Resolving a Case

Any time you agree you owe a debt, you might want to consider resolving the case before a lawsuit is filed against you. You can reach out to the creditor at any time and explain your situation. Be honest with them about how much you can pay and see if you can come to an agreement. If you do owe money but disagree with the amount, make every effort to communicate with the creditor and settle the matter. 

Below is information that may be helpful if a creditor files a lawsuit against you but it is not a substitute for legal advice. There are other rules and laws that may apply to your situation, but these are common rules and laws that apply in civil cases.


  • It is a bad idea to just stop making payments. If you have already stopped making payments, your creditor may send a letter informing you they want to sue. Think about reaching out to the creditor before they sue. If a suit is filed, the creditor will want you to pay the court filing fees and attorney's fees, increasing the amount you may end up owing.

  • You might have some payment options, such as making your upcoming payments when they are due and offering to pay your past due amount in installments. Another option is to ask the creditor to refinance your loan. Just be sure any agreement you make is one you can afford and is in writing. Make sure you read and understand all the new conditions so you will not be surprised later.

  • The creditor might agree to accept a lump sum amount that is lower than the total amount owed. The creditor might also agree to lower monthly payments. Make sure you read and understand all the conditions, especially if you accept additional penalties if you miss a payment. For example, the creditor might allow you to pay what you owe with no interest, but if you miss a payment all the interest comes back.
    Beware of signing agreements that allow the creditor to obtain a judgment without notifying you.  

  • Once you have been sued, the creditor will want you to pay the court filing fees and attorney's fees. While some creditors stop adding interest to the debt once they file the lawsuit, others do not, which costs you more money the longer the debt remains unpaid. Car title loans can have interest rates up to 204% per year. Not all creditors are the same and some debts could end up much higher if the case drags on for 6 or 12 months. 

  • If a judgment is signed before you make a payment agreement, the creditor could ask a judge to order your employer to withhold money from your paycheck and garnish your wages. Once that happens, the creditor knows they can get paid a certain amount every paycheck and it might be too late to offer a different payment plan. 

  • If you know you owe the money and do not think you can actually win the case, you might be better off trying to settle. But if you believe you do not owe this amount of money, watch the video entitled "How to File an Answer in Consumer Debt Cases."

  • Once a settlement is complete, you should get a satisfaction of judgment signed by the creditor. Be sure you file this document with the court so it is reflected on your credit report.

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