When you stop paying the balance on your credit card for usually six months, your credit card issuer typically writes off what you owe as a loss. Some credit card issuers then sell the outstanding debt to a debt buyer. This practice is legal. Once a debt buyer purchases your debt, it has a right to try to collect the debt from you. One method debt buyers have to collect money is to sue you. But they must follow proper procedure.
Burden of Proof
When a debt buyer sues you to collect money, the burden of proof is on the debt buyer to prove its case. The debt buyer does that by providing this evidence to the court:
- That it has the right to collect any debt you owe
- That you owe the debt
- The exact amount of the debt
Proof of Right to Collect
The debt buyer needs to prove that it bought your specific debt by showing the court the sales contract. Sometimes the debt buyer suing you is not the first debt buyer on the case. The first debt buyer can sell the debt to another debt buying company, which could sell the debt to a third debt buying company and so on. If the debt buyer suing you did not buy the debt from your original creditor, it needs to provide the chain that leads back to the original credit issuer.
Proof Debt is Yours and Active
The debt buyer, to prove the debt is yours, needs to have documents you signed with the original credit issuer. To prove amount, debt buyers need to show the court outstanding bills or account statements. Sometimes debt buying companies pursue old debt, called “time-barred” debt — debt that has passed the statute of limitations, which varies from state to state. Debt collectors cannot sue you for time-barred debt.
If You Are Sued
If a debt buyer sues you, it might or might not have a case against you. Either way, you should never ignore a lawsuit. You must provide a written answer within 20 days. Your answer could state any number of claims:
- You were not served properly
- The debt is not yours
- The debt is too old
- You paid the debt
- The amount the debt buyer is suing for is wrong
- The debt buyer has no right to sue you
- You filed bankruptcy
After you file the answer, you get a court date. If you don’t provide an answer or don’t go to your court date, a judgment will be awarded against you.
