What Happens When a Creditor Sues You?

Receipt of Papers

Any creditor has the right to sue you if you owe the creditor money. The debt could be from a credit card company, an old doctor bill, and even a contractor you might have hired to do some work on your home. Whomever the creditor is, the company will file a suit with the court and send you the documents in the mail. In some cases, the creditor pays to have the documents served to you. When you receive these documents you are given between 20 to 30 days to respond or the judge will make a ruling without you. You have 20 days to respond if you received the paperwork personally and 30 days if you received them in the mail.

Ignoring the Papers

If you choose to ignore the court documents the judge will rule a "default judgement." This is very bad for you. It means the creditor wins and has the right to get money from you whatever way possible. The creditor can put liens on your property and even take money from your bank accounts. You should respond to the court documents even if you do owe the money.

Answering the Papers

An individual has the right to defend himself against any accusations. The individual can file a response on his own, but it is recommended that you allow an attorney to handle this matter. The individual can ask for proof of the amount owed, offer his own proof that the debt was paid, file a counter suit, investigate whether the statute of limitations has run out, and ask for any other information pertinent to the case. The answer or response is then to be filed with the court. The individual's attorney must make sure that the creditor and its attorney receives a copy of the response by the due date.

Mediation

Once the court papers are filed the two parties can get together for a mediation session. This session will give the individual and the creditor a chance to reach a settlement. The creditor may agree to receive a lower amount. You can also ask the creditor to accept the lower amount in payments over time. If you choose to make payments over time, make sure that you know what the specifics are if you miss a payment.

Trial

If no settlement is reached then both parties must present their cases in front of a judge. You may give your own testimony and bring others to testify on your behalf. You will get a chance to cross examine the creditor, and the creditor will get a chance to cross examine you. You must present any evidence you have. Once you are finished your arguments, the judge will excuse himself and then return later with a verdict.

Collection

If the judge ruled in favor of the creditor, the creditor can then obtain the necessary papers to place a lein on your home, seize your bank accounts, remove some of your personal property, and take a percentage of your paycheck. You must comply with all judgments. You can appeal the decision, but it won't do any good unless you have new information to add.

Resources

• More about legal rights