What Happens if a Debt Collector Sues You in Court?

Nearly every individual will owe money to a creditor at some time during his life. However, if you fail to pay a debt on time, you may receive phone calls or letters from the creditor or a third-party debt collection agency. Eventually, the creditor or collection agency may file a lawsuit against you.

Filing a Lawsuit

Both creditors and third-party collection agencies can file lawsuits against debtors. A collection agency can't file the lawsuit unless it purchases the debt from the creditor. However, the creditor can file a lawsuit at any time. If the collection agency doesn't want to purchase the debt but believes that the debtor has assets the creditor can seize, the agency may send the case back to the creditor with a recommendation for legal action.

Summons and Complaint

If a creditor or a collection agency files a lawsuit, you will receive a summons and a copy of the complaint. The complaint will describe the debt you owe and your failure to pay it. The summons will inform you of your right to answer the complaint in writing, how long you have to answer and where you must send your response. You should respond to the complaint regardless of whether or not you agree with it.

Answering the Complaint

To answer the complaint, you must submit a document to the court that states whether you agree or disagree with the statements in the complaint. If you answer the complaint, the court will notify you of further proceedings and you will be able to argue the matter in court. If you don't answer the complaint, the creditor or collection agency will win the case automatically. However, filing an answer may increase the court costs you will owe if you lose the case.

Judgments

If the collection agency or creditor wins the case, the court will issue a judgment, which is a court order that allows the creditor or agency to collect the debt by garnishing your wages or seizing assets. Creditors or collection agencies with a judgment may withdraw money from your bank account, take possession of a vehicle or collect a percentage of your paycheck. Some income and assets, such as Social Security income or an individual's home, may be exempt from garnishment.