Can I Settle a Debt After Being Served? Your Options Explained

You can absolutely settle a debt after being served. Filing an Answer first puts you in the strongest position. Then you contact the collector and make your offer.

Many people get sued by debt collectors without warning. Collectors count on you not responding. If you ignore the lawsuit, you lose automatically.

The collector can then garnish your wages or freeze your bank account. For people who owe at least part of the debt, responding and then settling works best.

Why Did I Get Served a Summons and Complaint?

You received legal papers because a creditor claims you owe money. Research by the Consumer Financial Protection Bureau shows many people don’t actually owe the debt.

A lawsuit is typically the creditor’s last resort. The summons means they want to force payment instead of asking.

In most states, someone hands you the Summons and Complaint personally. You might also receive them by mail. Sometimes collectors use “sewer service” and file without properly serving you.

The Summons notifies you of the lawsuit. The Complaint explains why you’re being sued.

What Are My Options After Being Served?

You have three main paths when served with a debt lawsuit.

File an Answer

Filing an Answer is your best option in nearly every situation. An Answer is the proper legal response to a Summons and Complaint.

Filing an Answer protects you from default judgment. You avoid losing automatically. An Answer also gives you leverage to negotiate a settlement.

Even if you owe the debt, you should still file an Answer. Even if the statute of limitations expired, file anyway.

Our partner Solo makes responding to debt lawsuits straightforward and affordable.

Do Nothing

Ignoring the lawsuit guarantees you lose. The collector files for default judgment and wins automatically.

After that, they can garnish your wages and seize your property.

Do Something Invalid

Invalid responses are surprisingly common. They produce the same result as doing nothing.

Invalid actions include filing incorrectly, admitting everything in your Answer, or calling the collector without filing. Getting a settlement without filing an Answer is also risky.

If you pay without filing an Answer, collectors can file for default judgment anyway. They might claim they never received payment and garnish your wages to collect twice.

Filing an Answer gives you basic protection. You need it before considering any other options.

What Should I Do First After Being Served?

The clock starts ticking the moment you’re served. You have limited time to respond before things get worse.

Stay calm first. Then follow these five steps to settle your debt successfully.

1. Respond immediately
2. Check if you’re legally liable
3. Examine your finances
4. Make an offer
5. Continue defending yourself

1. Respond Immediately

Responding to a Summons immediately is essential. Your deadline to respond varies by state, typically between 14 and 35 days.

Missing this deadline lets the debt collector file for default judgment. After that, wage garnishment starts and you lose negotiating power.

Our partner Solo simplifies the response process.

Example: Ben gets sued by a debt collector. He uses Solo to respond and have an attorney review his documents. In his Answer, Ben denies all allegations in the Complaint. The debt collector realizes continuing the case costs more than the debt is worth. They request dismissal, and the court grants it.

2. Check If You’re Legally Liable

Review all the papers you received carefully. Verify whether you actually owe money to the company suing you.

Ask yourself these questions:

• Did you borrow money from this company?
• Does the amount they’re suing for match your records?

You’re determining legal liability here, not ability to pay.

3. Examine Your Finances

Understand what creditors can legally take if they win a judgment. If you own your home, creditors may be able to claim it.

Creditors can freeze bank accounts and garnish wages. Calculate how much they could take from your paycheck.

In some states, Social Security income is protected from freezing and garnishment.

Determine how much you can afford to settle for. Lump sum payments are most attractive to collectors. You’ll pay less overall with a lump sum than with monthly payments.

Calculate what you can afford as a lump sum offer.

4. Make an Offer

Debt buyers typically accept settlements between 1% and 50% of the amount they’re suing for. Debt collectors buy debts for about 8 percent of face value on average.

Settling for 10 percent still gives them a 2 percent profit. Original creditors are less willing to settle low. You might settle for 20% to 70% with them.

Debts settle for a wide range of amounts. Many factors affect how much collectors will accept.

Base your offer on your finances and the debt specifics. Consider selling valuable possessions that aren’t essential to your life.

If you can’t afford a lump sum, monthly payments may work better.

Example: Samuel owes credit card debt and misses several payments. The account transfers to collections. Debt collectors start calling. Samuel gets served with a Summons a few months later. He uses Solo to draft and file an Answer, buying time to work out a settlement. He offers a lump sum of 50% of the debt. After negotiating, he settles at 75% of the original amount. Samuel saves money and avoids court.

5. Continue to Defend Yourself

After you respond and make an offer, the collector might refuse. They may continue to the next lawsuit phase instead.

The next phase is usually discovery. You’ll receive Request for Response to Admissions or Interrogatories.

File a response to these documents to defend yourself. A basic response is usually sufficient to keep pushing for settlement.

Each time you respond, you increase the collector’s costs. Higher costs increase the likelihood they’ll settle.

Settlement Strategy Tips

Successful debt settlement requires strategy and timing. You have the most leverage right after filing your Answer.

Start with a low offer, typically 25% to 40% of the debt amount. Collectors expect negotiation, so leave yourself room to increase your offer.

Always get settlement agreements in writing before sending payment. The agreement should state the collector will dismiss the lawsuit upon receiving payment.

Never share unnecessary financial information with collectors. Only provide what’s required by law or court order.

Keep detailed records of all communication. Save emails, letters, and notes from phone calls with dates and times.

When Settlement Isn’t the Right Choice

Settlement doesn’t always make sense. If you don’t owe the debt, fight the lawsuit instead of settling.

If the statute of limitations expired, you have a complete defense. Raise this defense in your Answer rather than settling.

If the collector can’t prove you owe the debt, make them prove it. Many debt buyers lack proper documentation.

If settling would cause severe financial hardship, explore other options. Bankruptcy might provide better relief than settling multiple debts.

How Solo Helps You Respond and Settle

Our partner Solo makes resolving debt with collectors easy. You can respond to lawsuits, send letters to collectors, and settle debts.

Solo’s Answer service is a step-by-step web app. It asks all necessary questions to complete your Answer. An attorney reviews your document before filing.

The settlement tool helps you contact collectors and negotiate online. It simplifies and streamlines the entire debt settlement process.

No matter where you are in the debt collection process, Solo helps you resolve your debt.