Can Collection Agencies Sue?
Why Would the Collection Agency and not the Lender be Suing?
This is a very good question. And often when the person representing the collection agency shows up at your door or contacts you he informs you he is representing the office of the lender.
Be assured that this is not true. If it were the original lender who was in the process of suing you, his office would be in contact with you via his own attorney.
However, the collection agent possibly could be in the process of suing you on his own and if he is, from this point on, the original lender is no longer in the picture.
What happens is the original creditor or lender will sell your debt to a debt collector for a fraction of the cost, then the collector has the right to pursue you for the full amount plus his own fees.
This is how the collectors make their money. In the meantime, the original creditor writes it as a “charge-off” because they lost money on it, and becomes a tax right-off for their company,
The collector most likely will sue you for the amount of the original debt. However, you can check on “Discovery” and find out how much he paid for the debt, which could be 25 cents to 30 cents on the dollar from the original lender.
In you do have to go to court for this, it is necessary for you to find out exactly what the collector purchased the debt for. Unless you raise the issue, the only amount the court will ever hear is the original debt amount. Then you can argue that the amount the collection agent is entitled to be the amount that he paid to obtain the debt.
What If I Think My Rights Were Violated
A collection agency can file a lawsuit to collect a debt however; he is not allowed to threaten you with a lawsuit just to get you to pay the debt. You should send them a certified letter telling them to stop all contact with you and you should contact Legal Aid.
Just because a debt collector sues you does not mean that they are automatically entitled to a judgment. They still have to prove their case, and you can have a trial. At this point many collections agencies will negotiate a settlement to avoid having a trial.
However, it is very important to negotiate other aspects of the debt and not just the amount of the debt. You will need to discuss court fees, and having the item removed from your credit report.
If you feel you are in the right, you should still go to court to force the collection agent to prove their case. Sometimes there will be extra charges and fees the collection agency is seeking to collect.
And if you do not appear, the court will assume the fees are valid and award a judgment to the collection agency.
It is so wise to know your rights and how to handle an experienced debt collector. Once he sees you are aware of what is going on he will not want to force his way into court and be exposed even more. It would be to his advantage to settle with you, with the major quantity he can and move on.
On the other hand, if you show fear and no understanding of the law or your rights, he will push and push you to obtain the largest amount of currency he can get before he walks away.
