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In 2011, 200,000 lawsuits were filed by debt collectors in New York in an attempt to resolve cases where borrowers had failed to pay an obligation. However, a Federal Trade Commission study has revealed that only 6 percent of creditors actually have documentation to support their claim. Furthermore, many people claim that they aren’t even told that they are being sued before a judge enters a default judgement against them.

That is what happened to a 69-year-old man who allegedly owed $2,500 on a credit card that the man claimed he never had. A 44-year-old woman in a similar situation took debt collectors to court after a default judgement was entered against her despite never being told of any action being taken against her before receiving notice that her wages were being garnished. While the man had to sell his house to pay off the supposed debt, the woman was able to sue the debt collector and have the judgement against her vacated.

Why are so many people having judgments entered against them when creditors can’t always prove their case? The biggest reason has to do with overworked judges who don’t have time to go over dozens of documents before hearing a case. To make matters worse, it is estimated that only 20 percent of those taken to court actually show up to defend themselves.

When dealing with creditors, it is important to stay vigilant. If a debt collector makes a claim on an outstanding debt balance, it is advisable to respond to that claim as soon as possible. Those who aren’t sure about what to do about a possible lawsuit may wish to talk to an attorney to determine what steps to take to respond to the lawsuit and avoid having a default judgment entered against them.

Source: The Huffington Post, “Debt Collectors Have Figured Out A Way To Seize Your Wages And Savings“, Hunter Stuart, June 03, 2014