on. Debt defense attorneys know these statutes in great detail, though, so they can dispel any confusion.
4. Prepare for settlement – Many bank lawsuits eventually end up in settlement. If the bank’s lawsuit is precisely detailed and the defendant really does owe the debt, the only recourse is for the defendant to negotiate better terms during settlement. Of course, the defendant also has the option to declare bankruptcy, but this a last resort option that has far-reaching consequences.Banks are usually willing to negotiate a settlement, especially if they haven’t yet won a default judgment. The bank would prefer to avoid the legal costs and time associated with going to trial, which means they will often give a little to improve their chances of collecting on the debt. A debt defense attorney can take advantage of this, and earn more favorable terms for their client.
The whole world may feel like it’s crashing down once served with lawsuit papers, but once that first wave of shock and distress has subsided, a debt defense attorney can start laying the groundwork for an effective response.