Have You Been Sued?

Have you recently been served with a lawsuit? Let me try to explain what this means to you, in practical terms.

Often I get a call or an email that goes something like this: Help! I’ve been sued. What do I do? Or: What do I do if I get sued? Or: I’ve been served with a lawsuit. What should I do?

If it seems to you like credit card companies are suing more people lately you are correct. This increase in lawsuits was discussed in a Wall Street Journal article. If you get served with a lawsuit it will probably be emotionally upsetting. You need to know how to deal with it.

First of all, you should know, that bankruptcy takes care of the problem.  Filing bankruptcy stops the lawsuit in its tracks.  It doesn’t matter if the lawsuit has already been filed.  Even if the lawsuit has turned into a judgment bankruptcy still takes care of the problem.  There are a few exceptions such as a lawsuit for fraud which I can tell you about.

Therefore if you’re planning on filing bankruptcy you don’t need to read any further.

If you don’t know if you’re going to file bankruptcy you may find this informative.

The first step the credit card (or other creditors) takes when suing you is to file the complaint with the court. The creditor has a messenger take the lawsuit to the court, pays a filing fee, and the clerk puts a stamp that says something like “filed” and gives the stamped copy back to the messenger. These lawsuit papers include the following:

*The Complaint: This is the document that explains why the creditor says you owe him money and how much you owe
*The Summons: This is a document the court issues which notifies you that you have been sued and that you have 30 days to answer.
*A document that tells you who the judge in your case will be.
*Usually some documents that explain that you might want to consider mediating the case.

The messenger brings the stamped copies back to the creditor’s attorney. The creditor’s attorney then gives the papers to another messenger (called a process server) who then tries to “serve” you. “Serving” means that you are given a copy of the lawsuit papers.

You have 30 days after you are served to file a response to the lawsuit. There are only certain ways to respond to a lawsuit. Usually the only response you would consider filing is an Answer to the lawsuit. The Answer must be in a particular form, you must pay a filing fee (around $350) and you must file the Answer with the court. You also have to prepare a declaration that a copy of the answer was mailed to the creditor’s attorney.

Some people think that if they write a letter that is a legal response. But it’s not. You must follow the proper legal procedures for your response to be considered valid.

You should consider hiring me or another attorney to prepare the Answer in proper form.

So if your Answer isn’t due until 30 days have passed since you were served, can’t you avoid ever having to respond by hiding from the process server?


If you are not home when the process server arrives at your home or place of employment then he comes back a couple more times. If you’re never there he can give the lawsuit to anyone that answers the door and then mail you a copy. This is called substitute service.

But what if no one ever answers the door? What if the creditor’s attorney can’t figure out where you live and can’t find you in order to serve you with the lawsuit? Does that let you off the hook?
No again. If the creditor’s attorney can’t find you then he signs a declaration that says he searched for you and couldn’t find you. The creditor’s attorney presents this declaration to the judge and the judge signs an order allowing the creditor’s attorney to serve you by putting an ad in the newspaper. Usually, this process takes 2 or 3 months. The costs of the newspaper ad (usually a few hundred dollars) are added to the amount you are being sued for.

So, in other words, hiding from the process server might delay things a little bit or even a few months but it won’t stop the lawsuit from proceeding against you.

Ok, let’s assume you have been served and the 30-day clock is running. You must file your Answer within 30 days. But maybe you don’t have the $350 for the filing fee. Maybe you don’t have the legal knowledge to prepare the Answer in proper legal form (or can’t afford an attorney to hire to do it for you.)
So what happens if you don’t file the Answer on time?

If you don’t file the Answer on time then the creditor’s attorney files a Request for Entry of Default. This is a document that says that you have been served but failed to Answer. It asks that the court make an order that you lose the lawsuit by default. When the court signs the document it is said that your “default has been entered” or your “default has been taken”.

Once the judge (or clerk) signs this document then you have lost the lawsuit. You have lost the right to tell your side of the story. It is too late to file your Answer. The clerk won’t accept it for filing.

The creditor’s attorney can file the Request for Entry of Default on the 31st day after you have been served. But they rarely do. It’s hard to say when the creditor’s attorney will file the Request for Entry of Default. It could be a few days. It could be a few weeks. It depends on how busy the creditor’s attorney is.
As long as you file your Answer before your Default is entered you can still file your Answer. So you should still try to file your Answer even if the 30 day period has expired. Go to the clerk’s office. The clerk will tell you if your Default has been entered. If not, you’re in luck. You can still file your Answer.
So what happens to you if your Default is entered? The creditor’s attorney files declarations and papers with the judge and asks that the court enter a judgment against you. You won’t have a say in how much the judgment should be for. The judge will base in on the creditor’s attorney’s statements and documents.

Then the creditor’s attorney gets something called a Writ of Execution. The Writ of Execution is a court document that gives the sheriff the power to take your property to satisfy the judgment.
The creditor’s attorney gives a copy of the Writ of Execution to the sheriff along with instructions to take your property. The easiest property to seize is money in your bank accounts.

If the sheriff seizes the money in your checking account you won’t know it until your checks start bouncing. This can have a snowball effect that can lead to serious financial problems. Let’s say you think you have $1,200 in your checking account. Without you knowing it a judgment holder levies on your checking account and removes all the money or the bank freezes it. You write a few checks totaling $900.00, thinking you have enough in the bank to cover the checks. They all bounce. Your bank charges you a bounce fee and all the people you wrote checks to you charge you a penalty. If someone is living paycheck to paycheck this can lead to financial ruin.

But an important law went into effect on September 1, 2020. Now we’re referring to it as SB 616. The law creates an automatic bank account exemption to prevent debt collectors from seizing the last $1,788 in a person’s account. It doesn’t erase the debt but at least it will stop those checks from bouncing and leave a little “survival money” in your account.

Another easy way to take your property is to ask the sheriff to garnish your wages. This is usually considered a catastrophe by my clients.

But if you have no money in the bank (or the creditor’s attorney can’t find it) and you don’t have a job, you may be “judgment proof”. The judgment will just be a worthless paper if you don’t have anything the creditor can take.
You are probably wondering how it would be different if you do get your Answer on file on time. If you do Answer on time then the case is put in line for trial.

Your property can not be taken until after the trial date and the judgment is made. Plus you will be sent notices by the court saying what’s going on with your case, such as the date of trial.
Therefore you are in a much better position if you do get your Answer filed on time. You receive notices from the court. And you delay the judgment by months while your case waits for the trial date.

Alas, eventually, there is a good chance you will lose your case that the credit card company has filed against you. Eventually, the court will issue that judgment. What do you do then?

Well, you might be “judgment proof”. Then you don’t much care if there is a judgment against you. Although the judgment is good for a very long time (10 years and it can be renewed). If you get property in the future the creditor can take it then.

But most people aren’t “judgment proof”. Those people need to seriously consider filing for bankruptcy. The bankruptcy cancels the judgments and it has no more legal effect. The debt is discharged.

You need to be aware of judgment liens.

A creditor might record the judgment. If you own real property in the county where the judgment is recorded the judgment becomes a lien on your property. This should be dealt with in bankruptcy.

In conclusion: If you are sued, you may be able to ignore the lawsuit if you are judgment proof (i.e. have no property the creditor can take). But if you have assets or income then you are probably vulnerable – you can’t ignore the lawsuit. You can get rid of the lawsuit problem by filing for bankruptcy – bankruptcy discharges most debts including most lawsuits. But if you can’t file bankruptcy right away (maybe you have to wait for some reason, e.g. you need to wait until your income decreases because of the means test) then you might want to file an answer to the lawsuit and file bankruptcy later.

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