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Being Sued for a Debt

What to do when a creditor or debt buyer files a lawsuit over a credit card, medical bill or other consumer debt: answering, the defenses that often apply, and what a judgment allows the creditor to take.

Informational only - this is not legal advice. These definitions explain general legal vocabulary in plain English. They are not advice about your situation, reading them creates no attorney-client relationship, and the law differs from state to state and changes over time. For advice you can rely on, speak to a lawyer licensed in your state.

Looking for a lawyer rather than a definition? Skip to the state-by-state list of Debtor-Creditor law firms.

What it means

A debt lawsuit begins when a creditor, a collection agency or a debt buyer that purchased the account files a complaint in court and serves the consumer with a summons. The summons states the deadline to respond. The single most important step is to file a written answer by that deadline, because most of these cases end in a default judgment when nobody responds - often for the full amount claimed plus interest, fees and costs, whether or not the amount is right. Federal law requires a debt collector to sue in the judicial district (usually the county) where the consumer lives or signed the contract, so a lawsuit filed far away is itself a problem for the collector.

Defenses are common, especially against debt buyers. The plaintiff must prove it owns the debt and how much is owed, and buyers frequently lack the original agreement or a complete record of the transfers. The debt may be past the state's limitation period (time-barred debt). The amount may include charges the contract does not allow, the debt may belong to someone else or result from identity theft, or the consumer may not have been properly served. A collector that sued on a debt it could not prove, or misstated the amount, may have violated the federal Fair Debt Collection Practices Act, which can support a counterclaim. Many credit card agreements also contain an arbitration clause that the consumer, not only the bank, can choose to invoke.

A judgment lets the creditor use the state's collection tools: wage garnishment (limited by federal and often stricter state law), a levy on a bank account, and a lien on real estate (see collecting a judgment). Some income is protected: Social Security, SSI and veterans' benefits are generally exempt from garnishment by private creditors, and banks must automatically shield a protected amount of those benefits when they are deposited directly. A settlement or payment plan negotiated before judgment is often cheaper than one after, and filing for bankruptcy stops the lawsuit through the automatic stay.

Where this comes from

Fair Debt Collection Practices Act, 15 U.S.C. §§ 1692-1692p (false or misleading representations, § 1692e; unfair practices, § 1692f; venue for legal actions, § 1692i; civil liability, § 1692k); Regulation F, 12 C.F.R. Part 1006. Federal limits on wage garnishment: Consumer Credit Protection Act, 15 U.S.C. §§ 1671-1677. Protection of federal benefits: 42 U.S.C. §§ 407(a), 1383(d)(1); 38 U.S.C. § 5301(a); 31 C.F.R. Part 212 (automatic protection of directly deposited benefits). Federal Arbitration Act, 9 U.S.C. §§ 1-16. Deadlines to answer, limitation periods, exemptions and default procedure are set by each state's court rules and statutes.

When people hire a lawyer for this

Call a consumer protection lawyer or a legal aid program as soon as you are served, before the answer deadline; many consumer lawyers take strong cases against debt buyers or collectors at little or no cost to you, because the federal collection law makes a collector that violates it pay the consumer's attorney's fees. Court self-help centers can help you file an answer if you represent yourself. Do not ignore the papers, and do not assume a phone conversation with the collector stops the case; only a filing with the court does.

Worried about the cost? A lawyer can be hired for one part of a case only (limited-scope representation), may be paid from what a claim recovers (contingency fee), or may be free through a pro bono program or legal aid; a court can also waive its own filing fees.

Find Debtor-Creditor law firms in your state

Choose your state to see Debtor-Creditor law firms in the city where we list the most; your city may be under “other cities”, A to Z. A state marked “Bankruptcy & Debt” has no Debtor-Creditor listing yet and opens the broader page.

Alabama (Birmingham)
+1 other city
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Alaska (Anchorage)
Arizona (Chandler)
+6 other cities
Arkansas (Little Rock)
California (Modesto)
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- and 7 more with fewer listed firms
Colorado (Aurora)
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Connecticut (Bridgeport)
Delaware (Wilmington)
District of Columbia (Washington)
Florida (Jacksonville)
+5 other cities
Georgia (Atlanta)
Hawaii (Honolulu, Bankruptcy & Debt)
Idaho (Boise, Bankruptcy & Debt)
Illinois (Chicago)
Indiana (Fort Wayne)
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Iowa (Des Moines)
Kansas (Wichita)
Kentucky (Lexington)
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Louisiana (Baton Rouge)
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Maine (Portland)
Maryland (Baltimore)
Massachusetts (Boston)
Michigan (Detroit)
Minnesota (Minneapolis)
+1 other city
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Mississippi (Jackson)
Missouri (Kansas City)
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Montana (Billings)
Nebraska (Lincoln)
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- Omaha
Nevada (Henderson)
+2 other cities
- Las Vegas
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New Hampshire (Manchester)
New Jersey (Jersey City)
+1 other city
- Newark
New Mexico (Albuquerque)
New York (New York City)
+2 other cities
- Buffalo
- Rochester
North Carolina (Charlotte)
+5 other cities
North Dakota (Fargo, Bankruptcy & Debt)
Ohio (Columbus)
+3 other cities
Oklahoma (Oklahoma City)
+1 other city
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Oregon (Portland)
Pennsylvania (Philadelphia)
+1 other city
- Pittsburgh
Rhode Island (Providence, Bankruptcy & Debt)
South Carolina (Columbia)
South Dakota (Sioux Falls)
Tennessee (Memphis)
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Texas (Arlington)
+12 other cities
Utah (Salt Lake City)
Vermont (Burlington)
Virginia (Chesapeake)
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Washington (Seattle)
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- Spokane
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West Virginia (Charleston)
Wisconsin (Madison)
+1 other city
- Milwaukee
Wyoming (Cheyenne)

Related terms

Entries on the same subject:

Other entries in the same area of law, each written from the same primary sources.

Automatic StayThe immediate, court-ordered halt to most collection activity that takes effect the moment a bankruptcy case is filed.
Bankruptcy DischargeThe court order that ends personal liability for the debts covered by a bankruptcy case - what it does, what it does not do to liens and co-signers, when it is entered, and how it can be denied or later revoked.
Bankruptcy ExemptionsThe property a person filing bankruptcy keeps - the home equity, vehicle, household goods, tools, retirement accounts and other assets the law places beyond the reach of the trustee and creditors - and the state-by-state choice of which exemption list applies.
Bankruptcy Means TestThe income calculation that decides whether a person may file a Chapter 7 case or is steered into a Chapter 13 repayment plan - a comparison of household income against the state median, followed if necessary by a line-by-line deduction of allowed expenses.
Bankruptcy Trustee and the Meeting of CreditorsThe person appointed to administer a bankruptcy case and the short, sworn examination every debtor must attend - what the trustee is looking for, who actually turns up, and what happens after.
Chapter 13 BankruptcyA reorganization bankruptcy for individuals with regular income: debts are repaid in part through a court-approved plan.
Chapter 7 BankruptcyA liquidation bankruptcy: non-exempt property may be sold to pay creditors, and qualifying debts are discharged.
Collecting a JudgmentWinning a case and being paid are two different things - the second is a separate process the winner has to start.
Non-Dischargeable DebtsThe debts a bankruptcy discharge does not erase - child and spousal support, most taxes, most student loans, criminal fines, debts from fraud or drunk-driving injuries - and the difference between those that survive automatically and those a creditor must ask the court to preserve.
Preferences and Fraudulent Transfers (Clawback)The trustee's power to undo payments and transfers made before a bankruptcy was filed - a repayment to a relative, a property signed over to a family member, a creditor paid ahead of the others - and why "I paid my brother back first" is a problem rather than a virtue.
Reaffirmation AgreementA voluntary agreement in a Chapter 7 case to remain personally liable on a debt - usually a car loan - that the discharge would otherwise wipe out, in exchange for keeping the property; what it costs, the court's role, and the alternatives of redemption and simply continuing to pay.
Small Business Bankruptcy (Chapter 11 and Subchapter V)The reorganization chapter for a business that wants to keep operating while it restructures its debts, and the streamlined subchapter Congress added for small businesses - who qualifies, how a plan is confirmed, and what happens to the owner's personal guarantees.

« All glossary terms

Part of the LawyerLand plain-English legal glossary. Definitions are written from primary sources - statutes and court rules - and each entry states the authority it rests on, or says plainly when the doctrine is state law with no national rule.

If you cannot afford a lawyer, civil legal aid programs provide free help with many of these problems: civil legal aid programs by state.

Related free reference tools: statute of limitations for a personal-injury claim, by state, quoted from each state's official text - part of LawyerLand's legal reference tools.