What to Do if You Are Served Court Papers for Unpaid Debt[yoast-breadcrumb]
What to Do if You Are Served Court Papers for Unpaid Debt
Getting served with court papers over unpaid debt can be scary and overwhelming. But don’t panic! This article will walk you through what to do step-by-step so you can deal with the situation. I’ll explain what being served means, how to respond, your options, and where to get help. My goal is to empower you with knowledge so you can handle this responsibly.
What Does Being Served Mean?
Being “served” means you are formally notified that a creditor is suing you over an unpaid debt. The creditor has filed a lawsuit against you in court and hired a process server to deliver you official court documents about the lawsuit. This is called “service of process.”
The papers you receive are called a “summons” and a “complaint.” The summons tells you that you are being sued and you must respond in writing by a certain deadline (usually 30 days). The complaint explains why you are being sued and how much money the creditor is seeking.
Being served means you are now a defendant in a legal case. You are required to respond appropriately or else the creditor will win the lawsuit by default and can garnish your wages or put liens on your property. So taking action is critical.
Step 1: Read Everything Carefully
The first thing to do is read all the court papers closely. Make sure you understand:
- Who is suing you – Is it the original creditor like a credit card company, or a debt collection agency?
- What debt is this for – The complaint should explain the debt details like the original amount, interest, fees, etc.
- What they want – The complaint will say how much money they are seeking from you.
- When you must respond by – The summons lists your deadline to respond, usually 30 days.
- How to respond – The summons explains your options for responding, either filing a written response or appearing in court.
If anything is unclear, contact the court clerk or an attorney (see “Getting Legal Help” below). It’s important to understand everything in the documents, so you know how to properly respond.
Step 2: Notify the Court You Got the Papers
To show you received the lawsuit papers, you or a friend/relative over age 18 (not involved in the case) must sign and date the second page of the summons form. Then make a copy for your records and return the signed original summons to the court clerk by mail or in person. Keep a copy of the full complaint too.
This is called an “Acknowledgement of Receipt” and proves you were properly served. If you don’t do this, the court will allow the creditor to serve you in a different way like by publication in a newspaper. So it’s important to sign and return the summons so the court knows you got the papers.
Step 3: Choose How to Respond
You have three options for responding to the lawsuit:
- File a Written Response – You can draft and file a formal written response explaining why you dispute the lawsuit claims. This is the most common option.
- Appear in Court – You can appear before a judge on your court date and respond verbally. But you still must file court papers saying you will appear.
- Do Nothing – You can ignore the lawsuit and not respond. But this will result in an automatic default judgment against you. The creditor will win the case without you and can garnish wages or put liens on your property.
Filing a written response is recommended so you can clearly explain your side and dispute anything inaccurate in the complaint. If you appear in court, the judge may order you to file a written response anyway.
How to File a Written Response
To file a written response, you must draft and submit an “Answer” form to the court by your deadline (usually 30 days from being served). This is a formal legal document where you admit or deny each statement made in the complaint and state your defenses.
Examples of defenses include:
- Identity theft – You aren’t the one who opened the account
- Debt already paid – You already fully paid off the debt
- Debt expired – The statute of limitations has passed
- Incorrect amount – The amount owed or fees are wrong
You should include any evidence like receipts, bank statements, or police reports. Get help drafting your Answer from an attorney or legal aid clinic if possible, since it is an important legal document.
File your written Answer with the court clerk by sending it certified mail or delivering it in person. Include a copy for the creditor. Keep a copy for your records too. This will prevent a default judgment.
How to Appear in Court
If you wish to appear before the judge to respond verbally, you must still file a written notice with the court saying you intend to appear. Otherwise, the creditor can seek an immediate default judgment if you don’t show up.
On your court date, bring any evidence or documents supporting your case. Dress nicely and be prepared to briefly explain your side and answer the judge’s questions. The judge may order you to also file a written response.
Consequences of Not Responding
Ignoring the lawsuit and not responding results in an automatic default judgment in favor of the creditor. The court will assume you admit the debt and owe the amount sought.
The creditor can then garnish your wages, put liens on your property, freeze bank accounts, and take other steps to collect on the judgment. Not responding also allows the lawsuit to move forward without your input.
So it’s critical to take action by filing a written response or appearing in court before the deadline.
Step 4: Consider Settling Before Trial
After submitting your response, the creditor may offer to settle the debt for less than the full amount rather than proceed to trial. This can save everyone time and money. Get any settlement offer in writing before paying anything.
You can also contact the creditor to propose your own settlement offer. Be realistic based on your financial situation. Offer a lump sum payment, monthly payment plan, or other option you can actually afford. This may satisfy the creditor and stop the lawsuit.
Step 5: Build Your Case
If the creditor rejects settlement and moves forward with the lawsuit, you will need to build your legal case and gather evidence to fight their claims at trial. Here are some steps to take:
- Organize documents like receipts, letters, bank statements, etc. showing you don’t owe the debt or already paid it.
- Request records like account statements from the creditor to identify errors or discrepancies.
- Obtain police reports if asserting identity theft.
- Research the statute of limitations for debt in your state to see if the creditor waited too long to sue.
- Talk to witnesses like credit counselors or family members who can testify on your behalf.
- Study the original credit agreement to see if the creditor is seeking improper fees or charges.
- Look for violations of lending and debt collection laws you can raise.
Having strong evidence and a clear defense will help convince the judge to rule in your favor.
Step 6: Consider Hiring a Lawyer
Although not required, having a lawyer represent you in a debt collection lawsuit can be very helpful. They understand debt law and court rules and can properly build and argue your case.
If you can’t afford a private attorney, research low-cost legal aid clinics in your area that assist with consumer debt cases. Or consider hiring a lawyer just for consultation and document review versus full representation.
Many lawyers offer free initial consultations, so interview a few to find someone experienced in debt defense and consumer protection law. Be sure to understand theirfees and billing arrangement. Many lawyers offer free consultations.
Step 7: Go to Trial
If you and the creditor do not reach a settlement agreement, the case will go to trial before a judge or jury. Make sure you are well prepared with all your evidence and witnesses. The creditor will also present their side.
At trial, you will have a chance to testify and explain why you don’t owe the debt and dispute the creditor’s claims. The judge or jury will consider all the evidence from both sides and issue a final verdict.
If the court rules in your favor, the debt collection lawsuit is dismissed and you will owe nothing. The creditor cannot attempt to collect on that debt again. However, if the court rules in the creditor’s favor, you will be legally obligated to pay the amount awarded plus interest and court costs.
Getting Legal Help
Here are some options if you need legal help responding to a debt collection lawsuit:
- Contact legal aid organizations like your state bar association or local law school clinics. They provide free or low-cost legal assistance.
- Hire a consumer protection attorney who specializes in defending debt collection cases.
- Visit the National Association of Consumer Advocates website to find lawyers in your state.
- Search online directories like Avvo.com to read reviews and compare credentials of debt defense lawyers.
- Ask friends or family for referrals to lawyers they have used successfully.
When interviewing attorneys, be sure to ask about their experience with debt collection cases, typical fees and costs, and percentage of favorable case outcomes.
Debt Collection Laws
These federal laws offer you protections and regulate what debt collectors can and cannot do:
- Fair Debt Collection Practices Act (FDCPA) – Prohibits abusive tactics like harassment, threats, or sharing false information about debts.
- Truth in Lending Act (TILA) – Requires disclosure of credit terms and interest rates.
- Fair Credit Billing Act – Governs dispute resolution for credit card billing errors.
- Fair Credit Reporting Act (FCRA) – Regulates credit reporting agencies and your right to dispute errors on your credit reports.
Check if the debt collector violated any of these laws. Their non-compliance can help invalidate the debt or get the case dismissed.
Avoiding Future Debt Lawsuits
Here are some tips to avoid being sued over debt again down the road:
- Pay all bills and debts owed on time each month if possible.
- Communicate proactively with creditors if you will be late or need alternative payment arrangements.
- Prioritize paying debts that are in collections or past due first before other expenses.
- Be cautious about agreeing to settle debts for a lump sum, as this resets the statute of limitations.
- Review account statements regularly for any errors and dispute them promptly in writing.
- Pull your credit reports annually to check for any debts or collections accounts you don’t recognize.
- Consider credit counseling to help manage payments and negotiate with creditors.
- Avoid taking on new debt you realistically can’t afford to pay back.
Taking proactive steps can help you stay on top of your debts and prevent legal action against you.