If You Are Sued for a Debt

Being sued is not a criminal matter

Lawsuits are filed in the civil justice system. This case is not a criminal matter. Being sued for unpaid consumer debt does not mean you are going to jail.

We say this first because it is the fear we hear most often. People who get court papers sometimes believe they are in criminal trouble or in danger of arrest. This is false.

Responding to a lawsuit is not a legal requirement

If you choose to not file a response to a lawsuit, you are not going to be arrested. If you show up at the courthouse dressed as a werewolf and insult the judge's mother, you might be arrested for contempt. This is true for everyone, however. It's wise to never insult a judge's mother.

Most people who come to us for help are sued for debt they DO owe. The debt is real — they borrowed the money and they cannot pay it back. For the people we serve, what matters is not whether a judgment exists. What matters is what the holder of that judgment can actually collect.

A judgment can reach two things

Income that is not protected, and property that is not protected. That is the whole list.

Most of our clients have neither. That is what people mean when they say someone is judgment proof. It is not a loophole or a filing — it is simply a description of someone a judgment cannot collect from.

Your income

Social Security, SSDI, SSI, veterans benefits and most pensions are protected by federal law. A credit card company, a hospital or a collection agency cannot garnish them, and winning a lawsuit does not change that.

Wages are different. Federal law protects up to $217.50 a week of your net pay, and anything above that can be garnished. Some states protect more, and a few — Pennsylvania, North Carolina, South Carolina and Texas — do not allow wage garnishment for consumer debt at all.

Your bank account

If you receive federal benefits like Social Security or Veterans benefits, a federal law automatically protects bank and credit union accounts where federal benefits are direclty deposited. The protection created by the direct deposit of a federal benefit into a bank or credit union account is equal to the total of all benefits directly deposited into the account over the preceeding two months. You can learn more about how this works by watching this video: Bank Account Protection Explained

Your belongings

Every state has exemption laws protecting your personal property. In practice, an unsecured creditor almost never comes after household goods.

Creditors, debt collectors and debt buyers do not want a person's household items and personal clothing for a practical reason. Used furniture and appliances are worth very little at a forced sale, and seizing them means court fees, a bond, and the sheriff’s time. It costs the creditor more than it returns. We have not seen it happen to a client.

If court papers arrive

Call us the day they come. If you are our client, we will tell you exactly what to do, and we will let the plaintiff's attorney know that your income is protected from any judgment that could be entered in the case

Whether you appear in court or file a response is your decision. Doing nothing generally means the creditor gets a judgment by default — which, if everything you have is protected from judgments, may change very little.