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Delinquent Debt Timeline: Lawsuit

Feb. 15, 2019
Paying Off Debt, Personal Finance
Delinquent Debt Timeline Step 6: Lawsuit
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When a debt collector can’t get you to pay a delinquent debt, it may decide to sue you. You’ll receive a summons about the lawsuit and the court hearing.

What you can do: It’s crucial to respond to the lawsuit and show up for your hearing. If you don’t, the debt collector will be given a default judgment against you and will be able to garnish your wages or put a lien on your property to get paid.

Judgments on your credit report can remain for up to seven years — although a change coming on July 1 will remove judgments and some tax liens from credit reports. It may help your credit by removing a big negative mark — the judgment — but that’s only part of the penalty for ignoring a lawsuit. You still will have to pay the judgment amount.

To avoid having your paycheck reduced by automatic payments or your bank account frozen, be sure to respond to the lawsuit. There are several ways to make a legal defense or handle the debt through a payment plan or settlement.

Lawsuits for debt can be complicated. You may be able to get advice from local legal aid services on the best way to proceed.

Learn more: Click on another stage in the debt timeline below, or return to the introduction.

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