How to Respond to a Debt Lawsuit

If you’re sued over a debt, you may feel confused or stressed. It’s important to know what the lawsuit means and what steps you can take. This guide explains:

• What debt collection lawsuits are
• What defenses you may have
• What limits exist on how much creditors can collect 

Understanding these rules can help you make informed decisions about your situation. 

What is a creditor?

A creditor is a person or company that you owe money to.

What happens if you owe money?

If you owe money, the creditor can call you, write to you, give the debt to a collection agency, or sue you.  

If the creditor gives a debt to a collection agency, the collection agency or debt buyer can call, write, or sue you.

If you do not pay, a creditor may be able to shut off services or deny you services.

Until a judgment is entered, creditors cannot take any money or property from you. A judgment is a court order saying you owe money.

• There are some exceptions. For more information related to cars and debt, see the Car Repossession guide.

What are the possible defenses against a debt lawsuit?

Responding to a lawsuit is called filing an answer. To file an answer, you need to give a legal reason why you do not owe the money. Not being able to pay is not a legal defense. Some common examples of defenses include:

• It is not your debt.
• The amount claimed is not accurate because not all payments you made are shown.
• The original creditor (the company you owed money to) sold the debt, and there is no proof that the collection agency that filed the lawsuit (called a plaintiff) actually owns the debt or has the right to sue.
• The debt is too old (this is called being barred by the statute of limitations).

There are times that there are no legal defenses. In those situations, filing an answer will not change the outcome.

What is a statute of limitations?

A statute of limitations is how long someone has to file a lawsuit before too much time has passed. In Colorado, creditors usually have 6 years from when you stopped paying to sue you for most debts (like credit cards and personal loans).

If too much time has passed, you can ask the court to dismiss the case. The time is counted from when you defaulted (stopped making payments) or last made a payment. Check the date you last made a payment to figure out the statute of limitations.

What if there is no proof of the debt?

The creditor must prove you owe the debt and that they have the right to collect it. You can ask them to show:

1. A copy of the original agreement.
2. Records showing how they calculated the amount.
3. Documents proving they own the debt if it was sold or transferred.

What if there was improper service?

You must be properly served with the lawsuit. This means the creditor followed the legal rules for serving you with the lawsuit paperwork.

If you believe you were not properly served, you must raise this in the first pleading you file, which is usually an answer. 

Can I counter-sue?

If you are sued, you can counter-sue for any damages that you may be owed for violations by the current creditor or the original creditor. This is called a counterclaim. 

After entry of court judgment

A judgment is a court's decision that you owe money, which gives the creditor the legal right to collect that money from you.

Interrogatories: Interrogatories are a series of questions that the judgment creditor can send to you after the Court enters a judgment against you.

• If you receive interrogatories, you must answer them completely and honestly. If you do not answer them, you may be found in contempt of court and have a bench warrant issued for your arrest. For more detailed information, see our guide on Understanding Interrogatories and Subpoenas After a Money Judgment.

Attachment of Property: The court may enter an order that directs the sheriff to seize, also called attach, the property and sell it to pay the judgment.

• You may object to the attachment. When you are served with notice, you should also receive an objection form. You have a limited amount of time to object and need to seek legal advice immediately or deal with the situation yourself.

Interest: Interest continues to grow on judgments.

Garnishments: A judgment creditor can try to garnish bank accounts and wages. You do not get notified in advance of a garnishment.

• For more detailed information, see our guides on Wage Garnishment and Bank Account Garnishments.

What does it mean to be "collection proof"?

State and federal laws set out what property or money a judgment creditor can take. If you are collection proof, then you do not have any income, assets, or property that a creditor could take, either by garnishment or attachment.  

This means even if the creditor wins a judgment, they may have no way to collect from you. It’s important to confirm whether your income and property are protected before assuming you are collection proof. Examples of protected income and property include:

• Most state and federal benefits
• Child support and spousal maintenance
• Public benefits 
• Wages up to a certain amount   

For more detailed information, see our guide on What It Means to Be Collection Proof.

What steps can I take now?

1. Ask for proof: Ask the creditor for proof of the debt and their right to collect it.
2. Respond to the lawsuit: Never ignore court papers. File an Answer or other response by the deadline.
3. Know your exemptions: Learn what property and income are protected.
4. Consider settlement carefully: If you have no property or income a creditor can take, you may not need to settle the lawsuit.
5. Get legal help: If you are unsure whether you are collection proof or have questions about your rights, talk to a lawyer.

Need more help?

If you are low-income, a senior, or a veteran, you may qualify for free legal help from Colorado Legal Services (CLS). To apply or ask if you might qualify, go to the CLS website and find the office that serves your area. If you call or visit, CLS can help you in your native language.

You can get help from the courts. Every judicial district has staff called “Sherlocks” to help people with their legal questions. To find the Sherlock in your county, visit the Judicial Department’s Sherlock webpage.