How Often Do Debt Collectors Take You To Court? 5 Things to Know
Written by Ascend Team
Updated Nov 16th, 2023
The information provided in this article does not, and is not intended to, constitute legal or financial advice; instead, all information, content, and materials available in this article are for general informational purposes only. This article may contain affiliate links that help support Ascend.
Many debt collectors are notorious for suing for unpaid debt. That said, the last thing you want is a sheriff showing up at your house.
We recently did a study and found that some debt collectors may set a minimum of a $500 balance to sue. What is the likelihood you will be sued? What can the debt collector do if they win a lawsuit?
All that and more will be explained in this article, so let’s get started.
One of the most important things to understand is that each creditor is different and each creditor has different criteria that the collector users to determine whether they will sue for unpaid debt.
When will a debt collector sue?
A debt collector will sue for unpaid debt when it believes it has a good chance of collecting that debt. Some attributes may be whether there are assets that have positive equity such as property, the amount of the debt owed, state laws regarding garnishment, and the statutes of limitations.
How many accounts am I past due on? The more accounts I owe the higher the chance one may sue me.
How is my debt proportioned? Do I owe all my credit cards and loans to one bank or is it spread out?
Is the creditor I owe most of my debt to local or small (credit unions)? Also, do they have more of a vested interest to sue me because they are a smaller bank (personal relationship)?
How often do creditors I owe have access to my assets?
Do I have checking, savings, or investment accounts with the creditors I owe? Can they see my transactions?
Do I have equity in assets that banks can calculate based on what’s reporting to my credit report?
What is the likelihood that I will be sued?
As stated, the chances of you being sued are HIGHLY dependent upon your creditor(s).
We reviewed thousands of lawsuits and used to be a debt settlement agency, so we put together a lawsuit likelihood calculator that estimates the likelihood you would be sued if your accounts went behind.
If you'd like specific insights about whether your creditors are likely to sue, please give me a call at 833-272-3631.
Will a collection agency sue for $5,000?
This is probably one of the most common questions we see is whether a collection agency will sue for just $5,000 or less. The answer is often that it depends on the collection agency. You will notice in our comprehensive reviews covering Midland Funding LLC and Portfolio Recovery Associates that you may be sued for as little as a couple of thousand dollars. I have also seen that a collection agency may not sue for much more than that amount.
How do you know if you will be sued for $5,000 or less?
It may be difficult to determine whether the collection agency you are working with will sue for $5,000 or less, but you may want to look at a few things to determine whether you may be sued. A company’s policies constantly change, so this should be viewed as an estimate, but it may be helpful to consider.
Does the company have a history of suing? You may be able to search on Google to find this information.
Is the collection agency a law firm or just a collection agency?
Is the collection agency a large or small collection agency? As Portfolio and Midland are some of the biggest collection agencies in the United States, you can understand that they have efficient operations that allow them to sue for less and still be profitable.
What are my options before being sued and after being sued?
Second, you may compare your options if you have multiple debts that are outstanding or if you cannot afford the debt for another reason. For example, oftentimes, a bankruptcy clears judgments. What should you do? It depends. There are 5 main options, so we build a debt relief comparison calculator below to help you do the following:
Estimate the all-in costs for EACH option.
Estimate the length of time for EACH option.
Shows pros and cons for EACH option.
Uses your city and state for each of these estimates.
Provides reputable providers in your area for different options.
Certainly, when resolving your debt through a debt settlement program, there is always a risk your creditors can pursue collection through legal attorneys.
What happens if I am sued while in debt settlement?
Once an account goes to a legal attorney licensed to collect debt in your state, the first thing that will usually happen is you receive a pre-legal letter validating the debt owed. To clarify, this is the attorney advising you that the debt has been placed in their office and they could pursue a judgment. At that time you are not being sued, and the account can still be resolved for a portion of what’s owed. Depending on the aggressiveness of the attorney and a valid hardship, results can vary from reasonable settlement percentages (50%) all the way to paying 100% of the debt plus attorney’s fees. But, this is all before going to court or being served to appear in court.
If an attorney decides to move forward with pursuing a judgment the next thing you will receive are legal documents (Lit Docs) with a scheduled court date (you must be served these documents, review laws on being served in your state). If arrangements are not made with the attorney’s office before the scheduled court date, an individual may represent themselves or be represented and fight the account in court. Outcomes vary when accounts go in front of a judge. Based on experience, judges can be very lenient if you show up to court and give a valid reason why you can only pay a portion of the debt or make arrangements on the balance that fit your current budget. However, at any time before going to court you can try to make arrangements to resolve a balance.
You may consider reviewing all of your options in the case when you are sued via debt settlement by taking a Chapter 7 Means Test Calculator to estimate qualification or Chapter 13 Calculator to estimate your monthly payment plan. These calculators also allow you to compare all of the different relief options.
Debt settlement arrangements that are usually available are:
If you are enrolled with Americor, CreditAssociates, or other debt relief companies, consider asking them to try to settle the accounts directly even if you are sued.
Debt Settlement – Paying a portion of what’s owed in a lump sum or overpayments. Fortunately, we wrote an extensive article on debt settlement to provide you with insights into how it works and the pros and cons of this solution.
Stipulation Judgment Settlement – Pay a portion of what’s owed, but if the agreement is not met the attorney automatically retains judgment without having to go to court. Although, you lose the ability to fight the account in court.
Payments towards the balance – Pay the full balance over time with payments that fit your budget and the attorney agrees with.
Stipulation Judgment payments towards the balance – Pay the full balance over time with payments that fit your budget and the attorney agrees with. If the agreement is not met, the attorney automatically retains judgment without having to go to court. You lose the ability to fight the account in court.
How Do I Deal With Debt Collectors When I Cannot Pay?
Also, you can use this 11 word phrase to stop debt collectors from calling you to give you time to think and consider your options. You can also ask that the debt collector not email or text message or send you letters going forward.
You could ask the debt collector to stop reaching out in writing using our free template. This template will help stop debt collectors from contacting you. It can also validate your debt and dispute your debt if you would like.
If the debt is also not valid, you can consider validating/disputing the debt. For this, you can use SoloSuit which helps you generate a letter to dispute the debt, allows PDF download and mail instructions.
Can I be Garnished If A Judgement Has Been Granted Against Me?
There are four main ways that an attorney or debt collector can attempt to collect from your once they get a judgment against you:
Wage garnishment of a paycheck
Levy/garnishment of a bank account
Lien on property or assets – Home mortgage
Continue normal collection practices
However, you can still try to settle if a judgment has been retained but you haven’t been garnished or levied yet. Usually, there’s a grace period before an attorney will start executing judgment because they need to notify an employer or bank, and that can take time. In conclusion, certain states allow attorneys to use all of the above tactics, others may only allow one. Therefore, it’s important to review judgment laws in your state to know how an attorney can pursue collection once they have retained a judgment. You may be wondering the difference between a levy and a lien, which is important to understand.
You can take the following wage garnishment calculator based on your state below to help you understand the different rules related to debt statutes and wage garnishment.
Statute of Limitations
The Statute of Limitations is defined as the deadline for a lawsuit. Your creditor most likely knows these statutes and takes this into consideration when deciding when to sue for unpaid debt.
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
Summary
Many individuals want to pay off debt but cannot do so due to financial hardship. Some creditors will sue to try to receive the funds for that debt. Getting sued can be stressful and can potentially lead to a garnishment or levy.
Use the lawsuit likelihood calculator below to estimate the chance you would be sued for debt.
