First, you need to take a deep breath. Yes, a sheriff’s deputy just came to your house to serve you with legal papers, but no, you are not going to jail. This is a civil lawsuit, and there will be a hearing in a magistrate’s court (district justice) or a Common Pleas Court (I’m talking to you Pennsylvania residents here). Read the fine print of the lawsuit complaint very carefully. The hearing is not automatically scheduled. The hearing will only be scheduled if you file a written response!

Second, you should speak with a qualified attorney about defending the case. Frequently, credit collection companies purchase old credit card accounts and file lawsuits against individual cardholders. These accounts are frequently stale, meaning that the time to file a lawsuit has passed (the “statute of limitations”). Speak with an attorney about your specific circumstances.

You should realize however that the judge hearing your lawsuit case will not serve as a mediator to determine a payment plan. The judge’s job is to determine whether or not you owe the debt. If you lose the lawsuit, there will be a judgment against you. In Pennsylvania, that judgment serves as an automatic lien against any real estate you own. In addition, the creditor can possibly garnish your bank account. Remember however that the creditor cannot garnish your paycheck in Pennsylvania unlike in other states.

Finally, you should take this opportunity to examine all of your debts. Frequently, a lawsuit is a warning sign of other financial problems. And there may be many other debts that are troubling you as well. Therefore, you may want to consider some form of debt relief such as bankruptcy. If you decide to file bankruptcy, then this debt along with other unsecured debts will be wiped out, along with the lien on your property.