How to Avoid Being Sued For Debt

Being sued for debt can be a very frightening experience, especially when it feels impossible to pay the bill before court. However, despite the state of your finances there are steps you can take to avoid a consumer debt lawsuit and all its accompanying consequences. Any lawsuit is embarrasing and has a number of possible effects on your finances, credit, job, and community reputation. If you are being sued for debt, you likely can handle the matter without an attorney.

Difficulty: Moderately Challenging

Instructions

1. 
   Photo by DSC-N1.

   The most obvious way to avoid being sued for debt is to pay all your bills on time. When this is not possible, always try to send at least a few dollars to each creditor, especially those with large account balances, and do not dodge their phone calls and letters asking for the status of further payment.

2. 
   Photo by Marinela.

   If you fear being sued for debt, work out payment arrangements in writing with a creditor or collection agency. If the company goes back on their word later and tries to sue you, you will have a strong case to fight in front of the judge.

3. 
   Photo by tdenham.

   Being sued for debt requires the person or company claiming they are owed money to go to your local courthouse and file papers against you. A sheriff's deputy, process server, or mailed letter will be issued to notify you that you are being sued for debt. You will be asked to go to court on a specific date for a hearing to answer for the debt. If you are successfully sued, a judgment entry will be filed against you and placed onto your credit reports. This is a very serious legal matter and will likely all but stop you from getting most credit and even apartments, especially if the unpaid debt is a large amount of money.

Tips & Warnings

• Remember being sued for debt is a serious matter, and an unpaid successful consumer debt lawsuit can be continually renewed and remain on your credit report. Your wages can also be garnished to repay the debt claim.
• Consider learning ways to get out of debt. There are several helpful books noted in the Resources section near the end of this article.
• Do not avoid going to court if you are being sued for debt. In many cases, you can try to make a payment arrangement with the creditor or the judge and avoid automatically losing your case.

Resources

• How to Get Out of Debt, Stay Out of Debt, and Live Prosperously
• The Total Money Makeover Workbook
• The Automatic Millionaire: A Powerful One-Step Plan to Live and Finish Rich
• The Finish Rich Workbook: Creating a Personalized Plan for a Richer Future (Get out of debt, Put your dreams in action and achieve Financial Freedom

[toph]

on 2/17/2009 Very good advice for a truly scary event. Five/Five.