Bank Of America Business Debt Lawsuit: 5 Things to Do First

If you have been contacted about a lawsuit by Bank of America you must respond to it or risk losing the case and ending up with a judgment against you. There are better options than doing nothing.

1. Find your deadline

You can read the lawsuit to find the deadline to respond. It is often 20-30 days from when you were served. If you don’t know your deadline, find out now. Missing a deadline in your case can be fatal to your case. If Bank of America sues federally, the defendant must respond within 21 days of being served. Under California rules, you have 30 days to respond to a lawsuit after being served. In most New York courts, if you were served via hand delivery, then you would have 20 days to respond. The law varies by state, by county, and by courthouse, so you must find your own deadline and make sure you respond before then.

If you miss the deadline to file an answer, the plaintiff has the right to request default judgment. This means that unless the defendant immediately answers the complaint, the plaintiff can win the case without having to show up in court. It is always better to respond to a debt collection lawsuit than to allow the plaintiff to win without a fight.

2. Read who is suing you

Understanding who is suing you and why is the first step toward building a defense. You want to know if it is the original creditor or a third-party debt collector. Review the case paperwork carefully and make sure that you understand what Bank of America is claiming against you. The claims should be listed in the complaint. Look at the total balance that is due. The complaint should list the full amount of what Bank of America is seeking. That figure is often more than expected because of added fees and interest. Attorneys fees may also be added on top of the debt itself. Make sure the balance is accurate by reviewing your own records.

The complaint may list only the corporate name of your business, or both that and your own personal name. Make sure you are aware that your home, savings, car and other personal property are at risk if the business and owner are being sued. If the complaint lists you or your company as a defendant, then you must respond.

3. Hire a lawyer

Once you know who is suing you and what amount of money is at stake, it’s time to get a lawyer. There is a lot of complexity in the litigation process. In California, generally only an attorney can appear in court on behalf of your company. A skilled debt defense lawyer can stop Bank of America from getting a default judgment against you. Once retained, they will file an answer to the complaint on your behalf. Your lawyer will be able to protect your legal rights while also working to resolve the problem. A lawyer knows what to say to improve your chances of getting the court to accept your response, can help you understand your options and will represent you in court. Many debt settlement companies do not have attorneys on their staff and they can’t fight a lawsuit.

4. Protect your accounts and stay quiet

A judgment against you is serious because the plaintiff may be entitled to a wage garnishment order and a bank account levy. The sooner you get started, the better chance you have at settling your debt before things get worse. Payments after being served do not make a judgment go away. If you answer the phone and Bank of America starts asking questions, you may inadvertently say something that helps the other side. Don’t put anything that could be construed as an admission in writing. Once you hire an attorney, any further discussions with creditors must go through the attorneys.

Keep in mind that the federal Fair Debt Collection Practices Act applies primarily to consumer debts. Even a bank collecting its own debts doesn’t usually qualify as a debt collector under the FDCPA. You should get legal help before signing forbearance or settlement papers. Avoid transferring business assets to friends or relatives. Such actions, in addition to hurting your chances of winning, may be in violation of laws designed to protect creditors’ rights.

5. Weigh settlement against bankruptcy

It might be easier to settle your debt lawsuit than win it or to declare bankruptcy. But make sure you understand exactly what a debt settlement would mean in your case. Settlement options include a lump sum paid for less than the full amount, a new payment plan and sometimes release of the personal guarantee. Any forgiven balance may be counted as taxable income by the IRS. Ask your lawyer what the tax consequences are for a settlement in your case.

A bankruptcy filing can discharge debts and avoid the tax consequences. The automatic stay, one of the most powerful bankruptcy tools, stops virtually all collection efforts. To qualify for a small business bankruptcy under Chapter 11, you must have no more than $3,424,000 in debt. You should talk to a lawyer about when and how to file if you’re thinking about bankruptcy. It’s good to look at all possible solutions before deciding how to move forward.

A free contract review costs nothing and takes a day or two. Call (888) 837-7053, or send the agreements to Delancey Street for a straight read on your options.