What Happens if You're Sued for a Debt and Don't Have Money To Pay?

Being sued for a debt and not having the money to pay can trigger other financial headaches. Creditors typically sue if you don't communicate with them or arrange to pay a debt after 180 days. Some creditors simply write off the debt, send the account to collections and never pursue a lawsuit. But creditors vary, and some go to great lengths to recover debts.

Credit Judgment

Some debtors ignore a summons to appear in court to dispute an unpaid debt. Disregarding this notification and not appearing on your court date results in the creditor winning by default, and a judgment will likely go on your credit file. Judgments indicate that you haven't paid a creditor and you owe money. You cannot escape judgments, and once reported, this information remains on your personal credit report for seven years, even if you pay the debt.

Frozen Bank Account

Creditors don't often stop with judgments. While a judgment indicates you owe money, some debtors choose not to pay, and then wait for the judgment to fall off their report. But a relentless creditor may ask the court to take other actions, such as granting permission to freeze funds in a debtor's bank account. Creditors often have assess to bank account numbers because debtors typically use personal checks when making a payment. With a court ordered lien, creditors can contact a bank and seize funds in the account.

Wage Garnishment

Not paying a debt may also trigger wage garnishment. This involves your creditors going directly to your employer and taking money from your paycheck. With a court-ordered garnishment, employers can't ignore a creditor's request to take your earnings. You can lose 25 percent of your pay (50 percent if you owe alimony, child support or taxes) from each check.

Considerations

As a debtor you can avoid bank account seizures and garnishments by discussing your economic hardship with your creditors and agreeing to make small payments until you can eliminate the debt, or until your situation improves. Creditors and lenders are often eager to work with financially strapped borrowers. Depending on the severity of your economic hardship, you may qualify for deferments, forbearance, a lower interest rate or reduced payments.