Most small businesses must take on some debt. Unfortunately, however, when business is slow, it can be difficult to keep up with debt payments. And when a business fails to make timely debt payments, a debt collection lawsuit is usually right around the corner. If your small business is the recipient of a lawsuit, it is imperative that you respond appropriately. In this article, we explain how to respond if your small business is served with a debt collection lawsuit.
Don’t Ignore It
First, don’t ignore the lawsuit. In fact, ignoring a lawsuit is the worst thing you can do as a small business owner. If you fail to respond to the complaint, the court will enter a default judgment in favor of the debt collector, which means your business will be forced to pay the amount allegedly owed.
Don’t Contact the Plaintiff
Next, although you may be tempted to contact the plaintiff to try to work things out, you shouldn’t do so. Once a lawsuit has been filed, you should cease all communication with the plaintiff. The reason for this is that anything you say to the plaintiff can be used against you in court. Therefore, if you have something to communicate to the plaintiff or the plaintiff’s counsel, you should only do so through your attorney.
Preserve All Relevant Records
After being served with a lawsuit, you should preserve all records that may be relevant to the lawsuit—even those records that you believe may hurt your case. As a party to a civil case, you have a duty to preserve all evidence related to your case. If you fail to do so, you may face several negative consequences, including adverse presumptions regarding the issues of the case, monetary sanctions, unfavorable jury instructions, and the potential entry of a judgment against your business.
Check Your Insurance
Most small businesses carry several types of insurance, some of which provide coverage for legal disputes. Therefore, you should investigate whether any of your small business’s insurance policies provide such coverage. For assistance in reviewing your insurance policies to make this determination, you should contact an experienced debt collection lawsuit attorney.
Contact a Debt Collection Lawsuit Defense Attorney
Finally, if your small business is the recipient of a debt collection lawsuit in California, you should contact an experienced debt collection defense lawyer. At Fullman Firm, our California debt collection lawsuit defense attorneys have what it takes to provide your small business with a strong defense against your debt collection lawsuit. Our experienced lawyers have a strong reputation as aggressive litigators and skilled negotiators. So, when you come to us for help, you can rest assured that we will do everything possible to resolve your matter. Please contact us to schedule a free initial consultation.