What should I do if a creditor decides to sue me for unpaid debt?

Question

What should I do if a creditor decides to sue me for unpaid debt?

Answer

You have several potential options if you come to believe that a creditor lawsuit is looming, or if you have just been served with a summons telling you that you are being sued.

About To Be or Already Sued

The first, most important thing that you can do if you fear a lawsuit is about to happen or you have already received a summons is to contact an attorney who specializes in debt settlement or bankruptcy. An attorney with a background and specialty in these areas will be extremely useful to you.

  • You should not ignore a creditor lawsuit. If it has gotten to this point you need legal assistance.
  • While you may be able to follow the instructions on your summons and file a response at the court house without the assistance of an attorney, you should not do so unless you have first met with an attorney and fully understand either what you are doing, or what the potential consequences are of handling this matter alone.

Consequences

When you are sued, you have the opportunity to file a response and to fight the lawsuit if you believe the debt is not valid. If you choose to ignore the lawsuit summons and not file a response the judge will assume that you agree that you owe this debt and will enter a judgment against you.

  • The judgment amount will usually include the full amount of the debt at the time of the hearing plus the cost of the lawsuit.
  • A judgment stays on your record for many years, and varies by state.
  • A judgment can cause your wages to be garnished, funds in your bank accounts to be seized, or can be entered as liens against your property to be paid at the time your property is sold.

Get Legal Help

Just as the laws in each state are different, each debtor/creditor situation is also unique. Talk to an attorney as soon as possible for the best results. Your attorney may be able to negotiate a settlement with your creditor that will allow you to avoid the hassles and embarrassment of being sued for a bad debt.

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