It’s a notice nobody wants to receive: a notification that you’re being sued by a creditor. It can feel overwhelming, and your first instinct may be to bury your head in the sand. However, you must respond promptly. You still have options and time to respond.
Here’s what typically happens when you’re sued by a creditor and what you should do next.
Why Do Creditors Sue?
People can be sued by creditors for various reasons, but they typically all involve:
- Failing to repay debts (credit card balances, personal loans, medical bills).
- Breach of contract (violating terms of a loan agreement).
- Unsecured debt collection
A lawsuit is typically a creditor’s way of seeking a court judgment that gives them stronger legal tools to collect.
What Happens When You’re Sued by a Creditor
If a creditor sues you, the first thing that will typically happen is that you will be served with legal papers. The documents will state who you are being sued by, the amount of money they claim you owe, and the basis of the debt.
In New York State, you generally have 20 to 30 days to respond to a creditor lawsuit.
What You Should Do Immediately
If you fail to respondto the lawsuit, creditors will win the case by default. These judgments can allow creditors to garnish your wages or even freeze your bank account. It is crucial to take action immediately after being served with papers. The best way to do this is by:
Reviewing the Details Carefully: Double-check that the information in the papers accurately matches your specific debt details. Ensure that it is, in fact, your debt and the correct amount that you owe.
Speak with a Bankruptcy Attorney or Debt Defense: Speaking with an attorney can help you file a formal report, negotiate a settlement, and challenge any improper documentation. In some cases, you may be eligible to file for bankruptcy. This triggers an automatic stay, which immediately halts collection actions such as lawsuits.
Get the Assistance You Need Today
Being sued by a creditor is serious, but it is not the end of the world. You still have legal protections and opportunities to defend yourself strategically. Contact our defense lawyers at Todd Cushner & Associates today at (914) 600-5502 for a free consultation.
