The Lawful Procedures of Suing Your Debtor

One way or another, when we become adults, we will either owe somebody money or somebody will owe money from us. Sometimes, the latter is more stressful. It can be quite the blessing when the person who borrows our money is trustworthy enough that we never have to remind them. But even for the most responsible people who incur debt, unexpected situations can arise.

Due to the COVID-19 pandemic, many people lost their jobs. Some people have defaulted on payments, and yet some have declared bankruptcy. But the pandemic’s worrisome effects are felt by creditor and debtor alike.

While people can go to jail for not paying taxes or for not paying child support, debtor’s prison is a thing of the past in present-day America. For failing to pay student loans, credit card bills, or mortgage payments, you cannot be imprisoned, but you can be sued by your creditor. If you are a creditor, this article is for you. Here, we will be discussing the steps you can take to bring your debtor to court.

Taking a Debt to Small Claims Court

If you have come to the decision that you want to sue your debtor, you are probably already concerned about a significant amount. But money you worked hard for is money you deserve, no matter the amount. However, legal proceedings can incur lawyer’s fees that might prove unreasonable for a small debt you are going after. It might be worth your while to consider taking your case to Small Claims Court, where you will not have to hire an attorney to represent you and you will be able to personally defend yourself.

Find out if the amount you are owed falls under the maximum of the Small Claims in your state. Filing your case this way will only incur you two main fees: payment for the filing and payment for the officer of the court who will serve the summons to your debtor. If money is truly tight, you can even serve the summons to your debtor yourself. However, you have to remember that it needs to be done the legal way and there must be documentation that the summons was received.

Taking a Debt to Trial

1. Find out how much you are owed.

Now that you have noticed that your debtor has been missing payments, it is best to find out just how much exactly are you still owed to this point. In doing so, you will also be able to consolidate evidence of the debt. Because you have to prove the existence of this debt in court, you need to gather all sorts of communication between you and your debtor starting from the day he or she signed the contract to the last time you were given a promissory note. However, there are some debts that are dealt by shaking hands and these are the debts that are more difficult to prove. If payments were by installment, you can gather evidence for previous payments that have already cleared. This is an acknowledgement of the debt by your debtor that can work in your favor.

2. Send a demand letter to your debtor.

When you have already computed for the amount including the interest that you are owed, you need to send a final letter of demand to your debtor. In doing so, you might also get acknowledgement from the debtor of his or her existing debt as well as give him or her one last chance to settle the missing amount. As much as possible, you must avoid using language that might be seen as harassing to your debtor. You can mention that you are thinking of suing but anything beyond such a threat might be tantamount to a federal crime. As a rule, make sure that you can also get documentation that this letter is received by the debtor by requesting for a return receipt. In the letter, include a clear timeframe or a deadline for payment. It is up to you if you will still accept communication or negotiation from your debtor before taking the matter to court.

3. File your lawsuit.

You have three options for the right county in which to sue your debtor. You can sue the debtor at the county he or she lives in, the county where he or she signed the contract for the debt, or the county where the debtor owns business. You have to pay a fee for filing the complaint forms and you must ensure that you are able to fill out the right number of forms.

4. Make sure that your debtor is served the summons.

An officer of the court will be tasked to serve the notice to your debtor that you are suing him or her. You need to ensure that you are able to file the proof of service form once this step of the lawsuit is done.

5. Present your witnesses.

At the trial, it will be very helpful for your case if you can present witnesses to your agreement, especially if the debt was made as an oral contract. The lawsuit is settled by a jury and witnesses will be able to provide more evidence to your case. You can even choose to testify to narrate your side during the proceeding.

6. Wait for the verdict.

Once all is said and done, you just need to trust the system and wait for the conclusion.

Some Things to Consider

You have the right to go after money that is owed to you. However, in some instances, you might not be allowed to sue the people who refuse to return the money they have borrowed. Depending where you might want to file a lawsuit, you need to find out the statute of limitations that varies per American state. There is also the matter of the Servicemembers Civil Relief Act (SCRA). This is a federal law that protects those in active military service from being taken to court over any civil proceeding. They cannot be sued up to a year after they are released from military duty and this time might count towards the statute of limitations of your debt. It is best to find out if your debtor is covered under the SCRA before embarking on any legal action.

This article does not necessarily reflect the opinions of the editors or management of EconoTimes