Getting served with court papers over a debt is frightening. The good news is that a lawsuit is not the end of the road. You have rights, you have options, and the steps you take in the first few weeks matter a lot.
Can a Debt Collector Really Sue You?
Yes. Original creditors and collection agencies, including companies that buy old debts, can file a lawsuit to collect what they say you owe. This most often happens with credit cards, personal loans and medical bills after several months of missed payments.
What they generally cannot do is sue you over a debt that is past your state’s statute of limitations, threaten a lawsuit they don’t intend to file, or harass you. The federal Fair Debt Collection Practices Act (FDCPA) limits how third-party debt collectors can behave.
What Happens If You Ignore the Lawsuit
This is the most important point in this article: do not ignore a summons. If you don’t respond by the deadline, the court will usually enter a default judgment against you. That means the collector wins automatically, often for the full amount plus fees and interest.
With a judgment, a creditor may be able to garnish your wages, levy your bank account or place a lien on property, depending on your state’s laws. Read more about what happens if you ignore your debt.
What to Do If You’re Served
- Find your deadline. The summons tells you how long you have to respond. In many states it is somewhere between 14 and 30 days, so check your papers carefully.
- Confirm the debt is yours. Check the name of the plaintiff, the account and the amount. Mistakes and sold debts with incomplete records are common.
- Check the dates. If the last payment was made long ago, the debt may be past the statute of limitations. That can be a defense, but you usually have to raise it yourself.
- File a response. This is usually called an “answer.” Filing one keeps you in the case and prevents an automatic default judgment.
- Talk to a professional. A consumer attorney or legal aid office can review your options. Many offer free consultations.
Can You Still Settle After Being Sued?
Often, yes. Many collection lawsuits end in a settlement rather than a trial. Collectors may accept a reduced lump sum or a payment plan to avoid the time and cost of court. Any settlement should be put in writing and, if a lawsuit is open, filed with the court so the case is properly closed.
Not sure which of your debts can be negotiated? See which debts can be settled.
How to Avoid Getting Sued
- Open and read every letter from creditors and collectors.
- Reach out before accounts go too far past due. Here is how to talk to your creditors without stress.
- If you can’t keep up with payments, look at your options early, before accounts are charged off and sold.
This article is general information, not legal advice. Court rules and deadlines vary by state, so speak with a licensed attorney about your case.
Get Help Before It Gets Worse
If collection calls are piling up, a plan now can help you avoid a lawsuit later. Get a free debt evaluation from Alliance Settlement.
