You received a mailer from a bankruptcy attorney or you were recently served a summons at your door notifying you of a debt collection lawsuit.
The purpose of this article is to concisely explain what you can do when facing a debt collection lawsuit.
You are most likely being sued because of an outstanding debt that is past due. The original creditor (Ex: American Express, Bank of America, Capital One) may have sold the debt to a debt buyer (Midland Funding, CACH LLC, Portfolio Recovery), and now these companies’ sole purpose is to get more money back on the debt they purchased than what they paid.
You may see on the court summons exactly how much you are being sued for or you should be able to pull a credit report to see the debt. If you pull a credit report, you may want to find the government-issued credit report to avoid having to pay.
The first step to do when you are being sued is to determine whether you are going to respond to the lawsuit. Each state has different timelines to file a response, so be sure to read the paperwork closely.
For example, the example below shows a Portfolio Recovery Associates, LLC Lawsuit in Santa Ana, California where the defendant has “30 calendar days after the summons and legal papers are served on you to file a written response at the court”.
Make sure to read the fine writing to know exactly how many days you have from when the file was served. For example, in California, this is how it works, “You have 30 days AFTER the date you are served to file a response with the court. The 30 days include weekend days and court holidays. If the last day falls on a day that the court is closed, you have until the next day that the court is open.”
There are a number of ways to respond to a lawsuit. Generally, the easiest way is to provide a few points of information that is added to a template legal form that is mailed to the same courthouse where the lawsuit was filed.
Here’s an example response form for the state of Minnesota.
Ascend helps by making things simpler for you to respond to a lawsuit. Feel out the information below, and someone will reach out to provide information on how to respond in your state and court jurisdiction.
You will be the person to know whether to respond to the debt collection lawsuit. One of the state court websites gives some helpful information related to responding. This is not legal advice, but hopefully, it’s directionally helpful.
Some people may file a response:
Some people may NOT respond:
If you do not respond, the plaintiff will likely file a “request for default”, which means that you no longer have the ability to respond to the lawsuit and defend yourself. Once you have defaulted, you will not be able to disagree with the amount of money you feel you owe.
Next, the plaintiff may ask the court to enter a default judgment against you without you having the ability to argue your side. Finally, the plaintiff may seek to enforce the judgment against you generally by means of garnishment, levying, or liens. You may also see the judgment on your credit report.
Please see the enforcement actions that can be taken in each state to understand what may happen if you choose not to respond.
You generally have 3 different options to resolve the debt before receiving a judgment. We explain the issues below but feel free to take our debt relief calculator if you’d like insights and costs specific to your situation.
Settling the debt before judgment is common when sued.
You will want to take a look at your entire debt picture before settling your account. If you have a lot of outstanding unpaid debt, will another creditor follow suit if you settle this debt?
Bankruptcy may also be a valid option when you are sued. This option may be more realistic if you are unable to come up with funds to pay the debt and you have a lot of other outstanding debt, meaning that more creditor lawsuits are likely to happen.
For this route, you must consider whether you have other assets, income, and liabilities that would make this option either too expensive or not good for your situation.
This option is often much easier said than done. Most people do not have thousands of dollars available to easily pay the debt in full, so this option may not be viable for you.
If your debt is small, you have the cash, and this is one of the only debts you have, you may be able to pay in full, but this is often not realistic for most people.
Ascend helps you understand and implement your desired option when sued for a debt collection lawsuit. We help you understand your options, so you can make the most informed decision.
We do so by helping you understand how to respond to lawsuits and via a debt relief calculator to help you compare your options.