What to Do If You Are Being Sued for Debt
If you owe money to a creditor, like a credit card issuer or medical provider, and you don’t pay, that creditor can sue you. Or the creditor might assign the debt to a collector or sell it to a debt buyer, and then that company can then file a lawsuit against you.
Facing a lawsuit for an unpaid debt can be stressful—especially if you don’t know what to do or what will happen next. While each case is a little different, and states and courts have their own rules, here’s generally what you need to know if a creditor or collection agency sues you for nonpayment of a debt.
How a Debt Collection Lawsuit Starts
To start the suit, the creditor or collector files a “complaint” (sometimes called a “petition”) in court. The complaint states why the creditor or collector (the “plaintiff”) is suing you and what it wants from the court. The complaint will ask for a judgment against you for the money you owe, plus interest, attorneys’ fees, and costs. The suit will most likely be filed in state civil court—such as a municipal court, superior court, justice court, or county court—or it might be filed in federal court under some circumstance, like if you owe money to the federal government.
What Happens When You Get Served Papers for a Debt Lawsuit
A professional process server or a local sheriff will serve you a copy of the suit, or the server might leave a copy with another adult at your address and then mail a copy to you. Sometimes, the court allows the complaint to be served by mail, along with a form for you to sign, acknowledging that you received the paperwork. You'll get a summons along with the complaint, which informs you that you’re being sued, and gives you information about the case, like the deadline to file a written response—called an “answer”—and which court to file it in.
If you don’t file an answer to the suit, the plaintiff will probably ask for and receive a default judgment (an automatic win) from the court, which means you lose the ability to dispute that you owe the debt. After the plaintiff gets a money judgment against you, it might garnish your wages, levy your bank account, or place a lien on property you own. Many debt collection suits end in a default judgment, even if the plaintiff’s paperwork or case is flawed. So, it’s usually best to answer the lawsuit.
Should You File an Answer to the Suit?
If you’re sure you owe the debt, don’t have any defenses, and the amount the collector requested accurately reflects the amount you owe, you might consider not responding to the suit—especially if you’re what’s called “judgment proof.” Being judgment proof means you don’t have any income or property that creditors or collectors can legally go after. Technically, they could still sue you and get a judgment, but they can’t collect on it.
But before you decide not to file an answer—even if the debt is valid—you’ll want to make sure that you don’t have any defenses or counterclaims to the action. Consider talking to a lawyer who can help you identify defenses or legal violations that might get the case dismissed or offset the amount you owe. For example, you might be able to argue that the statute of limitations (the time limit for filing the lawsuit) has expired, that service of process was improper, or that the creditor doesn’t have standing (the right to sue you). Or you might make a counterclaim, like by saying that a debt collector violated the Fair Debt Collection Practices Act when trying to get you to pay up.
Again, it’s usually in your best interest to answer the complaint. If you respond to the debt collection lawsuit, the creditor or collector has to prove to the court that the debt is legitimate and that you owe the amount claimed. Many times, the plaintiff won’t have the paperwork needed to prove that someone owes a debt or will have committed some legal violation that could help you fight the suit.
How to Answer a Debt Collection Lawsuit
Most people get around 20 to 30 days to file their written answer to the lawsuit with the appropriate court. You’ll also have to hand-deliver or mail a copy to the plaintiff’s lawyer. In the answer, you have to respond to the allegations that the plaintiff made in the complaint by:
- admitting the allegations you believe are true
- denying those that you think are incorrect, or
- saying you don’t have sufficient information to admit or deny (and therefore deny) certain allegations.
Don’t admit you owe the debt, though, and don’t admit any statement the plaintiff makes in the complaint unless you know it’s 100% correct. Force the plaintiff to prove its case. You’ll also need to set forth any defenses that you have to the suit.
Can You File an Answer Without a Lawyer?
You can prepare an answer, file it, and represent yourself, which is called acting “pro se.” You’ll have to do some legal research, prepare your answer, and learn about all the court rules; otherwise, you could lose the opportunity to defend your case. If you raise an argument or defense at the wrong time or in the wrong way, the court might not even consider it.
Getting help from a lawyer generally ensures that you have the best possible chance of successfully defending a debt collection suit. A lawyer can help you identify and raise any defenses to the lawsuit, prepare an answer and file it, and represent you in court, if necessary.
Consider a Settlement or Payment Plan, Filing for Bankruptcy
If you have some money available, you’re sure you owe the debt, and you don’t have any defenses or counterclaims, you might want to consider making an offer to settle the debt or set up a payment plan. A lawyer can also help you with this process. Once a creditor or collector knows that an attorney is involved, they’re generally more willing to settle, and less interested in pursuing a court case.
Another option to consider if you can’t afford to pay the amount you owe is filing for bankruptcy. If the debt is discharged in bankruptcy, it’s uncollectible. You probably shouldn’t file for bankruptcy to eliminate just one debt. But if you have a lot of other outstanding liabilities that you could discharge, filing for bankruptcy might be worth considering.
What Happens After You File an Answer
If you file an answer, the creditor or collector could file a motion for summary judgment, asking the court to rule in its favor because none of the material facts of the case are in dispute. The plaintiff might argue that you signed a legal contract, you didn’t make the payments, and you don’t have any valid defenses. If the judge agrees, it will grant the motion and enter a judgment against you without a trial.
To fight the motion for summary judgment motion, you’ll have to file a response. If you don’t respond, you’ll almost certainly lose the case, and the judge might not allow you to make any oral arguments at the hearing. So, at this point, you should seriously consider talking to a lawyer, if you haven't already done so, to learn what steps to take.
If the case does go to trial, you or your lawyer will need to present your case according to specific rules of procedure and evidence. The judge (or jury, if applicable) then makes a decision, which is entered in the court records as a judgment. The court might rule in your favor, dismiss the case, or rule in favor of the creditor or collector. Frequently, though, debt collection lawsuits don’t make it to trial. Cases often settle, or the court dismisses the case earlier in the process, or the collector wins the suit with a default or summary judgment.
When Debt Collectors Cross the Line
Debt collectors are often intimidating and abusive when contacting and dealing with debtors. This aggressive conduct might violate federal or state law. If you know your rights, like those under the federal Fair Debt Collection Practices Act, you’ll know when a debt collector is making illegal threats or unlawful tactics. In this scenario, you might be able to counter-sue the collector or use the debt collector’s violations against them when settling the debt.
Getting Help From a Lawyer
If you’re facing a collection lawsuit, it’s a good idea to schedule at least one consultation with a lawyer, even if you can’t afford to hire one to represent you through the entire process. In cases where the creditor or collector violated the law and you’re expected to get a substantial payout, you might be able to find an attorney willing to take your case on a contingency fee basis. (That is, the lawyer won’t get paid unless you win the case.) Generally, an attorney will give you a free initial consultation where you can ask about a contingency fee and the likelihood of success in your case. Or you might be able to get low- or no-cost help from a legal aid office.