What should I do if I’m sued by a debt collector or creditor? | Consumer Financial Protection Bureau (2024)

FAQs

What should I do if I’m sued by a debt collector or creditor? | Consumer Financial Protection Bureau? ›

If you're sued for an unpaid debt, you should respond to the lawsuit, either personally or through a lawyer by the date specified in the court papers. If you have been sued or “served” by a creditor or debt collector for an overdue debt, read the lawsuit carefully and respond by the required deadlines.

You have 30 days from the day you were served with the summons to respond to the debt collection lawsuit. You do this by filling out a court form (called an answer form), filing it with the court, and delivering it to the person who sued you (called the plaintiff).

This is why most lenders will first try to collect the debt by sending written notices. If they aren't successful after a period of time, they may decide to sue you, or they may write off the debt and sell it to a third-party debt collection agency or debt buyer.

But what must the creditor provide by way of documentation? At a minimum, it must produce: A copy of the original written agreement between the parties, such as the loan note or credit card agreement, preferably signed by you.

In a Nutshell

It's important to respond to (or answer) the lawsuit. You do this by filing official paperwork with the court. Be sure to address every point in the complaint, raise any defenses you have, and file the paperwork within the time frame provided.

You must fill out an Answer, serve the other side's attorney, and file your Answer form with the court within 30 days. If you don't, the creditor can ask for a default. If there's a default, the court won't let you file an Answer and can decide the case without you.

If you receive a notice from a debt collector, it's important to respond as soon as possible—even if you do not owe the debt—because otherwise the collector may continue trying to collect the debt, report negative information to credit reporting companies, and even sue you.

When you respond to the lawsuit, a debt collector has to prove to the court that the debt is valid. If you owe the debt, you may be able to work out a settlement or other resolution with the collector. Responding doesn't mean you're agreeing that you owe the debt or that it is valid.

What's the worst a debt collector can do? ›

The worst thing they can do

If you fail to pay it off, the collection agency could file a suit. If you were to fail to show up for your court date, the debt collector could get a summary judgment. If you make an appearance, the collector might still get a judgment.

If the court rules against you and orders you to pay the debt, the debt collector may be able to garnish — or take money from — your wages or bank account, or put a lien on your property, like your home.

How likely is it that you will be sued for a debt? According to one Consumer Financial Protection Bureau report, 1 in 7 — or about 15% — of consumers contacted about a debt in collections were sued. But the likelihood of a debt collection lawsuit depends on several factors.

Debt collectors don't want you to know that you can make them stop calling, they can't do most of what they tell you, payment deadlines are phony, threats are inflated, and they can't find out how much you have in the bank. Furthermore, if you're out of state, they may have no legal recourse to collect.

In order to win a court case, a debt collector must prove that they have proper ownership of the debt, that you actually owe the debt, and that the amount they claim you owe is correct.

If you get a summons notifying you that a debt collector is suing you, do not ignore it—if you do, the collector may be able to get a default judgment against you (that is, the court enters judgment in the collector's favor because you didn't respond to defend yourself).

You may lose the ability to dispute the debt, if you believe you don't owe it or that the amount is wrong, and 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.

Collection agencies usually won't sue you for a debt of less than $500. While every collection agency has a different policy regarding debt lawsuits, you should feel reasonably safe from a legal claim if you owe less than $500 on a debt. However, if you receive a court summons from a collection agency, don't ignore it.

How likely is it that you will be sued for a debt? According to one Consumer Financial Protection Bureau report, 1 in 7 — or about 15% — of consumers contacted about a debt in collections were sued. But the likelihood of a debt collection lawsuit depends on several factors.