Dena Standley | June 09, 2023
Edited by Hannah Locklear
Summary: Generally, debt collection agencies won’t sue over debts less than $500, but it isn’t unheard of. If a collection agency is chasing you for an old debt, you might wonder whether it will take its efforts a step further with a debt lawsuit. SoloSuit explains how collection agencies determine whether a debt lawsuit is worth the expense.
You open your mailbox and find a few advertisements, a magazine, and what appears to be a letter from a collection agency. Debt collection notices can come at the most inconvenient times, reminding you of your failure to pay a bill.
The collection letter you receive is for a $200 balance on your old Visa card. You’ve long forgotten about the debt, but the collection agency hasn’t! Will it sue you if you don’t pay?
That depends on several factors, including the amount you owe, the age of the debt, and whether you attempt to communicate with the collection agency.
Sued for debt already? Settle the debt before going to court with the help of SoloSettle.
When a collection agency decides to sue you, it will determine whether the benefits of a lawsuit outweigh its costs.
Filing a lawsuit in your local court requires the lender to pay court filing fees and find a local representative or lawyer. If the expense of the court filing and the representative outweighs the amount you owe, the collection agency is less likely to sue you.
However, most collection agencies retain representatives who show up to argue cases in court. A collection agency might file dozens of lawsuits simultaneously and fill the judge’s schedule over several days. That means it will divide the cost of representation among various claims.
Debts with a smaller value are less likely to be chosen for a lawsuit. For instance, if you owe $25 to a collection agency, you probably don’t need to worry about a debt lawsuit. However, if your debt is $2K, you’re at high risk of a lawsuit, especially if the obligation hasn’t passed your state’s statute of limitations.
Generally, the minimum bar for a lawsuit ranges from $500 to $1K. Every collection agency sets its own minimums, but if your debt is less than $500, you have less risk of a lawsuit.
You’ll know a collection agency is suing you if you receive a court summons. Your court summons will include a copy of the collection agency’s Complaint listing the amount you owe and identifying information about the debt.
You shouldn’t ignore a court summons. Instead, be proactive and read the Complaint to see if you find any errors. If there are any mistakes, you can use them in your response to the lawsuit, known as an Answer.
An Answer is critical to the debt lawsuit process and protects you from a default judgment if the collection agency requests one. Instead, the judge will review your Answer and let you further defend yourself during the hearing.
Check out the following video to learn how to draft and file an Answer to your debt collection lawsuit:
Once you put your Answer in the mail, you’ll need to make a decision: repay the debt or attempt a settlement.
Repaying the debt stops the lawsuit since you’ll no longer owe any money to the collection agency. After the agency receives your money, it will close your account and drop the case.
However, if you don’t have the money available to repay the debt altogether, you can try to settle it instead. In a debt settlement, you offer the creditor a portion of the outstanding amount. If you reach an agreement with the agency, it will drop the lawsuit and release you from the remaining amount you owe.
Let’s consider an example.
Example: WWYM Collection Agency is suing Alex for $2,000 on an old medical bill. Alex uses SoloSuit to draft and file his Answer to the suit. After filing an Answer with his local court, Alex decides to settle the debt before his court date. He uses SoloSettle to send an offer to WWYM Collection Agency to settle for $1,200 The collection agency accepts his offer and sends the money after signing a settlement agreement. WWYM Collection Agency drops the lawsuit against Alex and reports the debt settled to all three credit reporting bureaus.
Need help to prepare an Answer for a collection agency? Use SoloSuit’s convenient Debt Answer template.
While every collection agency has a different policy regarding debt lawsuits, you should feel reasonably safe from a legal claim if you owe less than $500 on a debt. However, if you receive a court summons from a collection agency, don’t ignore it. Instead, take the steps necessary to resolve the debt before it becomes a judgment.
Do you need help settling a debt with a collection agency? Put SoloSettle to work for you!
SoloSuit makes it easy to fight debt collectors.
You can use SoloSuit to respond to a debt lawsuit, to send letters to collectors, and even to settle a debt.
SoloSuit's Answer service is a step-by-step web-app that asks you all the necessary questions to complete your Answer. Upon completion, we'll have an attorney review your document and we'll file it for you.
Here's a list of guides for other states.
Being sued by a different debt collector? Were making guides on how to beat each one.
You can ask your questions on the SoloSuit forum and the community will help you out. Whether you need help now are are just look for support, we're here for you.
Is your credit card company suing you? Learn how you can beat each one.
Need more info on statutes of limitations? Read our 50-state guide.
Need help managing your finances? Check out these resources.
Out Debt Validation Letter is the best way to respond to a collection letter. Many debt collectors will simply give up after receiving it.
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