New York Times story highlights the importance of answering a debt collection lawsuit

The New York Times recently published a story about the increase in wage garnishments due to the sour economy. The story tells the story of two struggling consumers who’ve had their wages garnished to pay back their debts. One man, who owed just over $4,000, actually had over $10,000 taken from his paycheck due to accrued interest and fees. But the lesson here–at least in my mind–is that in many cases, these garnishments can be prevented:

Most consumers never offer a defense, and creditors win their lawsuits without having to offer proof of the debts, much less justify to a judge the huge interest charges and penalties they often tack on …. In the rare event that a consumer battles back, creditors frequently lack the documentation to prove their claim, and cases are dropped. That is because many past-due debts are owned not by the banks that issued them, but by debt collectors who bought, for cents on the dollar, a list of names and amounts due …. “If the consumers were armed with more education about how to defend against these debts, they’d be successful,” said Jeffrey Lipman, a civil magistrate in Des Moines.

I’ve written extensively about the importance of answering a collection lawsuit, but I’ll repeat the message again: if you’ve been served with a collection lawsuit in Minnesota, you MUST answer the lawsuit within 20 days or the creditor will win the case without a judge ever seeing it. In most cases, the creditor’s next step is either a bank or wage garnishment. Even if you believe that you owe the debt, you’re entitled to answer the lawsuit and force the creditor to prove their case.

If you live in Minnesota and want help answering a debt collection lawsuit, feel free to contact me by using the contact form in the upper right corner of this page. I offer a number of flexible representation options, so even if you can only afford to pay a few hundred dollars, I might be able to help you.

Pay Garnishments Rise as Debtors Fall Behind | New York Times | April 1, 2010