I Am Being Sued for Debt: What Are My Options?

Receiving a lawsuit summons is alarming. The formal language, the court deadlines, and the threat of a judgment can feel overwhelming. But being sued does not mean you are out of options. In fact, this is often the moment when taking decisive action can make the biggest difference in your financial future.

Bryan P. Keenan has helped thousands of Pittsburgh residents respond to debt lawsuits effectively. Whether the lawsuit was filed by a credit card company, medical provider, debt buyer, or collection agency, there are concrete steps you can take to protect yourself.

What Happens When a Creditor Sues You

When a creditor files a lawsuit, you receive a summons and complaint, usually delivered by a sheriff or process server. The complaint describes the debt, the amount claimed, and the legal basis for the suit. You typically have 20 to 30 days to file a written response (called an "answer") with the court.

If you do not respond within the deadline, the creditor can request a default judgment. A default judgment means the court rules in the creditor's favor without hearing your side. This is one of the most important reasons not to ignore a lawsuit, even if you believe you owe the debt.

What a Judgment Means

Once a creditor obtains a court judgment, they gain powerful enforcement tools:

• Wage garnishment: Pennsylvania has historically been protective of wages, and most private creditors cannot garnish wages under state law. However, federal agencies, tax authorities, and certain other creditors can garnish up to 25% of disposable income. Additionally, some creditors pursue garnishment in other jurisdictions where the rules differ.
• Bank account levy: A creditor with a judgment can petition the court to freeze and seize funds in your bank account. You may receive little or no advance warning before funds are taken.
• Property liens: Judgments can be recorded as liens against real property you own in the county. This prevents you from selling or refinancing without first satisfying the judgment.
• Asset seizure: In theory, a judgment creditor can execute against personal property, though this is uncommon in practice for consumer debts.

Judgments in Pennsylvania are valid for 5 years and can be renewed, potentially following you for a decade or longer.

Your Options When Facing a Lawsuit

Option 1: File an Answer and Defend the Case

You have the right to contest the lawsuit. Common defenses include challenging whether the statute of limitations has expired, disputing the amount owed, questioning whether the plaintiff actually owns the debt (common with debt buyers), or raising procedural defects in how the lawsuit was served.

Defending a lawsuit requires legal knowledge and ongoing court appearances. For many people, the cost of hiring a litigation attorney exceeds the potential benefit, especially when the debt is legitimate.

Option 2: Negotiate a Settlement

Many creditors will accept a reduced lump-sum payment to resolve a lawsuit, particularly debt buyers who purchased the account for pennies on the dollar. Settlement amounts vary widely, from 25% to 75% of the balance, depending on the creditor and your financial situation.

The drawback is that you need available cash to fund the settlement, and forgiven amounts over $600 may be treated as taxable income. Settlement also does not address your other debts, which may be headed toward similar lawsuits.

Option 3: File for Bankruptcy

Filing for bankruptcy stops a lawsuit in its tracks. The automatic stay takes effect the moment the petition is filed, and the creditor must immediately cease all litigation activity. If the underlying debt is dischargeable (most credit card debts, medical bills, and personal loans are), the lawsuit becomes permanently moot once your discharge is entered.

Bankruptcy addresses the lawsuit and all your other debts simultaneously. Rather than fighting one creditor at a time, you resolve your entire financial picture in a single legal proceeding.

When to File Bankruptcy to Stop a Lawsuit

Timing matters. The best time to file is before a judgment is entered, because preventing a judgment is simpler than unwinding one. However, bankruptcy can still help after a judgment, including stopping active garnishments and levies.

Here are situations where filing sooner rather than later is strongly advisable:

• You have been served with a lawsuit and the answer deadline is approaching
• A judgment has been entered and you expect garnishment or a bank levy
• Your wages are already being garnished
• Multiple creditors are pursuing you simultaneously
• The total debt across all creditors exceeds your ability to repay

In emergency situations, Bryan can prepare and file a bankruptcy petition within days. The moment the case number is generated, the automatic stay applies.

Chapter 7 vs. Chapter 13: Which Is Right?

Chapter 7 eliminates most unsecured debts in approximately 4 months. If the lawsuit involves credit card debt, medical bills, or personal loans, Chapter 7 can permanently resolve the matter. You must qualify through the means test, which evaluates your income against the Pennsylvania median.

Chapter 13 is often the better option if you are behind on mortgage payments, need to catch up on car loan arrears, or have income above the Chapter 7 threshold. Chapter 13 allows you to repay a portion of your debts through a structured 3- to 5-year plan while maintaining automatic stay protection throughout.

Do Not Wait Until It Gets Worse

The single biggest mistake Bryan sees is delay. People receive a lawsuit, feel paralyzed, and do nothing. The deadline passes, a default judgment is entered, and within weeks, money starts disappearing from their paycheck or bank account. Every day you wait is a day that creditors can use to strengthen their position.

If you have been sued for a debt, or if you believe a lawsuit may be coming, contact Bryan P. Keenan for a free consultation. There is no cost to learn your options, and early action gives you the most flexibility.