What’s Next If I’m Sued for Unpaid Debts?

iStock_000002674288_LargeIf you owe money to a credit card company, medical provider or for a student loan and you get behind on your payments, your creditor may file a lawsuit against you. If a creditor does end up suing you, it’s not the end of the world. Here is a summary of what happens, and what you can do if you are sued for unpaid debts.

What Happens When a Creditor Sues You?

When a creditor sues you, it is usually called a petition. This means that the creditor has filed a complaint with the court, naming you and any cosigners in the debt as defendants. These petitions usually detail why the creditor is suing, and what they want (usually repayment of the debt, interest, and some extra for attorney fees).

The creditor or collections agency is required to “serve” you a summons and a copy of the complaint. Typically, this is to be done in person by an agent for the creditor, but can in some cases be mailed to you with a slip that is to be signed and returned, acknowledging that you received the summons.

How to Respond to a Creditor Lawsuit

After receiving the summons and copy of the complaint, you probably have about 30 days to respond to the petition.

It’s usually a good idea to get help from a bankruptcy lawyer at this stage as they can help you to prepare the best response and defense to the lawsuit. A bankruptcy lawyer may be able to point out where a creditor could have violated the law, which is obviously a great defense.

It is possible to represent yourself in most cases, but doing so requires that you have a decent understanding of the law. Preparing the best defense means raising every possible defense and doing so at the correct times. If you present an argument at the wrong time, for example, your defense may be thrown out completely.

What If I Don’t Respond to a Creditor Complaint?

If you ignore or otherwise do not respond to a complaint filed against you, the creditor could get a default judgment against you, meaning the court may award your creditor the total amount they have asked for. A defaulted debt could also lead to wage garnishment and further creditor harassment.

Assuming you respond to the lawsuit, you case will go to court. For more information on what happens once your case goes to court, check out next week’s blog.