Do NOT follow the normal temptation to just toss those lawsuit papers on your heaping pile of overdue bills and then try to forget about them. That's what the creditor hopes you'll do. There are serious consequences to a collections lawsuit , and you have some workable options that you truly should consider.
If you are sued by a creditor or collection agency, there are various sensible-sounding reasons why you might just disregard it. After all, you admit you owe the money so why try to fight it? They haven't been able to get money out of you, so what difference will just another set of papers make? Besides, attorneys are expensive and you have no money to hire one, and what's the point if you owe the debt anyway?
But these seemingly sensible ideas actually usually do not make sense.
By not responding to a collections lawsuit, you are doing much more than simply admitting that you owe the debt. Once the deadline to respond to the lawsuit passes and a judgment is entered against you, that closes you off from pursuing important rights:
a) To raise possible defenses to the lawsuit. Creditors, and especially collection agencies, can be very sloppy about who they file lawsuits against and how those papers are prepared. Because relatively few of these lawsuits are challenged by the debtors, the creditor does not have much incentive to put effort in being accurate. So creditors often sue the wrong people, sue after the statute of limitations on the debt has expired, or sue even though the debtor has some other strong defense. But once the time to answer the lawsuit has expired and a judgment is entered against you, raising such defenses is either impossible or very difficult.
b) To bring counterclaims against the creditor. Creditors occasionally violate the law either in the way that the debt was originally entered into or in the way it was collected. You can usually bring up those violations in a counterclaim within the collection lawsuit. With certain kinds of counterclaims, if you fail to raise them in that original lawsuit against you, you forever lose your ability to do so. But even if you raise the counterclaim later in settlement discussions, or even go so far as file a lawsuit, you may well have lost the counterclaim's leverage just when it would do you the most good.
c) To dispute allegations beyond than just owing the debt. Letting the deadline to respond to a lawsuit expire results in the court entering a "default judgment" against you. That judgment usually includes everything that the creditor asked for in its lawsuit. Sometimes the facts alleged go further than just state that you owe and have not paid the debt. For example, the allegations could say that you incurred the debt through a misrepresentation or some other wrongdoing. If so, that debt could be much more difficult to discharge in bankruptcy. Although the bankruptcy court may ultimately give less weight to a judgment entered by default, at the very least you are buying an expensive fight that you could have avoided.
And that gets to the point that letting a default judgment be entered against you especially doesn't make sense when you have a practical solution. The solution consists of two steps: finding out your legal options, and then choosing and pursuing the best option.
Because a lawsuit is a serious matter with serious consequences, you urgently need to understand those consequences and your options for avoiding or dealing with those consequences. You need to get personal legal advice for that. Fortunately, most attorneys who help with consumer debt issues provide a free initial consultation meeting. That's a valuable service. These initial meetings by their nature tend to have a marketing component to them, in that the attorney is introducing you to their services and wanting to establish a relationship with you. But the attorney is ethically bound to give you advice about your true options, laying out what is in your best interest, whether or not he or she is charging you for it.
As you discuss the lawsuit with the attorney, and your broader financial situation, you may find that some of your better options involve broader solutions, sometimes including bankruptcy options. The attorney is ethically forbidden from forcing you to pursue any option-he or she can only give advice so that you can make an informed decision. Part of that advice will likely be about practical ways to pay for each option.
So, you owe it to yourself to find out the consequences of letting a lawsuit go to judgment, and to find out your options before that happens. No matter how much you're tempted to just toss the lawsuit papers away or onto the pile of unpaid bills, this is your signal that it's time to get legal advice about what is really best for you in your difficult circumstances. That knowledge can lead you to a workable game plan, and to the peace of mind that you want so much.