Sued by a debt collector: what to do first

It means the collector, or the company that bought the debt, has asked a court to order you to pay. You are the defendant. The papers you received usually include a summons, which tells you how and when to respond, and a complaint, which says what the collector claims you owe.

This is common. Pew found that debt collection suits grew from about 1 in 9 civil cases to 1 in 4 (The Pew Charitable Trusts, opens in a new tab) between 1993 and 2013. You are far from alone.

The deadline is on the summons or the court notice. It may be a number of days after you were served, or a date for a first hearing. The CFPB says (CFPB, opens in a new tab) to respond by the date in the court papers, either personally or through a lawyer.

Avoiding the papers does not help. The CFPB notes that if you refuse to accept service, the court could treat it as ignoring a properly served lawsuit.

According to the FTC (FTC, opens in a new tab), the collector will have to prove that you owe the debt, that the amount is correct, and that it has the legal right to sue you. When a debt has been sold, that last point often means showing how the account passed from the original creditor to the plaintiff.

The collector should also have sent you a written validation notice with the original creditor, the amount and your right to dispute. Federal law gives you 30 days to dispute (Cornell LII, opens in a new tab) the debt in writing after that notice.

Federal law also limits where a collector may sue you. Under 15 U.S.C. 1692i (Cornell LII, opens in a new tab), a debt collector must sue in the area where you signed the contract or where you live when the suit is filed.

Only a lawyer can tell you which defenses fit your case and how to raise them in your court. These are the questions that often come up in debt cases, so you can bring the right papers to that conversation.

The court can decide the case without hearing from you. This is called a default judgment. Pew found that courts resolved more than 70 percent (The Pew Charitable Trusts, opens in a new tab) of debt collection suits this way, and that fewer than 10 percent of defendants had a lawyer.

A judgment is a court order. The CFPB says it can let the creditor garnish your wages, place a lien on your property, or move to freeze money in your bank account, and that a judgment is very hard to change once the case is over.

The FTC adds (FTC, opens in a new tab) that the collector can ask the court for collection costs, interest and attorney's fees on top of the debt, and that a judgment will likely show up on your credit report.

A collector may still agree to a lump sum or a payment plan after a case is filed. But talking about a settlement does not pause your court deadline. Only the court, or an agreement filed with it, changes the case.

If you reach an agreement, get it in writing before you pay, and ask how it will be filed with the court so the case is closed.

If you have $10,000 or more of unsecured debt in total, we can talk through whether settlement fits the rest of it. We will tell you plainly if a lawsuit means you should speak to an attorney first1.

The Servicemembers Civil Relief Act adds protections. Before a court enters a default judgment, the plaintiff must file an affidavit stating whether you are in military service, and the court may appoint an attorney to represent a servicemember who has not appeared (50 U.S.C. 3931 (Cornell LII, opens in a new tab)).

If a default judgment is entered during your service, or shortly after, the law lets you ask the court to reopen it in some cases. A military legal assistance office (Armed Forces Legal Assistance, opens in a new tab) can help you use these rules.

Federal law bars collectors (CFPB, opens in a new tab) from harassment, false statements and unfair practices, and many states add their own rules. The FTC says (FTC, opens in a new tab) that if a debt collector breaks the law, you have one year from that date to sue the collector in a state or federal court.

A consumer lawyer can tell you whether what happened counts, and whether it can be raised in the same case.