What happens if you're sued while enrolled in a debt forgiveness program?
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TL;DR
- Enrollment in a debt forgiveness program does not prevent creditors from suing to collect unpaid balances.
- Creditors can pursue legal action, including lawsuits, while debt settlement negotiations are ongoing.
- Ignoring a lawsuit can result in a default judgment, which allows creditors additional collection methods like wage garnishment or bank levies.
- If sued, borrowers must respond to court documents by the given deadlines.
- It is important to notify the debt relief company about the lawsuit and inquire about their assistance and how it affects the settlement strategy.
- Consulting a consumer law attorney is recommended to understand legal rights and how to respond to the lawsuit.
- Reviewing the overall debt relief plan and considering other options like credit counseling or bankruptcy may be necessary if multiple creditors sue or funds are insufficient for settlements.