What to do if you are being sued
I frequently get calls from people who are being sued: have been served with suit paper: a complaint. Credit card companies, collection agencies, or debt buyers who have bought the accounts, have filed a civil suit in state court seeking a judgment for an amount that they claim is owed to them. Sometimes, the suit may be accompanied by a letter from the law firm that filed the suit, insisting that the client contact them immediately. Getting sued is a scary thing. So, should you hit the panic button? What does it mean, and what can you do?
A civil suit is nothing more than a request that a court decide that you owe the plaintiff money. That’s it. You are being put on notice, and you have the right to respond and dispute that you owe the money, or that the amount is incorrect, or that you don’t owe that the money. It is not an arrest warrant, and you can’t be put in jail simply because you owe money and haven’t paid it.
You may need to file a file a response to the suit (called an Answer), and if you don’t the court will usually find in favor of the plaintiff, giving the plaintiff a civil judgment for the amount of money requested. If you don’t respond, you don’t usually have to attend court. Once the court grants the plaintiff a civil judgment, however, you may effectively lose the right to challenge that the amount is correct, or that you actually owe the money, or to assert defenses such as that three years have elapsed since the debt came into being and the plaintiff is barred from suing you. In Delaware, if that judgment is made in Superior Court, or the judgment is transferred to Superior Court, the judgment will become a lien on real property that you own in that county. However, that is pretty much it. If you don’t dispute that you owe the debt, a judgment is pretty much a piece of paper that says you owe what you already knew you owed.
What comes after a judgment is granted depends mostly on whether you are employed and what you own. If you want to know how a civil judgment will affect you and your property, you have to consult a lawyer. There is no other way to be sure, unless you consult a lawyer who can tell you about your situation. Normally the first thing the creditor does with the judgment is either attaché your wages, attempt to sell your car, or levy on your furniture and other belongings to sell those things to pay on the judgment.
My advice is different for many different situations. Sometimes the person being sued is basically “judgment-proof.” That means what it sounds like – a judgment doesn’t change anything, because there is nothing the judgment creditor can do: no wages to attach, no property for the judgment creditor to take because what little the person has is protected from execution (sale to pay the judgment). On the other hand if you own real property, may need to respond differently because ultimately your home could be sold to pay the judgment.. Sometimes a lawsuit is the final straw that forces people to file bankruptcy because they would not be able to survive is 15% of their wages were taken to pay the creditor, or they didn’t have a car to get to work.
Bankruptcy may be a solution. A bankruptcy can stop a suit that has been filed, and prevent a judgment from being granted. Bankruptcy can also sometimes alleviate the affect of a judgment that has already been issued. Whether is is necessary or advisable, again, depends on your situation. Only an experienced bankruptcy attorney can tell you. In that case you should contact my office. Bankruptcy is a specialty and a lot of attorneys do not have much of an understanding of bankruptcy law. Relying on a non-attorney can provide even worse information. Bankruptcy can protect a lot of property. Most people who file a chapter 7 bankruptcy in Delaware are able to keep everything that they own. However, every situation is different.
I also mentioned the possibility of a letter insisting that my client contact the creditor’s lawyer immediately? If the language of the letter suggests that dire consequences could result if you do not contact them, the letter may even be a violation of the law. If you get such a letter (or phone call), remember that they, whether it is a law firm or a collection agency, are trying to get you to pay them money. Their stock in trade is to create a sense of urgency, and stampede you into making a commitment that you wouldn’t otherwise make. Again, your best defense is to consult with someone who is on your side, who can tell what you really need to worry about.
Do not delay getting advice. It may be tempting to just stick your head in the sand and wait to see what happens. Time is not on your side in this situation. Get legal advice, and make sure you know what can happen, and what you can do about it. You may be pleasantly surprised by the advice you receive.