Many of the lawsuits being filed are by debt collectors and not by the actual credit card company or banks (i.e. Discover, Chase, Wells Fargo) that you owed the money to. While they may have a valid claim because they bought the debt from the company who wrote it off as a loss, they may not have the proper documentation to prove their case. Defending the lawsuit will reveal what they have and if it is enough to get a judgment against you.
Why Responding to the Lawsuit Matters
Remember, this is a numbers game. The debt buyers and banks have several millions of dollars that they are trying to collect from several thousands of people. They do not want to waste money and resources on a smaller debt by going into prolonged litigation. Their goal is to get as much as they can for as little as it takes. If you fight they may be more willing to enter into an agreement and lower the amount owed or possibly dismiss the litigation altogether.
Ignoring the Lawsuit is a Mistake!
The collection companies and banks do not expect you to respond to their complaint. Most consumers simply ignore the lawsuit. This is a mistake. The attorneys will work with you if you communicate, but if you don't, they'll treat you as a number, and not a person.
What Happens When you Ignore the Lawsuit?
If you ignore the lawsuit, the creditor will get a default judgment against you. This allows them to garnish wages, levy on your bank accounts and levy on your personal assets. A bank levy means that they can take anything that is in ANY of your bank accounts. Any bank account that is tied to your social security number will be levied and the levy won't end until the judgment is satisfied.
Against Who and How The Creditor Will Collect
If you're married, the judgment allows the creditor to levy the accounts of your spouse! This is because California is a community property state, and the community assets will be used to pay off the debts of the delinquent spouse. So if you think you can simply use your spouses accounts you are dead wrong, they will attempt to collect on both of you.