You have 2 choices - you can fight the lawsuit and possibly delay it until you have the money to settle it, or you can do nothing.
Let's start off with the easy choice - doing nothing. The creditor will get a judgment for the amount of the debt as well as attorney fees. The creditor will look to collect by filing a lien on any real estate you own, or taking any money you have in the bank. Your unemployment benefits are protected from creditors, so if they only money you have in the bank is from that source, you should still be protected. To be on the safe side, I recommend speaking with the branch manager to get info on what the bank will do if they receive a court order to attach your checking account. In some cases, there could be a freeze on your account so you will have to go to court to explain that the only money in the account is from your unemployment.
Fighting the lawsuit is more complicated than doing nothing. Unfortunately, "I can't afford to pay" is not a legal defense that a court will accept, so you must dispute some of the facts in the lawsuit by filing a written response with the Court, usually called an "Answer." The Court may have pre-printed forms for you to use or you can put together your paperwork after reviewing samples.
Hope this brief explanation helps you to decide what to do. Good luck!
Inability to pay is not a defense. They have a right to sue you and try to make you pay. Once they get a judgment against you they can start collecting by trying to garnish bank accounts, seizing property or intercepting state tax refunds. Consider filing for bankrupty protection as it stops all creditor lawsuits, garnishments or harassment. I know you want to pay your bills and can't afford it. Speak with an attorney to find out more information and maybe it is a realistic option for you to clear up all of your debt problems. Your income problems will still be the same but the stress of who is going to sue me next will be gone.
The first thing you need to do if and when you get sued is file an Answer. The summons will tell you that you must “appear” by way of an Answer in 10, 20 or 30 days, “depending on the method of service.”
PLEASE CHECK THE LAW IN YOUR STATE AS YOU MAY ACTUALLY HAVE TO APPEAR IN COURT, AS IN VIRGINIA, IN ORDER TO AVOID A DEFAULT!
You need a lawyer, but if you cannot afford one right away, rather then do nothing and have a judgment entered against you, is to “appear” by filing something!
Many people think this means they have to go to Court and this is incorrect. 90% of all lawsuits end in Default Judgments because the defendant (person getting sued) did not file an Answer.
I recommend you go to the free form I have on my website. Print it out and fill it out as instructed. You must answer the numbered paragraphs on the Complaint by writing them into the appropriate lines in the Answer. The Answer will allow you to preserve your rights and will prohibit a default judgment (i.e. you did not show up) from being entered against you.
Mimic the paperwork you got when you got sued. Answer all the paragraphs of the Complaint by writing the numbers in lines 1, 2 or 3.
Almost 100% of attorneys will deny what is owed because they did not do the calculations and do not know what the basis for the number is…
When you file the Answer that is your “not guilty”. You have the right to make the person suing you (Plaintiff) prove their case, but you must also answer the complaint truthfully.
Make sure you fill in the name and address of the attorney suing you before you bring this paperwork to the Court. Mail it to the attorney suing you right away!
Check out the guide I have drafted on the Avvo profile. This will provide more detailed instructions. If it is helpful remember to indicate that and get the guide read!
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Disclaimer: This answer does not constitute legal advice. I am admitted in the States of New York, New Jersey and Massachusetts only and make no attempt to opine on matters of law that are not relevant to those three States. This advice is based on general principles of law that may or may not relate to your specific situation. Facts and laws change and these possible changes will affect the advice provided here. Consult an attorney in your locale before you act on any of this advice. You should not rely on this advice alone and nothing in these communications creates an attorney client relationship. The opinions expressed herein are those of the author only and the fact that he has worked as an Assistant District Attorney; State Supreme Court Clerk; Special Assistant United States Attorney (Hawaii); Assistant Cornell University Counsel or Judge Advocate, United States Marine Corps should not be relied upon to assume that these statements reflect the policy of these organizations.
In then event judgment is entered against you, you can also file a motion (request) with the court asking the court to approve an installment payment plan. Considering you have no steady source of income, you may be a good candidate for this relief.