How to Resolve Your Debt Lawsuit: Q&A with Real Answers

Getting sued for debt feels overwhelming. You’re not alone.

When a debt collector files a lawsuit, you have options. You can respond with an Answer document. You can file for arbitration. You can negotiate a settlement before court.

The key is taking action before your deadline passes.

What Happens When You Get Sued for Debt

You receive a Summons and Complaint in the mail. These documents explain why you’re being sued.

Your deadline to respond is usually 14-30 days. The exact timeframe depends on your state.

Miss that deadline and you lose automatically. The court grants a default judgment against you.

But filing an Answer buys you time. It gives you leverage to negotiate.

Your Three Main Options for Fighting Back

Option 1: File an Answer Document

An Answer is a formal legal document. It must be filed with the court properly.

You can’t just call the court. You can’t simply send a letter.

The Answer must include proper formatting and specific legal language. It needs to respond to each allegation in the Complaint.

Most attorneys deny everything in the Complaint. They use the phrase “deny for lack of knowledge” frequently.

Filing an Answer leads to case dismissal about 30% of the time. That’s a significant win rate for simply responding.

Even if you’re a few days late, courts usually accept your Answer. Judges prefer deciding cases on merit rather than technicalities.

Option 2: Compel Arbitration

Many credit card agreements include arbitration clauses. You can use these to your advantage.

Arbitration costs debt collectors thousands of dollars. For a small debt, collectors often drop the case.

You file a Motion to Compel Arbitration after submitting your Answer. The court then decides whether to grant it.

Once granted, the case moves to arbitration. The plaintiff must pay upfront fees of $4,000-$5,000.

Many collectors abandon lawsuits at this point. The cost exceeds potential recovery.

Option 3: Negotiate a Settlement

Settlement makes sense when you owe at least some portion of the debt.

Debt buyers typically purchase old debts for 8% of face value. A $10,000 debt cost them only $800.

They’ll often accept 40-60% of the total amount. You save thousands of dollars.

Settlement requires filing an Answer first. Collectors won’t negotiate if you haven’t responded to the lawsuit.

You can arrange monthly payments or lump-sum settlements. Both options work depending on your financial situation.

Need help negotiating with debt collectors? Our partner Solo specializes in debt lawsuit responses and settlement negotiations.

Common Debt Lawsuit Questions Answered

How Should I Respond to a Motion for Summary Judgment?

File a counter motion opposing summary judgment. Include a memo explaining why the judge shouldn’t grant it.

Summary judgment means one party wins without a trial. Judges shouldn’t grant these when facts are disputed.

If you denied allegations in your Answer, you’ve created disputed facts. The case should proceed to trial.

You’ll need to attend a hearing to argue your position. Prepare your arguments in advance.

What Happens If I Lose the Lawsuit?

The collector files for wage garnishment. Your employer receives a court order.

They’ll take up to 25% of your gross monthly income. Your paycheck shrinks significantly.

Garnishment continues until the debt is paid completely. Interest keeps accumulating during this time.

If you own property, collectors can place liens on it. When you sell, they get paid first.

About 4 million Americans face wage garnishment annually. Avoiding this outcome is worth fighting for.

Can I Still Respond If My Deadline Passed?

Yes, you can file a late Answer. Courts often accept them.

Judges prefer deciding cases on facts rather than missed deadlines. File as soon as possible.

Late filing works until a default judgment is entered. Once that happens, you need different strategies.

Check your case docket online. Search your state plus “case search” to find the court website.

The docket shows all filed documents. You’ll see if a default judgment exists.

Should I Ask How Much the Debt Buyer Paid?

You can certainly ask during negotiations. Most collectors won’t answer directly.

The person on the phone probably doesn’t know. They’re hourly employees without access to purchase data.

Debt buyers typically pay 8% or less of face value. Use this as your negotiating anchor.

Remember that collectors have additional costs beyond purchase price. They won’t settle for just 9% on an 8% purchase.

But knowing their basis helps you negotiate confidently. You understand their actual investment.

Can Collectors Take Money From My Bank Account?

Yes, after winning a judgment against you. They can garnish bank accounts and wages.

Garnishment happens repeatedly until the debt is satisfied. It’s not a one-time deduction.

The maximum federal amount is 25% of gross income. Some states allow less.

Post-judgment interest continues accruing during garnishment. The total amount keeps growing.

Avoiding judgment is crucial. Settlement before judgment saves you from garnishment entirely.

Special Situations and Advanced Strategies

Being Sued by Midland Funding or Other Debt Buyers

Midland Funding, LVNV, and Cavalry are major debt buyers. They purchase thousands of old debts.

These companies settle lawsuits regularly. They expect negotiation as part of business.

File your Answer first to establish leverage. Then open settlement negotiations.

Debt buyers win about 70% of cases by default. Simply responding changes the equation dramatically.

When Multiple Debts Are Combined in One Lawsuit

Collectors sometimes bundle several accounts together. This complicates your response.

File an Answer addressing all accounts mentioned. Deny each set of allegations separately.

Settlement becomes more attractive with bundled debts. The collector wants to resolve everything at once.

You gain negotiating power with multiple accounts. Offer to settle all accounts for a reduced total.

Dealing With Default Judgments You Never Knew About

Many people discover lawsuits only after losing them. This is called “sewer service.”

Collectors serve papers at old addresses intentionally. You never receive notice of the lawsuit.

File a Motion to Set Aside Judgment immediately. Explain you never received proper service.

Judges should grant these motions. You deserve a chance to defend yourself.

After the judgment is set aside, file your Answer. Then proceed with settlement or arbitration.

When the Statute of Limitations Has Expired

Each state has time limits for collecting different debt types. These are statutes of limitations.

Credit card debt typically has a 3-6 year statute depending on state. Medical debt sometimes has shorter limits.

Raise the statute of limitations as an affirmative defense in your Answer. The collector must prove the debt is timely.

Once a judgment exists, different rules apply. Judgment statutes of limitations are usually 10-20 years.

Judgments are often renewable indefinitely. Don’t let cases reach judgment stage.

What to Do Right Now

Calculate your deadline to respond. Count the days from when you were served.

Gather all lawsuit documents. You’ll need the Summons and Complaint to file an Answer.

Decide your strategy: Answer alone, compel arbitration, or settle. Your choice depends on whether you owe the debt.

For fraudulent debts or identity theft, fight for dismissal. Don’t settle what you don’t owe.

For legitimate debts you can’t pay in full, settlement saves you money. Negotiate from a position of strength.

Check your case docket online regularly. Court websites show all filed documents and upcoming hearings.

Never ignore court dates or hearings. Missing these guarantees you’ll lose.

Understanding Court Procedures

How Courts Process Your Answer

Courts can take weeks or months to file documents. Some jurisdictions are extremely backlogged.

New York courts reported being a year behind during COVID. Your Answer may sit unfiled for months.

This doesn’t mean your Answer wasn’t received. Courts process documents in order received.

Check the online docket to confirm filing. The document should appear with a file date.

What Happens After You File an Answer

The collector must now prove their case. They can’t win by default anymore.

Many collectors drop cases at this point. They prefer easy wins over actual litigation.

About 30% of cases get dismissed after an Answer is filed. Simply responding works.

Another 30% settle before trial. Negotiation becomes the collector’s best option.

The remaining cases proceed toward trial. Most settle before reaching that stage.

Dealing With Motions and Hearings

Collectors file various motions to advance their case. You must respond to each one.

File counter motions opposing their requests. Include supporting documentation and legal arguments.

Attend all scheduled hearings without exception. Judges rule against absent parties.

Bring copies of all relevant documents to hearings. Courts don’t always have complete files available.

Being sued for debt doesn’t mean you’ve already lost. Our partner Solo can help you respond to the lawsuit and negotiate a settlement that works for your budget.

The Ethics and Reality of Debt Settlement

You don’t have a moral obligation to pay debt buyers full amounts. The original creditor already wrote off the debt.

Creditors sold your debt for pennies on the dollar. They’ve already taken their loss.

Paying the debt buyer doesn’t make the original creditor whole. That ship has sailed.

Debt buyers purchase debt as risky investments. They expect some accounts won’t pay.

Settlement for 40-60% of face value still profits the debt buyer. Everyone can walk away satisfied.

Medical Debt Considerations

Medical debt has unique characteristics compared to credit card debt. Statutes of limitations may be shorter.

Medical debt is typically dischargeable in bankruptcy. This gives you another option.

Many hospitals have financial assistance programs. Explore these before facing garnishment.

Old medical bills that went to collections can still be settled. Hospitals and collectors negotiate regularly.

When Professional Help Makes Sense

Some situations require attorney representation. Complex cases benefit from legal expertise.

Multiple lawsuits happening simultaneously need professional coordination. Don’t handle these alone.

Large debt amounts justify attorney fees. Saving thousands makes representation worthwhile.

When you’ve already lost and face garnishment, attorneys can file motions to set aside judgments.

Settlement negotiations benefit from experienced negotiators. Attorneys know collector tactics and counter-strategies.

Monthly payment plans require careful contract review. Attorneys ensure terms protect you.

Taking Control of Your Situation

You have more power than you think. Collectors rely on your inaction.

Filing an Answer changes everything. You’re no longer an easy target.

Negotiation from strength gets better results. Never negotiate from a position of fear.

Understanding the process removes mystery and anxiety. You know what to expect next.

Thousands of people successfully defend debt lawsuits annually. You can join them.

The legal system provides tools for your defense. Use them strategically and confidently.