January 13, 2021
Summary: If you're sued for a debt but have no money, use SoloSuit to respond in 15 minutes and win your lawsuit.
Being served with a debt collection lawsuit can be an anxiety-inducing experience, especially if you are already struggling to stay afloat financially. The prospect of going to court and defending yourself against a large debt collection company can be intimidating and potentially overwhelming, and that fear is often exacerbated when you are down to your last dime and unable to pay if you lose the legal battle.
If an adverse judgment is entered against you and you lack the financial resources to pay, the judgment basically becomes an additional debt that will need to be repaid. In many instances, the plaintiff will take steps to try and obtain compensation from you in one form or another.
One option potentially available to the plaintiff is initiating a wage garnishment. This is routinely pursued if you are gainfully employed and receiving income from a job.
However, it is important to note that if you only earn minimum wage or receive income through social security or disability, a debt collector is prohibited from accessing these funds. If, on the other hand, you are paid through a 9-to-5 job or have a salaried position, a debt collector could garnish up to 25 percent of your earnings.
In addition to wage garnishment, a debt collector will likely try to liquidate funds maintained in your bank account or checking account. Though, if you have a retirement account like an IRA or 401(k), creditors cannot liquidate those funds. Nevertheless, the funds in your checking account could be accessed and drained to pay a portion of the judgment.
If you lack the funds to pay the adverse judgment in full, you could reach out to the plaintiff and try to negotiate a post-judgment settlement. This may be worthwhile since, at the end of the day, the plaintiff wants to receive some form of compensation and may be open to accepting a lower amount, or a payment plan, so they are actually compensated. Whether the plaintiff is willing to accept a lower amount or is open to setting up a payment plan depends largely on the creditor and the amount owed.
In many instances, if you are sued and lose the lawsuit, you may be in a position to file for bankruptcy, depending on the amount owed from the suit. The debt from an adverse judgment can usually be erased if you take the proper steps to formally declare for bankruptcy.
Many people are frightened by the prospect of filing for bankruptcy. However, it is important to understand that bankruptcy can actually provide statutory protections for your personal property when you are being pursued by a debt collector on an adverse judgment. For example, if you declare Chapter 7 bankruptcy, your creditors no longer have the right to try and collect from you (which can provide both financial and psychological benefits since you should stop receiving hounding phone calls and correspondence).
Bankruptcy is generally not recommended if you are trying to address a single debt. Instead, bankruptcy should only be considered after conducting a thorough review of your finances, income, and debts. You should also make sure to review and utilize the resources available through SoloSuit.
SoloSuit makes it easy to respond to a debt collection lawsuit.
How it works: SoloSuit is a step-by-step web-app that asks you all the necessary questions to complete your answer. Upon completion, you can either print the completed forms and mail in the hard copies to the courts or you can pay SoloSuit to file it for you and to have an attorney review the document.
"First time getting sued by a debt collector and I was searching all over YouTube and ran across SoloSuit, so I decided to buy their services with their attorney reviewed documentation which cost extra but it was well worth it! SoloSuit sent the documentation to the parties and to the court which saved me time from having to go to court and in a few weeks the case got dismissed!" – James
If you need assistance on how to best respond to a debt collection lawsuit, consider utilizing SoloSuit. What is SoloSuit? Take a moment to review these FAQs to learn more.
Here are some key points on what you need to do if you are served with a debt collection lawsuit and lack the funds to pay an adverse judgment:
Best of Luck!
Here's a list of guides for other states.
Being sued by a different debt collector? We're making guides on how to beat each one.
Need more info on statutes of limitations? Read our 50-state guide.
Need help managing your finances? Check out these resources.