Sued for a Debt? Here's What to Do Next
Getting served with court papers is frightening, but a lawsuit is not the end of the road. Debt collection lawsuits are often filed in large numbers by debt buyers who are counting on people not responding. When consumers do respond, they frequently have defenses, settle for less or get the case dismissed.
Key takeaways
- Never ignore a debt lawsuit. If you don't respond, the court will likely enter a default judgment against you.
- You usually have 14 to 30 days to file a written response, depending on your state and court.
- Common defenses include the statute of limitations, lack of proof that the plaintiff owns the debt, and an incorrect amount.
- Many debt lawsuits are settled before trial, often for less than the amount claimed.
What the clock means for you
Step 1: Read the papers and find your deadline
You should receive a summons and a complaint. The summons tells you which court the case is in and how long you have to respond. The complaint explains what the plaintiff claims you owe. Write the deadline on your calendar right away. Deadlines vary by state and court, often between 14 and 30 days after you are served.
Also check that the lawsuit is real. Scammers sometimes send fake legal papers. Call the court clerk using a phone number you find yourself, not the number on the papers, and confirm the case exists.
Step 2: File a written response (an "answer")
To avoid a default judgment, file an answer with the court before the deadline and send a copy to the plaintiff’s attorney. Many courts have fill-in-the-blank answer forms for debt cases. In the answer, you respond to each claim in the complaint and list your defenses.
Step 3: Raise your defenses
Defenses must usually be raised in your answer, or you may lose them. Common ones include:
Lack of standing
The plaintiff cannot prove it owns the debt. Debt buyers often have incomplete records of the sale chain.
Wrong amount
The amount includes interest or fees not allowed by your agreement or state law.
Not your debt
Mistaken identity or identity theft.
Already paid or settled
You have proof of payment or a settlement letter.
Improper service
You were not properly served with the papers.
Arbitration clause
Some credit card agreements let you require the case to go to arbitration instead of court.
Step 4: Use discovery and consider settlement
Use discovery
After you file an answer, you can ask the plaintiff for documents that prove its case, such as the original agreement, account statements and proof of ownership. Plaintiffs who cannot produce these documents often offer to settle or drop the case.
Consider settlement
Settling is often possible at any stage. Get any settlement in writing, and make sure it states that the case will be dismissed.
What happens if you don't respond
If you miss the deadline, the plaintiff can ask the court for a default judgment. With a judgment, a creditor may be able to:
Garnish your wages
Federal law limits garnishment for ordinary debts to the lesser of 25% of your disposable earnings or the amount by which your weekly disposable earnings exceed 30 times the federal minimum wage. Some states protect more.
Levy your bank account
Certain federal benefits deposited directly, such as Social Security, are protected up to two months’ worth of payments.
Place a lien on your property
Judgments can last for 10 years or more and can often be renewed. If you already have a default judgment, ask the court about a “motion to vacate.” You may be able to reopen the case if you have a good reason.
Getting legal help
Many consumers handle debt cases themselves, but a lawyer can make a big difference. Look for:
- A consumer protection attorney (some take FDCPA cases at no cost to you)
- Your local legal aid office
- Self-help centers at your courthouse
Received a debt lawsuit?
Debt Remediation can help you understand your options and prepare to respond, or connect you with full-service support.
Debt Remediation is not a law firm. For legal advice about your case, contact a licensed attorney in your state.
Frequently Asked Questions
No, not for an ordinary consumer debt. But ignoring a court order, such as a summons to appear for a debtor's examination after a judgment, can cause problems, so always respond to the court.
Not necessarily. The plaintiff still has to prove its case, and many cases settle for less than the amount claimed. Review your defenses first.
You can still respond and negotiate. A settlement or payment plan agreed through the court is usually far better than a default judgment with wage garnishment.
