How to Resolve Your Debt Lawsuit: Expert Q&A
You have three powerful options to resolve a debt lawsuit: file an Answer to avoid default judgment, compel arbitration to increase collector costs, or settle for 60% or less. People who respond enjoy a 70% win rate compared to 10% for those who ignore lawsuits. Taking action within your deadline dramatically improves your financial outcome.
Answer Your LawsuitYou can respond to a debt lawsuit using several strategies. Filing an Answer protects you from default judgment. Compelling arbitration moves your case out of court. Settling the debt ends the lawsuit and saves you money.
About 10 million people face debt lawsuits every year. You’re not alone in this fight. Most cases resolve within four to six months after you respond.
Respond to Your Debt Lawsuit in 15 Minutes
Don't lose by default judgment. File your Answer before your deadline expires and protect yourself from wage garnishment. Our partner Solo guides you through every step with attorney review included.
Start Your Answer NowPeople who respond to lawsuits enjoy a 70% win rate. Without responding, you lose over 90% of the time. Taking action dramatically improves your odds.
Your Three Main Options to Resolve a Debt Lawsuit
You have three powerful tools to fight back against debt collectors.
File an Answer Document
Filing an Answer is your first line of defense. The document responds to all allegations in the Complaint. You typically have 21 days to file after being served.
An Answer includes your affirmative defenses. These defenses must be raised immediately or you lose them forever. Common defenses include improper venue, statute of limitations, and lack of standing.
Our partner Solo walks you through the entire process. Answer a few questions and generate your court document. An attorney reviews it before filing.
Compel Arbitration
Many credit card agreements contain arbitration clauses. You can force the lawsuit into arbitration instead of court. The plaintiff usually has to pay arbitration fees.
Collectors often dismiss cases after arbitration is compelled. Arbitration costs them more than the debt is worth. You can file a Motion to Compel Arbitration at almost any point in your case.
Settle the Debt
Settlement ends the lawsuit permanently. Most settlements range around 60% of the total debt amount. Some people settle for even less.
You negotiate directly with the attorney handling your case. Find their contact information on the Complaint document. They handle settlement discussions, not the original creditor.
Our partner Solo can negotiate on your behalf. Make an offer and they handle the back-and-forth communication.
Common Debt Lawsuit Questions Answered
Getting Sued in a Different State
Collectors can sue you where you currently live or where you opened the account. Both venues are often valid under the law.
You can challenge improper venue in your Answer document. Include this as an affirmative defense. The plaintiff must prove the venue is correct.
Bring up venue issues immediately. You waive this defense if you don’t raise it in your Answer.
How Often Collectors Sue
About 10-15% of people with debt in collections get sued. Major collectors like Midland Funding generate 25-50% of their revenue from lawsuits.
Lawsuits are typically a last resort. Collectors try phone calls and letters first. Suing costs them money and attorney fees.
Stopping Wage Garnishment
Garnishment happens after you lose a lawsuit. The best defense is responding before judgment.
If garnishment papers arrive but wages aren’t yet being taken, file a Motion to Set Aside Judgment. This requests a second chance to respond. You can still file an Answer after missing the original deadline.
Once garnishment starts, settlement becomes harder. Collectors have less incentive to negotiate. You can still make an offer below the judgment amount.
Identity Theft Lawsuits
The plaintiff must prove you owe the debt. You don’t have to prove your innocence. This burden of proof works in your favor.
Gather all identity theft documentation. File FTC complaints and police reports. Bring these documents to court hearings.
Request proof of signature on the credit agreement. Most debt buyers can’t produce signed contracts. Without a signature, they can’t prove you opened the account.
What Happens After Filing an Answer
Three outcomes typically follow your Answer:
- The case gets dismissed because the plaintiff can’t prove their case
- You receive a settlement offer from the collector’s attorney
- The case continues with additional court filings and hearings
Expect at least one month before any action. Most cases resolve within four to six months. Some take longer depending on court schedules.
Third-Party Debt Buyers
Third parties can legally sue you for debt. This is the most common type of debt lawsuit.
Original creditors sell debts to buyers like Midland Funding or Portfolio Recovery. These buyers then sue to collect. Legislation in the 1990s made debt buying more common.
Settlement vs. Arbitration
Both strategies work well together. File for arbitration first, then make a settlement offer. This approach puts maximum pressure on the collector.
Arbitration increases their costs significantly. Settlement gives them a guaranteed recovery. Combined, these tactics motivate quick resolution.
Settlement provides the cleanest ending. The debt is resolved permanently. Dismissed cases can sometimes be refiled or collected outside court.
Recording Settlement Calls
Most states allow you to record calls without the other party’s consent. Check your state’s recording laws before calling collectors.
Recording protects you from broken promises. Get everything in writing after phone discussions. Never make payments without a written settlement agreement.
Medical Debt Lawsuits
Medical debt collectors behave differently than credit card collectors. More forgiveness programs exist for medical debt. Hardship arguments work better for medical bills.
Your Answer isn’t the place for your story. Save explanations for settlement negotiations. Explain ongoing medical conditions and financial hardship during those discussions.
When to Compel Arbitration
File your Motion to Compel Arbitration right after answering the lawsuit. You can file it later, even after summary judgment motions.
Smaller debts around $3,000 are perfect for arbitration. The arbitration fees exceed what collectors can recover. They often dismiss rather than pay arbitration costs.
Final Judgment Letters
Verify any judgment document is real. Collectors sometimes send proposed orders as intimidation tactics. Real judgments have judge signatures or court stamps.
If you truly lost by default, file a Motion to Set Aside Judgment. Courts often grant second chances if you act quickly. You can still file an Answer after a default judgment.
Common Collectors and Their Tactics
Synchrony Bank backs many store credit cards. They file thousands of lawsuits each year. Store cards often carry extremely high interest rates.
These high rates cause balances to balloon quickly. What started as a small purchase becomes a large debt. Synchrony aggressively pursues judgments.
Respond to Synchrony lawsuits the same way as any other. File your Answer, consider arbitration, and negotiate settlement. They settle cases regularly when people respond properly.
Take Action on Your Lawsuit Today
Every day counts when facing a debt lawsuit. You have limited time to respond. Missing your deadline results in automatic loss.
Default judgments add court costs, attorney fees, and post-judgment interest. A $1,000 debt becomes a $3,600 judgment overnight. Garnishment follows quickly after judgment.
Responding protects your rights and your wages. You gain negotiating power immediately. Collectors take you seriously when you file proper court documents.
Most people resolve cases for 60% or less of the total debt. Some get cases dismissed entirely. Your odds improve dramatically when you fight back.
Financial freedom waits on the other side of this lawsuit. Resolving this debt is one step toward that freedom. You can overcome this challenge.