What Happens When You Get Sued By a Loan Company?

A loan company will need to file a lawsuit and obtain a court judgment against you before it can force you to pay any money owed. This is a process that requires a minimum of several months and several legal procedural steps. You will have notice and the opportunity to defend yourself all along the way.

  1. Summons

    • The first thing that happens when a loan company sues you is the loan company will serve you with a copy of a summons. A summons is an order to appear at court to defend yourself. Being served with a summons means the loan company has initiated a lawsuit against you by filing a complaint in court. The summons will indicate how long you have to file a formal response. In most instances, you will have 20 days to respond to the complaint.


    • If you want to defend yourself against the lawsuit, then you will have to file a formal response, called an answer, within the time period given in the summons. The answer must be filed in the court presiding over the lawsuit. In the answer ,you can deny any allegations of the loan company's complaint, and you can raise any defenses you may have to the complaint.


    • If you don't file an answer to the complaint, then the loan company will obtain a default judgment against you. But if you file an answer, the loan company will have to win at trial by convincing a judge or jury that you breached your loan obligation. Assuming the loan company obtains a judgment by either default or after trial, the judgment will contain an order for you to pay a certain amount of money.


    • A judgment gives the loan company the right to collect money from you in order to satisfy the judgment. The loan company may do this by placing a lien on any property you own, including your home, or by garnishing a portion of each of your paychecks. Garnishment means your employer will be under court order to pay the loan company a certain portion of each one of your paychecks until the judgment has been fully paid off.

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  • "Nolo's Encyclopedia of Everyday Law"; Shae Irving; 2009
  • Photo Credit Jupiterimages/Photos.com/Getty Images

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