Having outstanding debts can lead to financial stress, especially when there simply isn’t enough money to make the payments. While many creditors are patient and allow things like payment plans, others are in a rush to get their money. Ultimately, some creditors may opt to file a lawsuit against you in an attempt to get the money they’re owed.
Being sued by a creditor can be an alarming realization, especially if you aren’t familiar with what will happen. In Iowa, a creditor lawsuit usually begins with formal court papers stating the amount allegedly owed and the reason for the claim. This document contains a host of information that’s important, including deadlines that can impact your options.
What happens with the lawsuit process?
Most creditor lawsuits follow the same pattern, which starts when the creditor files the lawsuit with the court. Once that occurs, you will be served with the Petition and given a limited time to file an Answer. It is imperative that you timely respond otherwise the court may issue a default judgment. This then enables the creditor to pursue collection remedies.
Once an Answer is filed, the case enters the discovery phase prior to the trial date. In some cases, you and the creditor may be able to reach an agreement before reaching trial. If that doesn’t happen, the court will decide the outcome. The court will issue a judgment, which can result in wage garnishment, bank account levies or liens against property.
Not all creditor lawsuits end in a judgment being issued, so it’s critical that you learn your options for addressing the lawsuit. In some cases, filing bankruptcy may be beneficial, and you should seek the assistance of a bankruptcy lawyer. A bankruptcy filing will result in the issuance of an Automatic Stay, which can help to provide protection from creditors, particularly if the creditor is harassing you.