Collection lawsuits are a difficult matter for any debtor. To avoid them, one must first understand how they work and how to stop them from occurring. Collection is the process of collecting money owed from a debtor on a debt.
The source of the money owed is the outstanding debt. In a normal situation, the creditor or his representative sends a debt collection letter or a demand for payment. If the debtor does not honor the demand, the creditor will file a lawsuit in federal court.
In most cases, the court allows the debtor to repay the debt within a specified time period called a “settlement.” However, if the plaintiff does not, the courts will appoint an “automatic stay” on the case. This action of the courts temporarily halts all collection activity and orders creditors to stop calling and to not send collection letters. The debtor is required to pay the balance of the debt, including costs, to the creditor or his representative.
Once the automatic stay is issued, it is effective on the date specified in the order.
At this point, the case must be brought before an attorney who has the experience and knowledge to guide the case to its conclusion. If an attorney is not immediately available, then collections lawsuits can be pursued by hiring a private investigator. Attorneys normally charge more for their services, but often recover their costs by winning the case.
Private investigators are especially useful in pursuing “short” collections.
These are cases where a creditor does not have sufficient time to send the demand letter, or the customer does not have enough money to settle the case in full. In such cases, an investigator’s assistance may be indispensable. It is important, however, that an attorney is involved from the very start of the case, so that the attorney can make contacts with the IRS to obtain the evidence needed to win the case.
It is important to obtain the services of an experienced attorney. Some collections lawsuit cases do not involve sophisticated technology, making them easier to defeat at trial.
However, even relatively simple cases involving sophisticated technology can be quite difficult to beat, especially if the IRS proves its authority over the debt under the set-up. Also, it is important to select an attorney well versed in collections law, as many are unaware of the technical aspects. Selecting an attorney should also include ensuring they have experience dealing with the specific collections lawsuit setup one is involved with.
It is usually a good idea to hire an attorney who specializes in collections law.
This will ensure expertise in the area of the collection and will give one an edge in negotiating a settlement. If one does not have an attorney, then there are other resources available. The Internet, for instance, is a great place to look for potential sources of information on collections lawsuits.