Here’s What Happens When You’re Sued By a Creditor

A gavel in the foreground and the scales of justice in the background.

The following is presented for informational purposes only and is not intended as legal advice. Consult with a qualified attorney for questions specific to your circumstances.

You fall behind on a debt. Too far behind to ever catch up. You get plenty of calls asking for payment. There are letters reminding you how delinquent your account has become. Eventually, your creditor may give up on you and send your account to collections, where the letters and phone calls only get worse.

This may be as bad as it ever gets, but there’s a chance your creditor or the debt buyer could decide to take you to court. Now you’re being sued for an unpaid debt.

It sounds scary (and it can be), but if you understand what’s coming and prepare yourself appropriately, a creditor lawsuit doesn’t have to be a terrifying experience. With that in mind, here’s what will typically happen once a creditor decides to sue you for an old debt.

Note: The legal system is full of complexity, with state and local laws changing how cases may be approached depending on where you live. Your best bet is almost always to connect with a qualified attorney and let them guide you through the specifics of your unique case.

Creditor Decides to Sue

It’s entirely possible that you ignore a debt forever and the consequences never go beyond repeated phone calls and letters. There are costs associated with taking a case to court, after all, so the debt needs to be worth the effort and the cost.

Once the creditor has determined that, yes, they would like to get that money, they’ll need to file a complaint with the appropriate court. This complaint will essentially spell out the creditor’s case, including what they want and why they want it. They’ll name the defendant and any other demands beyond just the delinquent debt (they may want you to cover court costs, for example).

You Receive a Summons

To move the case forward, the creditor (or someone acting on the creditor’s behalf) needs to “serve” you a copy of the complaint and a “summons.” The summons is basically a notification that you’re being sued, and should provide some direction on the steps you need to take to address this.

Depending on the rules of the court, the summons may need to be hand-delivered, or it may simply be mailed with a form you can send back, acknowledging that you received the summons. There’s no benefit to ignoring a summons or making it difficult for the summons to be served.

You Respond

The summons should set a timeframe for when you need to respond to the creditor’s complaint, but it’s usually within 30 days or less.

If you want to fight the lawsuit, your response should cite any and all applicable defenses. Has the statute of limitations run out? Is the debt not actually yours? Depending on the circumstances, this is where you’ll want to connect with an attorney to help you craft an appropriate response.

If you don’t respond in the given timeframe, the creditor can then ask for a default judgment. If the court agrees, the creditor has essentially won the case and will be able to collect the judgment amount, usually through a wage garnishment.

Allowing the creditor to win a default judgment may not be the worst decision, assuming the debt is legitimate and you have no valid defense. If this is the case, however, it’s worth your while to reach out to the creditor before this happens to see if you can work out a payment plan and save yourself from both the judgment and the garnishment.

Summary Judgment, Settlement, or Trial

Once you file your response, the path forward can diverge pretty dramatically depending on the circumstances.

Summary Judgement

If your response didn’t do an adequate job offering a defense, the creditor may ask the court to issue a summary judgment and rule in their favor. You should have an opportunity to file a response to the creditor’s motion for a summary judgment.

You need to be able to offer a valid argument in your favor at this point. If there are no facts in dispute and no adequate defense, the judge will likely side with the creditor, awarding them the judgment and ending the lawsuit.

Settlement Conference

You may be required to attend a settlement conference in the hopes of preventing the case from going to trial. If you reach a settlement agreement, there’s no need for a trial. If you decide not to settle, the case will likely proceed to trial.


Once a trial date has been set, you will need to appear in court (preferably with some form of qualified legal representation) and plead your case. A judge or jury will hear both sides and rule in favor of either the plaintiff (your creditor) or the defendant (you).

  • If you win, you won’t need to pay the debt in question. You may also be entitled to damages from the creditor to help offset your court costs (you would need to formally request this).
  • If the creditor wins, they will have established a legal right to collect the debt in question. Next, they’ll seek permission to actually collect the debt (again, usually through a wage garnishment).
  • The case may also be dismissed, which ends the lawsuit, but allows the plaintiff to start the process all over again by re-filing their complaint.

Take Steps Before You Get Summoned

If you have unpaid debts and they’re legitimate, try to do your best to avoid getting summoned to court. Stay in communication with your creditor. Seek ways to reach a satisfactory compromise.

If you're feeling overwhelmed by old and new debts, a debt management plan (DMP) can help lighten your burden and save you money in the process. See how much you can save with a DMP.

"I can't live like this. This is not sustainable. So I called MMI and I decided to face the music and just really have a heart to heart conversation about the facts, in a very non-judgmental way. And for me that was a completely wonderful moment."

Hear how Annette decided to stop hiding from her debt and made the decision to start a DMP with MMI:

Tagged in Debt collection, Laws and legal questions

Jesse Campbell photo.

Jesse Campbell is the Content Manager at MMI, with over ten years of experience creating valuable educational materials that help families through everyday and extraordinary financial challenges.

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