By Robert J. Semrad | Published August 11 2022 |
How to Answer a Debt Collection Lawsuit in Texas When Filing Bankruptcy
If a creditor has filed a debt collection lawsuit against you in Texas, bankruptcy may be the best way to resolve your financial troubles. Filing a bankruptcy will allow you to immediately halt any judicial proceedings currently pending, end disruptive dinnertime calls, discharge your debts and avoid having a court judgment entered against you!
What Is a Debt Claim Case?
A debt claim case is a type of small claims lawsuit involving a creditor filing a lawsuit in the Texas Justice Court to recover unpaid debts, up to $20,000.00. The lawsuit will be decided by the Justice of the Peace.
Debt claim cases can be filed by banks, credit unions, collection agencies, a lender that charges interest, debt collectors, or other types of financial institutions for which you may owe an outstanding debt. Common examples of claims include unpaid loans, outstanding credit card balances, and unpaid medical bills.
How Long Is the Deadline for Answering?
To initiate a debt collection lawsuit, the creditor must file a claim in the proper Texas Justice Court. The petition will detail the amount you are being sued for, a case number, the date of the filing and the original creditor’s name if the account has since been purchased by someone else.
Once a creditor files a petition against you, you will be served with a citation informing you that you have been sued. When you receive the citation, generally you will have by the end of the 14th day after service to respond to the allegations contained within the lawsuit by filing your response. Your answer will need to be filed in writing with the court. Failure to answer your collection lawsuit may result in a default judgment against you.
What if I Ignore the Lawsuit?
While it can be tempting to ignore a lawsuit, it will only make things worse. If you fail to answer by the 14-day deadline, the Justice Court may issue a default judgment against you. This means that you’ll be ordered to pay the amount you’ve been sued for plus court fees & interest without ever having a chance to defend yourself! For this reason, it is essential that you file your answer within the 14-day deadline as prescribed by law.
What if I File for Bankruptcy?
When you file your bankruptcy petition, the bankruptcy court will grant an automatic stay that will immediately stop your collection case from proceeding! The automatic stay orders all of your creditors to stop pursuing collection actions against you, including any lawsuits that may have been initiated prior to filing your bankruptcy petition.
If the debt you’ve been sued for is discharged in your bankruptcy case, the creditor cannot obtain a judgment against you. Even better, your creditors will be unable to collect from you on the lawsuit or any other debts that you discharge through bankruptcy, regardless if your creditor initiated litigation against you.
When Should I Contact a Lawyer?
If you’ve been sued for a collection claim and are considering filing for bankruptcy in Texas, it is vital that you contact a lawyer immediately. Time is of the essence. Once a collection lawsuit has been initiated, you will need to move quickly to protect you and your loved ones property, bank accounts, and other assets. Our team will ensure that you can timely file your bankruptcy petition before your creditors obtain judgments against you.
Is bankruptcy the right choice for you? It may be if you are seeking general debt relief. If you’ve already been sued or collection activity against you is imminent, please contact our team of experienced attorneys for a free consultation! Call or text DebtStoppers today at 469-646-0750 or sign up online to request a free consultation with one of our knowledgeable Texas lawyers. We will thoroughly review your situation and advise you on how best to proceed legally as our goal is to give you the financial relief you deserve.