Notices to Sue

Every day, creditors win lawsuits. Why?  Because people ignore court notices (also called a summons) telling them that they are going to be sued.

Failing to answer the complaint within the timeframe specified in the notice to sue often results in a default judgment in favor of the creditor.  When a default judgment is issued against you, it is generally for the full amount the creditor sued you for, and can include interest, too.

When a creditor wins a suit against you, it expands the ways they can collect that money from you.  They can seek to:

• Garnish your wages.
• Garnish your bank account(s)
• Place liens on your property

If you receive a notice to appear in court because a creditor is suing you:

1. Do not ignore it.  Open it and read it.
2. Answer the court notice, which can also be called the complaint or summons. Be sure to respond within the timeframe listed in the notice.
3. Get legal help.  You may have legal defenses against the lawsuit such as:​
   1. Being judgment proof: If your income is very low or it comes from a protected source, you may be judgment proof even if a creditor sues to garnish your wages.  Protected sources of income include: unemployment, Social Security, Supplement Security Income, public assistance, child support, Veteran’s benefits, or federal and civil service retirement benefits.
   2. The debt is outside the statute of limitations.  This means the time limit for collecting or suing for the debt has expired.  Statutes of limitations vary from state to state. But if you do not respond to the notice of a lawsuit within the time period specified, you miss the chance to raise these defenses.
   3. Write a letter asking the creditor to verify the debt.  This is particularly important if you are being sued by a debt collector and you:
      • Question that the debt belongs to you.
      • Dispute the amount for which you are being sued.
      • Question that the debt collector is legitimate or has the legal right to collect this debt from you.

You may want to get legal help writing this letter. Or, you can model your letter after one created by the Consumer Financial Protection Bureau.  Just be sure to complete it with your information.

If the court finds in favor of the creditor, you:

• Can be ordered to pay cash.  The judge may order you to pay the debt all at once or in installments. Installments mean you would have to pay a portion every week or month until the debt it paid off.
• Can be ordered to give something you own to the creditor.  The creditor will sell this item and take the money you owe them from the sale of this item.  If the item is worth more than the debt, the extra funds are returned to you.
• Can have a lien on property you own.  This means the creditor has claim over your property until you pay what you owe.   With a lien on your property, you can’t sell it.
• Have your wages or accounts garnished.

For more information about dealing with a lawsuit from a creditor, visit: http://www.consumerfinance.gov/askcfpb/334/what-should-i-do-if-a-creditor-or-debt-collector-sues-me.html.  You can also see if one of the legal aid organizations in your state has this information on its website:  http://www.lawhelp.org/resource/legal-aid-and-other-low-cost-legal-help