Creditors in Arizona, like in other jurisdictions, can sue a debtor to recover owed money. Generally, this happens when the debtor defaults on the loan and has not responded to attempts by the creditor to collect the debt.
Statute of Limitations
In Arizona, the statute of limitations for collecting a debt is normally six years from the date of the last payment for written contracts (including credit card debt). This means that a creditor must file a lawsuit within this time span.
Service of the Lawsuit
When a creditor sues a debtor, a copy of the complaint and its summons must be served to the debtor. This serves as notification of the legal action and an opportunity for the debtor to reply.
Responding to the Lawsuit filed by Creditors
The debtor usually has a set period of time to reply after being served (normally 20 days in Arizona). If the debtor fails to respond, the creditor may obtain a default judgment. This means the creditor will win the lawsuit because the debtor did not defend themselves.
Defenses to the Lawsuit
If the debtor responds, they can establish a number of defenses to the action. They might, for example, claim that the debt is not theirs, that the amount is inaccurate, or that the creditor waited too long to file a suit (i.e., the statute of limitations has expired).
Garnishment and Collection for Creditors
If the creditor wins the case (either by default or after a trial), they can recover the money due in a number of ways. Garnishing the debtor’s earnings or bank accounts, or establishing a lien on the debtor’s property, are possible examples of this.
Exemptions
Certain exemptions in Arizona law prevent part of a debtor’s property from being removed to fulfill a judgment. A specific amount of equity in a debtor’s principal house, for example, may be exempt.
Debt collection has many complexities, and it is beneficial to consult with a qualified attorney if facing such a lawsuit. Seek the advice of experts who will help you navigate through debt management.