If you’re struggling with unpaid debt, it’s important to be aware of the risk of debt collectors taking legal action against you. While some may set a minimum balance of $500 before pursuing a lawsuit, it ultimately depends on the creditor’s individual criteria.
To help you understand the likelihood of being sued and what can happen if a debt collector wins a lawsuit, we’ve conducted research and compiled the key information in this article. With our guidance, you can learn how to protect yourself and avoid the stress and consequences of a debt collection lawsuit.
So, whether you’re dealing with medical bills, credit card debt, or other types of debt, read on to gain insight into the debt collection process and how to navigate it successfully.
When Do Debt Collectors Sue for Unpaid Debt?
Debt collectors will sue for unpaid debt when they believe there’s a good chance of collecting it. Factors that may influence their decision include the amount of debt owed, state laws, and the presence of assets with positive equity, such as property.
Factors That Affect the Likelihood of Being Sued for Debt
Several factors can affect the likelihood of being sued for debt. These include the number of accounts that are past due, the proportion of debt owed to different creditors, and the access that creditors have to your assets and accounts. Additionally, the likelihood of being sued can vary depending on the policies of each individual creditor.
Will Debt Collectors Sue for Small Amounts of Debt?
Many people wonder if debt collectors will sue for small amounts of debt, such as $5,000 or less. The answer depends on the collection agency and its policies. While some agencies may sue for small amounts, others may not. You will notice in our reviews of Midland Funding LLC and Portfolio Recovery Associates that you may be sued for as little as a couple of thousand dollars.
Factors to Consider When Assessing the Risk of Being Sued for Small Amounts of Debt
To assess the risk of being sued for small amounts of debt, you should consider several factors. For example, you can research the collection agency’s history of suing debtors, whether the agency is a law firm or a collection agency, and the agency’s size. Additionally, you can explore your options for settling the debt before or after being sued, such as negotiating with the creditor or filing for bankruptcy.
Comparing Debt Relief Options
If you’re struggling with debt, you may want to explore your options for debt relief. By comparing your options, you can make an informed decision about the best course of action for your situation.
Sued While in a Debt Settlement Program: What You Need to Know
If you’re enrolled in a debt settlement program, you may wonder if you can still be sued for your outstanding debts. Unfortunately, the answer is yes. Creditors may still pursue legal action even if you’re in a debt settlement program, so it’s important to be aware of your options and the potential consequences.
Risk of Being Sued While in Debt Settlement
To minimize the risk of being sued while in a debt settlement program, you can ask specific questions about lawsuit likelihood before enrolling. You can also research debt settlement companies and their reviews to gain insight into their success rates and any potential issues. However, keep in mind that there’s always a risk of being sued while in debt settlement, as creditors may decide to pursue legal action at any time.
What Happens If You’re Sued While in Debt Settlement?
If a creditor decides to sue you while you’re in debt settlement, you’ll likely receive a pre-legal letter validating the debt owed. At this point, you’re not being sued yet and may still have the opportunity to resolve the debt for a portion of what’s owed. If the creditor decides to move forward with pursuing a judgment, you’ll receive legal documents with a scheduled court date. At this point, you can represent yourself or hire an attorney to fight the account in court.
Debt Settlement Arrangements
If you’re sued while in a debt settlement program, you still have several options for resolving your debts. These include debt settlement, stipulation judgment settlement, payments towards the balance, and stipulation judgment payments towards the balance. Each option has its pros and cons, and it’s important to carefully consider your situation before making a decision. You may also want to consult with a bankruptcy attorney to explore your options for filing for bankruptcy, which may be a viable alternative depending on your circumstances.
Dealing with Debt Collectors When You Can’t Pay: What You Need to Know
If you’re facing debt collectors and struggling to make payments, it’s important to understand your rights and options. Under the Fair Debt Collection Practices Act, you have protections against harassment and unfair practices. To learn more about dealing with debt collectors when you can’t pay, check out our comprehensive guide.
Stopping Debt Collectors from Contacting You
If you need time to consider your options, you can use an 11-word phrase to stop debt collectors from calling you. Additionally, you can ask that the debt collector not contact you via email, text message, or letters going forward.
Garnishment After Judgment: What You Need to Know
If a creditor has obtained a judgment against you, they may attempt to collect the debt through various means, such as wage garnishment, bank account levy, or property liens. However, there may be a grace period before an attorney can start executing the judgment. During this time, you may still have the opportunity to settle the debt for a portion of what’s owed.
Understanding the Difference Between a Levy and a Lien
It’s important to understand the difference between a levy and a lien when facing debt collection. A levy allows a creditor to take funds directly from your bank account, while a lien is a legal claim against your property or assets. Depending on the laws in your state, an attorney may be able to use one or both of these tactics to collect a debt after obtaining a judgment.
Civil Statute of Limitations
The statute of limitations refers to the time limit for filing a lawsuit to collect a debt. This deadline varies depending on the type of debt and the state where the debt was incurred. It’s important to note that creditors are aware of these statutes and take them into consideration when deciding whether to sue for unpaid debt. If the statute of limitations has expired, the creditor may no longer have legal grounds to pursue collection through the courts. However, it’s still important to address any outstanding debts to avoid potential negative consequences such as damage to your credit score. By understanding the statute of limitations and taking proactive steps to address your debts, you can protect your financial well-being and achieve greater peace of mind.
| State | Years | Statute |
|---|---|---|
| Alabama | 3 years | Title 6 Ch.2 Sec. 37 |
| Alaska | 3 years | 9.10.053 |
| Arizona | 6 years | HB 24121 |
| Arkansas | 5 years | 4-3-0118 |
| California | 4 years | Code of Civil Procedure S.337 |
| Colorado | 6 years | Colorado Revised Statutes Title 13 S.80-103.5 |
| Connecticut | 6 years | Chapter 926 Sec. 52-576 |
| Washington, D.C. | 3 years | 12-301 |
| Delaware | 3 years | Title 10, Sec. 8106 |
| Florida | 5 years | 95.11 |
| Georgia | 6 years | 9/3/2024 |
| Hawaii | 6 years | 657-1 |
| Idaho | 5 years | 5-216 |
| Illinois | 5 years | Code of Civil Procedure 5/13-205 |
| Indiana | 6 years | Title 34 Art.11, 2-9 |
| Iowa | 5 years | Ch. 614.1.4 |
| Kansas | 3 years | 60-512 |
| Kentucky | 5 or 15 years | 413.120 and 413.090 |
| Louisiana | 3 years | Civil Code Sec. 2 Art. 3494 |
| Maine | 6 years | 14-205-752 |
| Maryland | 3 years | Section 5-101 |
| Massachusetts | 6 years | General Laws Part III Title V Ch. 260-2 |
| Michigan | 6 years | Ch. 600.5807.8 |
| Minnesota | 6 years | Civil Procedure Ch.541.05 |
| Mississippi | 3 years | 15-1-29 |
| Missouri | 5 years | Ch. 516-120 |
| Montana | 8 years | 27-2-202 |
| Nebraska | 4 years | 25-206 |
| Nevada | 4 years | 11-190 |
| New Hampshire | 3 years | 382-A:3-118 (g) |
| New Jersey | 6 years | 2A:14-1 |
| New Mexico | 4 years | 37-1-4 |
| New York | 6 years | Civil Practice Law & Rules, 2-213 |
| North Carolina | 3 years | Civil Procedure 1-52.1 |
| North Dakota | 6 years | 28-01-16 |
| Ohio | 6 years | Courts – Common Pleas, Ch. 2305.07 |
| Oklahoma | 5 years | 12-95A(1) |
| Oregon | 6 years | Oregon Revised Statutes, Civil Procedure Ch. 12.080 |
| Pennsylvania | 4 years | Judicial Procedure 42 Pa. C.S. 5525(a) |
| Rhode Island | 10 years | 9/1/2013 |
| South Carolina | 3 years | Code of Laws Title 15 Ch. 3 Sec.530 |
| South Dakota | 6 years | 15-2-13 |
| Tennessee | 6 years | Title 28 3-109 |
| Texas | 4 years | Civil Practice and Remedies Code, S.16.004 |
| Utah | 6 years | 78B-2-30910 |
| Vermont | 6 years | 9A-3-118 |
| Virginia | 3 years | 8.01-246 |
| Washington | 6 years | Revised Code of Washington 4.16.040 |
| West Virginia | 10 years | 55-2-6 |
| Wisconsin | 6 years | 893.43 |
| Wyoming | 8 years | 1-3-0105 |
State Garnishments, Levies, and Vehicles
Three of the primary tools that collectors will use to try to reclaim debt are wage garnishment, levies, and vehicles. More information can be found below broken out by the state.
| State | Wages | Vehicle | Bank Account |
|---|---|---|---|
| Alabama | 75% | None | $3,000 |
| Alaska | $456-7161 | $3,900 | $1,820 or $2,860 |
| Arizona | 75% | $5,000 | $150 |
| Arkansas | 75% | $1,200 | $800 or $1250 |
| California | 75% | $5,000 (2x) | $0 |
| Colorado | 75% | $5,000 | None |
| Connecticut | 75% | $1,500 | $1,000 |
| Delaware | 85% | None | $500 |
| D.C. | 75% | $2,575 | $850 |
| Florida | 100% | $1,000 | None |
| Georgia | 75% | $3,500 (2x) | $600 |
| Hawaii | 80% | $2,575 | None |
| Idaho | 75% | $5,000 | $800 |
| Illinois | 85% | $1,200 | $2,000 |
| Indiana | 75% | None | $4,000 |
| Iowa | 75% | $5,000 | $100 |
| Kansas | 75% | $20,000 | None |
| Kentucky | 75% | $2,500 | $1,000 |
| Louisiana | 75% | None | None |
| Maine | 75% | $5,000 | $400 |
| Maryland | 75% | $5,000 | $6,000 |
| Massachusetts | 75% | $700 | $425 |
| Michigan | 75% | $3,250 | None |
| Minnesota | 75% | $3,600 | None |
| Mississippi | 75% | $10,000 | None |
| Missouri | 75% | $1,000 | $1,250 |
| Montana | 75% | $2,500 | None |
| Nebraska | 85% | $2,500 wildcard | $2,500 wildcard |
| Nevada | 75% | $4,500 | None |
| New Hampshire | 75% | $4,000 | $8,000 |
| New Jersey | 90% | $1,000 | $1,000 |
| New Mexico | 75% | $4,000 | $2,000 |
| New York | 90% | $4,000 | $25,008 |
| North Carolina | 100% | $1,500 | $500 |
| North Dakota | 75% | $1,200 | $7,500 |
| Ohio | 75% | $3,225 | $425 (2x) |
| Oklahoma | 75% | $3,000 | None |
| Oregon | 75% | $1,700 (2x) | $400 |
| Pennsylvania | 100% | None | $300 |
| Rhode Island | 75% | $12,000 | None |
| South Carolina | 100% | $5,000 | $5,000 |
| South Dakota | 75% | $6,000 | 6k-Auto |
| Tennessee | 75% | $4,000 wildcard | $4,000 wildcard |
| Texas | 100% | Unlimited | None |
| Utah | 75% | $2,500 or $3,500 | None |
| Vermont | 75% | $2,500 | $1,100 |
| Virginia | 75% | $2,000 | None |
| Washington | 75% | $2,500 | $500 |
| West Virginia | 75% | $2,400 | $800+ |
| Wisconsin | 75% | $1,200+ | $1,000 |
| Wyoming | 75% | $2,400 | None |
In Summary
In this article, we explore five key things to know about debt collectors taking legal action against individuals who owe unpaid debts. These include understanding the criteria that debt collectors use to determine whether to sue, the likelihood of being sued based on your specific creditor and debt situation, and options for resolving debts if legal action is taken. We also provide insights into the statute of limitations for debt collection and the potential consequences of being sued while enrolled in a debt settlement program. By understanding these key factors, individuals can take proactive steps to protect themselves and achieve greater financial stability.