Nobody likes getting court papers or threats from lawyers. But debts and lawsuits won't go away on their own: You'll need to take action. While it is always best to try and settle problems with creditors before legal action becomes a possibility, if a creditor serves you with a summons, seek legal advice and prepare to go to court.
Don't Ignore It
Never ignore a threat of legal action or an actual summons. By ignoring the problem, you give up your right to appear in court and defend yourself. When this happens, the judge can issue a default judgment against you, making you responsible for paying the debt. Once your creditor has its judgment, it can begin using aggressive tactics to collect your debt, including wage garnishment and seizing your bank account. You'll also end up with a court judgment on your credit report, which will hurt your credit score significantly.
Talk to a Lawyer
Court papers can be confusing, so it is a good idea to talk to a lawyer, if possible, about your situation. If you cannot afford a lawyer, contact the legal aid society in your area. While it may not be able to send an attorney with you to court, it may be able to advise you on how you can deal with this matter on your own. A lawyer can also let you know whether any of your income or assets are exempt from garnishment or seizure: For example, Social Security benefits, unemployment and welfare money is typically exempt from garnishment or seizure. If you have exempt assets, separate them from non-exempt assets by placing them in a different bank account.
Try to Negotiate
Contact your creditor and ask if you can work out a settlement and avoid going to court. Some creditors may be willing to accept a payment plan or a cash settlement for less than you owe. Others will demand the full amount. Be sure to get any settlement agreement in writing, along with evidence that your creditor has asked the court to dismiss its case.
Go To Court
Don't miss your court date. If you can't make it, call the courthouse and find out what you have to do to reschedule. The papers you receive will tell you how you can file your "response" before going to court. There is usually a fee for this, but if you can't afford it, you may be able to ask the court to waive your fee. The court clerk will have the forms you need to request a fee waiver. Once you go to court, you, or your lawyer, can present your case.
Avoid Being in Contempt
There have been a few cases in which debtors have ended up in jail because of missing a court hearing. Nobody is placed in jail simply for being in debt. However, if a creditor gets a judgment against you and you aren't in court, the judge may issue a summons asking you to appear so the creditor can question you about your finances or ask you to fill out a financial disclosure form. If you don't show up at this hearing, the judge may hold you in contempt of court, which could result in your arrest. To avoid this, pay attention and respond to any communication you receive from a creditor, the creditor's lawyer, or the court.
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