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You've Been Sued By A Creditor...Now What?

You've Been Sued By A Creditor...Now What?

Someone just knocked on your front door and served you with a lawsuit. You’re being sued by a creditor. It’s probably a collection agency for an outstanding debt you owe, probably an overdue credit card bill. There’s a feeling of shock and anger in your stomach. You’re at a loss for words and don’t know what to do now; this came completely out of the blue. Here are some helpful hints and steps you should take:

1. Verify the lawsuit: A recent NY Times article stated that over 90% of credit card lawsuits are erroneous and flawed. Dispute the debt and ask the creditor to verify the debt and put it in writing. This will also give you some more time to formulate a plan.

2. Don’t panic!: After being served with the summons, you still have 30 days to either respond to the complaint or work out a settlement. Even after the 30 days, the creditor still must file an application for entry of default and request a default judgment. After that, the creditor still must apply for a writ of execution or an earnings withholding order before they can garnish your wages or levy your bank account.

3. Answering the complaint: One option for you is to answer the complaint and deny the allegations against you. You may assert many different affirmative defenses, but the two most common are that the statute of limitations has run (essentially, the creditor’s claim is too old and can no longer be brought), or the complaint fails to state a cause of action (it does not state all of the necessary elements for the cause of action). Some people may find the task of drafting an answer daunting, so consulting an attorney is advised.

4. Settlement: If you do not wish to draft an answer, contact the creditor’s attorney and ask for some kind of settlement agreement so that they will dismiss their lawsuit. Most creditors will allow you to repay the outstanding debt for a lowered amount or put you on a feasible payment plan.

5. File for bankruptcy protection: If you have many outstanding debts, it may be most effective to file for bankruptcy. Once you file, you are protected from the lawsuit filed against you and the creditor can no longer go after you. If your case is successful, that debt, along with all of your other unsecured debt, will be discharged. This is a big decision, so consulting a local bankruptcy attorney is highly recommended. Filing for bankruptcy is often the easiest, fastest and cheapest solution when you’ve been sued by a creditor.

Most importantly, do not panic. The process of being sued is certainly stressful, but you have plenty of time to act and formulate a solution that works best for you. Atlantis Law Firm is here to help you in this process, call us today for a free consultation. We have many options and solutions for dealing creditor lawsuits: debt settlement, debt consolidation, and bankruptcy.


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