I’m facing a lawsuit from a debt collector: What do I do?

Being served with notice of a creditor lawsuit can be a shock. While you were likely aware of your mounting debt and collection attempts, being sued by the debt collector may have been the last thing you expected to happen.

What can you do when someone that you owe money to sues you due to non-payment or frequent late payments? Do you have options to challenge the lawsuit?

Can you defend yourself from a creditor lawsuit in court?

It is possible in some cases for people to go to court and defeat a creditor’s claims. For example, if you can show that fraud played a role in your decision to take on the debt or that you already repaid it in full, the court may rule in your favor.

However, provided that the debt is legitimate and the payment issues that prompted the lawsuit are also verifiable, your options may be limited. Even if there is a straightforward explanation for your current financial hardship, the courts are only there to rule on the validity of the contract and help the creditor assert their right to repayment. That could result in garnishing your paycheck.

Can you avoid going to court at all?

If your situation doesn’t present a clear-cut defense for the debt itself, are you all out of options? Must you go to court only to wind up losing and facing the garnishment of your wages?

Thankfully, you still have options. Filing for bankruptcy could potentially help you. As soon as you file, there is an automatic stay that takes effect. No collection activity can continue until the courts resolve your bankruptcy filing.

Even if there is already a date set for a hearing in civil court, your filing will compel the other party to temporarily drop the lawsuit. Provided that your bankruptcy filing is successful and the debt in question is an unsecured debt, like a credit card balance or unpaid medical debt, bankruptcy will not only stop the lawsuit and garnishment of your wages but will also likely discharge the debt so you won’t face future collection efforts.

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