What happens to unpaid debt after a lawsuit is filed?

Unpaid debt doesn’t just go away. It continues to be reported on your credit report, harming your credit score, and leaving you at risk of potentially being sued. A debt collection lawsuit commences when the law firm that represents your creditor files a case against you in civil court.

What happens when you get served with a lawsuit?

Hearing the words “you’ve been served” is a dreaded thing. It can feel overwhelming to be served with a lawsuit, especially if you’re being sued for unpaid debts. A lot of people face debt problems at some point in their lives.

Can a debt collection lawsuit be settled before trial?

And it isn’t uncommon for lawsuits to settle before going to trial, especially if the amount of money in dispute is not a huge sum. A debt collection lawsuit can potentially be resolved with debt settlement. You can make a payment plan with the creditor to pay off the sum of the debt or partially pay the sum in a lump-sum settlement.

How often do people get sued over credit card debt?

While the Pew report found that less than 10% of people sued over debt hire a lawyer, those who do are more likely to win their case or reach a settlement that is satisfactory to both parties.

Is it bad to get summons for credit card debt?

Receiving a summons for your outstanding debts can be an alarming experience, especially if it’s your first time to get one. What do you do so you won’t get sued?

What happens when you get a summons from a creditor?

Keep in mind that when you receive a Summons because a creditor filed a lawsuit, the statements in the Complaint document are still allegations and are not rulings yet. This means that you have an opportunity to contest them or settle with the creditor.

What to do if you are served a summons and complaint?

By Daniel Cohen 1 A summons and complaint is an official notice of a lawsuit. 2 A defendant must respond to a summons or risk default judgment. 3 Consult with a lawyer in your state if you receive a summons.

Why are there laws against creditors suing you?

The idea behind these laws is that we as a society have decided that we don’t want old debts hanging around forever — we want people and businesses to be able to move on with their lives without worrying about being sued. The length of time a creditor has to sue you depends on your state of residence and the type of debt.

Where can I go to sue for unpaid debt?

For a small claims lawsuit, you can visit your local courthouse for a small claims booklet and forms instructing you on how to begin your suit for unpaid debt.

What do you need to know about a debt collection lawsuit?

The Lawsuit Begins A debt collection lawsuit begins when the collection agency files a “complaint” (sometimes called a “petition”) in court. The complaint will explain why the collector is suing you and what it wants—usually, repayment of money you owe, plus interest, fees, and costs.

Can a credit card company sue if you don’t pay?

Credit card companies consider the debt’s amount, its recoverability, and legal expenses before suing. However, this consideration doesn’t give you a get out of jail free card regarding credit card debt. If it was, many more people may choose not to pay. So if credit card companies don’t immediately sue, what will they do about unpaid debt?