Yes. A creditor or debt collector can sue over an unpaid debt. If you receive court papers, read them carefully and respond personally or through a lawyer by the date specified in the papers.
What to have in front of you
- The lawsuit or court papers you received.
- The date and any other deadlines stated in those papers.
- The amount the creditor or debt collector claims you owe.
- The name of the creditor or debt collector in the papers.
Keep the papers nearby as you review your options or talk with an attorney. The papers state the deadline for your response.
Read and respond to the lawsuit
The Consumer Financial Protection Bureau, or CFPB, says to read the lawsuit carefully and respond by the required deadlines. You can respond personally or through a lawyer.
When you respond, the debt collector has to prove to the court that the debt is valid. The CFPB says responding does not mean you are agreeing that you owe the debt or that it is valid.
If you believe you do not owe the debt, or that the amount is wrong, you may wish to discuss that with an attorney. An attorney can help you understand your debt collection rights and the protections that apply in your situation.
The court papers provide the date for your response. An attorney can help you understand the lawsuit and your options.
What can happen if you do not respond
The CFPB says that if you do not respond, the court could issue a judgment or court action against you. This is sometimes called a default judgment.
The CFPB says a judgment is likely to be entered for the amount the creditor or debt collector claims you owe. The judgment may also include lawful additional fees for collection costs, interest, and attorney fees, as allowed by the judgment.
A judgment gives debt collectors stronger tools to collect the debt. You may also lose the ability to dispute the debt if you believe you do not owe it or that the amount is wrong.
Depending on your situation and your state’s laws, the creditor may be able to:
- Garnish your wages.
- Place a lien against your property.
- Move to freeze funds in your bank account.
A judgment is a court order. The CFPB says it can be very difficult to change or set aside once the case is over. The CFPB says you have a better chance to fight a collection in court if you defend the case than if you wait until a judgment is entered.
If someone tries to serve you
If you have been sued or “served” by a creditor or debt collector, read the lawsuit and check its deadlines.
The CFPB says refusing to accept delivery, or “service,” of the lawsuit is unlikely to be an effective way to defend yourself. The court could view that refusal as ignoring a properly served lawsuit.
You can respond personally or through a lawyer. An attorney can help you understand your rights if you have been sued or threatened with a lawsuit.
Negotiating with the collector
The CFPB says you may be able to negotiate a compromise or settlement with the debt collector before the court makes a judgment. If you owe the debt, you may be able to work out a settlement or another resolution with the collector.
Responding to the lawsuit and discussing a possible resolution are options described by the CFPB. An attorney can help you understand your rights and discuss the choices available in your situation.
When a debt collector cannot sue or threaten to sue
The CFPB describes protections for people contacted by debt collectors who are subject to the Fair Debt Collection Practices Act, or FDCPA.
A debt collector cannot threaten a lawsuit to collect a debt if the collector does not intend to file one. The CFPB also says a debt collector cannot sue or threaten to sue after the statute of limitations has expired. The statute of limitations is the period of time the collector has to file a lawsuit to collect a debt.
An attorney can help you understand your federal and state protections if a debt collector has sued or threatened to sue you.
Where to find legal help
Some attorneys may offer free services or charge a reduced fee. You may wish to look for an attorney with experience in the FDCPA and debt collection issues.
Legal aid offices or legal clinics in your area may offer free services if you meet their criteria.
If you are a servicemember, the CFPB says you can consult your local JAG office, use the JAG Legal Assistance Office locator, or ask your installation’s financial readiness office for information.
If you are having trouble with debt collection, you can also submit a complaint with the CFPB.
Where this comes from
Consumer Financial Protection Bureau: “What should I do if I’m sued by a debt collector or creditor?”