I received a collections lawsuit. Now What?

Posted By : admin
Category : Bankruptcy
11 - Mar - 2015

Sometimes bad things happen to us financially.  Sometimes they are completely outside of our control.  Sometimes they are well within our control.  Regardless of how debt issues happen, they are always stressful.  However, one of the most stressful things that happens to people when they have gotten into debt and are unable to pay their bills is receiving a lawsuit.  When a lawsuit is filed it is often delivered via sheriff or certified mail.

One of the biggest mistakes people make when they are served with a lawsuit for a credit card debt or mortgage foreclosure is to ignore it.  Sometimes thinking about the problem seems overwhelming.  Often since there is no required date to appear in Court for a hearing people put the paperwork away and try not to think about it.  This is always the worst course of action.

When the Hamilton County, Marion County or Boone County sheriff’s department shows up and serves you with a summons and lawsuit you have a limited amount of time to take action.  If you are served via sheriff that amount of time is 20 days.  If you do nothing 20 days from receiving the lawsuit then the Plaintiff can and will ask that a default judgment be entered against you as a result of your failure to respond.  If you receive the lawsuit via certified mail then you have 23 days to respond.

So what is a default judgment?  It’s a judgment that means that your creditor may have obtained a judgment lien on your home, that the judgment creditor can begin proceedings to garnish your wages (typically 25% of net pay in Indiana) and may freeze your bank account.  All of that is really bad, so don’t be fooled into thinking that a default judgment is not a bad thing or that it is minor because it is a default.  A default judgment may mean, however, that if you did not receive service of the lawsuit and/or you have a valid defense to the lawsuit, a good excuse as to why you didn’t assert your defense earlier and it has been less than a year since the default judgment was entered you may be able to have the default judgment set aside.

As you can see, doing nothing shouldn’t be an option when you receive a lawsuit.  I know that people often think there is nothing they can do because they know the debt is owed and they just don’t have the money to pay.  Often the debt is a valid debt that is owed.  But the creditor will often enter into a payment arrangement to allow the debtor to pay off the debt over time.  Sometimes a family member can help the debtor by loaning them some money to attempt to settle the judgment.  Typically, this is a lump-sum payment of a sum of money that is less than the actual amount owed.  And, sometimes this lawsuit is the first of what is sure to be a string of lawsuits and a discussion regarding Chapter 7 or Chapter 13 bankruptcy is in order.  No matter which option (or some other option) works best for you, it is important to have a plan regarding how you are going to deal with a lawsuit once you receive it.  Doing nothing isn’t a plan.

If live in Indianapolis or the surrounding areas and you have received a lawsuit and would like an attorney to help you negotiate a payment plan, negotiate a settlement, or need to discuss bankruptcy contact Halcomb Singler, LLP at (317) 575-8222 or click here.

**Halcomb Singler, LLP, is a debt relief agency. It helps people file for bankruptcy under the bankruptcy code. No attorney-client relationship with the firm of Halcomb Singler, LLP, is created through this blog. Also, please note that Erika Singler is an attorney licensed in Indiana and does not seek to practice law in any jurisdiction in which they are not properly authorized to do so. The information contained in this blog is general in nature and should not be relied upon for the circumstances of any individual(s) or businesses.