The Surprising Reason Why Debt Collectors Sue

You might be surprised to find out that with all the threats of lawsuits by debt collectors that the majority of lawsuits for unpaid debts under $2000 never come to fruition. The primary reason for this is cost.

Lawyers suing on behalf of the original creditor or a collection agency is in business to make money just like everyone else. They generally will not sue for amounts under $2000 because of the time and money involved in filing a case on a debt that is generally by this time, either barred by the statute of limitations (SOL) or is shaky at best.

The statute of limitations for debt is determined by the type of debt and also by the state where the debt was originated. In California for example, the SOL on credit card debt is 4 years after the last payment was made before delinquency. This means that once this time has passed, the debtor is no longer legally obligated to ever pay back the debt.

With that being said, there is no law against a lawyer suing over the debt anyway. Now, he or she will never win a judgment in the case as long as you respond, but they will sometimes file it with the courts in an attempt to scare you into settling on the debt to keep you from going to court knowing full well that the case would be immediately dismissed by the judge if they actually presented it.

Scandalous, right? Lawyers even have a nickname for it. It’s called “sue for settlement.” It’s just another form of scare tactics they use because they count on people not knowing their rights and they exploit that fact. The whole purpose of suing you is to get you to settle and pay something on a debt that you otherwise would legally have no obligation to pay.

If you simply answer the summons, more times than not, the lawsuit will be dismissed. If you do not answer the summons, the suing attorney can be granted a default judgment based on the fact that you never bothered to respond. Let me repeat. You MUST answer the summons even though the debt is beyond the statute of limitations. If you do not answer, the attorney suing on behalf of the plaintiff WILL be granted a default judgment and then it’s bye-bye money!

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