For many people in New York dealing with insurmountable debt, a lawsuit from a debt collector may be a very serious concern. Of course, legal action is only one of the pressure tools used by collection agencies. People may deal with phone calls, letters and other attempts to collect a debt. Over 70 million people across the country have dealt with collectors at some point or another, and one-quarter of those felt threatened during those encounters. In order to handle a legal threat or a lawsuit over an unpaid debt, it is important for people to understand their rights.

First, if a lawsuit is filed in court, it is important to respond. Many borrowers fail to respond because they do not see a way out of the situation and are also unable to pay the bill in question. However, this could lead to a default judgment being entered against the person and even more difficulties with credit and debt. A lawsuit requires that an answer be officially filed with the court clerk rather than responding directly to the plaintiff that filed the case. It is important to make sure that the answer is filed correctly prior to the deadline specified.

In addition, borrowers can challenge the debt collection agency’s ability to sue to collect the funds. In many cases, lawsuits are filed after a debt has been sold, sometimes more than once. In order to properly collect on a debt, plaintiffs must be able to show a credit agreement and document the existence and chain of custody of the debt.

People who are facing a number of bills that they are unable to repay or struggling with multiple collection agencies may be looking for other debt relief options. An attorney may provide guidance on filing for personal bankruptcy in order to reach a different financial future.