When you respond to the lawsuit, a debt collector has to prove to the court that the debt is valid. If you owe the debt, you may be able to work out a settlement or other resolution with the collector. Responding doesn’t mean you’re agreeing that you owe the debt or that it is valid.
If you don’t respond, the court could issue a judgment or court action against you, sometimes called a “default judgment.” For example, if you refuse to accept delivery or “service” of the lawsuit, the court could view this as ignoring a properly served lawsuit, and it’s unlikely that this tactic will be effective at defending yourself against the lawsuit.
As a result, it's likely that a judgment will be entered against you for the amount the creditor or debt collector claims you owe, as well as lawful additional fees to cover collections costs, interest, and attorney fees as allowed by the judgment.
Judgments also give debt collectors much stronger tools to collect the debt from you. You may lose the ability to dispute the debt, if you believe you don’t owe it or that the amount is wrong, and depending on your situation and your state’s laws, the creditor may be able to:
- Garnish your wages
- Place a lien against your property
- Move to freeze funds in your bank account
A judgment is a court order, so it can be very difficult to get it changed or set aside once the case is over. You have a much better chance to fight a collection in court if you defend the case than if you wait until a judgment is entered against you. You may also be able to work out a compromise or settlement by negotiating with the debt collector before a court makes a judgment.
