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How To Handle Being Sued By Debt Collectors

If you’re being sued by debt collectors or worried about what might happen if you can’t pay back a debt, it’s normal to feel overwhelmed.

Here’s a quick guide to help you get your bearings and start working toward a solution.


How common are debt collection lawsuits?

While the realization that creditors can sue you for unpaid debts may be an unwelcome surprise, the fact of the matter is that they’ll typically only use legal action as a last resort. Another factor to consider is that taking someone to court is costly, so it’s unlikely that a collection agency will sue for a small amount, especially if it’s smaller than the cost of a court case, which can reach upward of $10,000.


How can I avoid getting sued?

Short of paying or clearing the debt, there’s little you can do. In some cases, responding to collection calls, emails and letters by explaining why you haven’t paid the debt and suggesting an alternative payment plan can help, but it’ll depend on the specifics of the case.


It’s also possible that a collection agency will engage in unethical tactics, such as threatening legal action for a debt that’s outside of the statute of limitations, which in Ontario is two years from acknowledgment of debt. While there’s no time limit on the debt itself, there’s one on how long you can be taken to court for it.


Read more: Dealing With Collection Agencies and Wage Garnishment – Know Your Rights!


What happens if I get sued?

Once you’ve been served a Statement of Claim, you’ll need to decide whether you want to file a defence or not. If you do, it has to happen within 20 days of receiving the court summons and you’ll need to fill out forms and attach supporting documentation.


If you don’t file a defence, the creditor will be awarded a win by default and allowed to seize property or garnish wages to recover their money.


Your best bet is to reach out for help as soon as possible so you know what you’re up against and what your options are.


Who can help me if I get sued?

A licensed insolvency trustee will be able to help you get a better grip on the financial aspects of the lawsuit and, should you decide to admit to the debt and propose a payment plan, design one that’ll let you move forward after the lawsuit is over. You may also meet the eligibility criteria for legal aid.


Contact Us for Credit and Debt Help in Ottawa Today!

If you’re being sued by debt collectors and need help navigating a difficult financial situation, call the experts at D. & A. MacLeod Company Ltd. The first consultation is always free, so don’t hesitate to make an appointment at a location near youtoday.