Can Collection Agency Sue For Debt - Advice About Being Sued For Debt

Being chased by a collection agency is at best annoying and at worst extremely upsetting. There is much confusion about the legal powers of debt collection agencies and in particular the question of whether they are able to sue you to get back the money which is owed. Assuming that the debt is genuine, whoever is owed the money has the right to take you to court to get an order for repayment. If you dispute the amount owed, or that you owe money at all, the most important thing is to communicate with the collection agency to explain your situation and, if possible, provide evidence to back your case.

Debt collection agencies are normally separate organisations acting on behalf of the company who is owed the money. In this case, it is unlikely that it will be the agency who will sue you, but they may instigate proceedings on behalf of their client. Most smaller businesses will not deal with debt collection directly, and will pay a collection agency to do it for them, often on a commission basis (hence the enthusiasm with which some agents operate!).

In some cases your debt will have been sold to the collection agency at a fraction of its value, in which case you now owe the money to the agency, not the original creditor. In these circumstances the debt belongs to the collection agency so the decision will be theirs whether to sue or not, and they are quite entitled to do so.

Collection agencies buy debts at knock down prices and make their income by collecting as much as they can of the original debt. It is always worth trying to negotiate a settlement with a collector rather than going to court. This will be their preferred option too, as they do not want to incur unnecessary costs. If the debt is substantial and they think you can afford to pay, it is more likely they will choose to sue you. If you are able to prove that you genuinely cannot pay what is owed, then show them the evidence and they are more likely to settle for a lower amount, if they believe that is the most they can get.

No-one wants to be sued, but it may help to have an understanding of what it actually involves, and what the possible outcomes may be if action is taken against you. It is easy to associate being sued with serious repercussions such as going to prison or being made bankrupt, but this is usually far more dramatic than the reality of the situation.

Procedures for the UK and the US are very similar. If you are sued successfully for a debt that you owe in the UK, the outcome will normally be a County Court Judgement being made against you, which will require you to pay back the debt. The important thing to bear in mind here is that the court will look at your financial situation and the terms of the repayment should be based on what you can actually afford. So you should not be ordered to pay back a lump sum that you simply do not have. If you are in this situation and have a judgement made against you, the most important thing to do is ensure you stick to the repayment plan set by the court. The reason for this is that if you fail to keep up with payments, the consequences of further legal action against you can be much more serious.

Clearly it is preferable to try to deal with any debts before they get to the stage of legal action, as the only real winners in court cases are lawyers. If you find yourself being pursued by a collection agency, you should first try to talk to them. See if you can establish a relationship and be up front about your situation. If they know you are being honest and taking a professional approach, they are more likely to be open to making a settlement.

No matter how large or complicated your debts are, your first approach should be to try to negotiate new terms for a settlement with your creditors. This is a tried and tested approach and help and advice is available free online. It is the only system that does not involve borrowing more money or paying a debt management company for their services.

Read reviews and recommendations for reputable debt management companies in the UK and US.