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Guide to Court-Ordered Debt Collections
by
Marco Maknown
•
February 10, 2026
•
14 min
Facing debt collection can be overwhelming, especially when court involvement becomes a possibility. Understanding your rights, obligations, and options can help you navigate this challenging situation with confidence. This comprehensive guide addresses the most critical questions about court-ordered debt collections and provides practical information to help you make informed decisions.*
How often do debt collectors take you to court?
Debt collection lawsuits are far more common than most people realize. According to The Pew Charitable Trusts, debt collection cases rose from roughly 1.7 million in 1993 to approximately 4 million by 2013, representing about one in four civil cases nationwide. More recent data shows this trend has continued, with up to 4.7 million cases filed in 2022.
That said, debt collectors don’t automatically pursue every case through litigation. Lawsuits involve substantial costs, including filing fees and attorney expenses, which collectors must weigh against recovery potential. They typically sue when the debt amount is significant enough to justify legal costs, when they have strong documentation, or when other collection methods have failed. Contrary to popular belief, creditors may sue for relatively small balances—even debts under $1,000.
Credit card debt, medical bills, personal loans, and auto loan deficiencies are among the most commonly litigated debts. Debt buyers like Portfolio Recovery Associates, Midland Funding, and LVNV Funding frequently file lawsuits as part of their standard collection strategy. According to Pew research, in states with available data, approximately half of all debt collection cases involve amounts less than $2,000.
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How to respond to a court summons for debt
Responding promptly to a court summons is the single most important step you can take when facing a debt collection lawsuit. Your response deadline typically ranges from 20 to 30 days depending on state law and how you were served. Ignoring the summons will likely result in a default judgment against you, allowing the collector to garnish wages, levy bank accounts, or place liens on property.
Your response, called an “answer,” must address each claim in the complaint. You can admit, deny, or state that you lack sufficient knowledge to respond to each allegation. When you deny owing the debt or lack knowledge about it, you force the collector to prove their case with evidence.
According to California Courts, your answer should include any defenses you have to the lawsuit. Common defenses include:
- General denial: You dispute all or most of the claims because you don’t know if they’re accurate
- Improper service: The summons wasn’t delivered according to legal requirements
- Statute of limitations: The debt is too old to be legally collectible
- Identity theft or mistaken identity: The debt belongs to someone else
- Lack of documentation: The collector can’t prove you owe the debt or that they have the right to collect it
- Payment already made: You’ve already paid some or all of the debt
You must file your answer with the court clerk and send copies to the plaintiff’s attorney. Some states charge filing fees, while others allow you to file for free. Keep copies of all documents for your records. Many courts offer standardized answer forms that simplify the process for people representing themselves.
If you need more time to prepare your response, you can request an extension from the court. Contact the court clerk’s office for guidance on filing procedures and available resources. Washington Law Help emphasizes that you must respond even if you believe the debt isn’t yours, as failing to respond results in an automatic win for the collector.
Do I need a lawyer for debt collection?
While you’re not legally required to have an attorney for a debt collection case, legal representation can significantly improve your outcome in certain situations. According to research cited by Pew, from 2015 to 2017 in Utah, 53% of consumers with lawyers won their debt collection cases, compared to only 19% without legal representation.
You can successfully defend yourself without an attorney, particularly for straightforward cases involving smaller debt amounts. Many court systems provide self-help resources, standardized forms, and guidance from court clerks. However, certain situations warrant hiring an attorney:
When legal help is strongly recommended:
- You’ve been served with court papers and face a lawsuit
- The debt amount exceeds $5,000
- You believe the debt isn’t valid or you’re a victim of identity theft
- The collector is using illegal harassment tactics
- You’re considering bankruptcy
- The case involves complex legal issues or multiple creditors
- You don’t understand the legal process or paperwork
According to the Consumer Financial Protection Bureau, once you have legal representation, debt collectors must communicate through your attorney, which can provide immediate relief from collection calls. Attorneys can also identify violations of the Fair Debt Collection Practices Act, negotiate better settlements, and defend you in court.
Look for attorneys specializing in consumer law, debt collection defense, or the Fair Debt Collection Practices Act. Many offer free initial consultations. Check with your state bar association for lawyer referrals, or contact legal aid organizations if you have limited income. Some attorneys work on contingency fees, meaning you only pay if they win your case or negotiate a favorable settlement.
What happens if a debt collector goes to court?
When a debt collector decides to pursue litigation, they must follow a formal legal process. The collector files a complaint with the court, outlining the debt amount and basis for their claim. You’ll be served with a summons and complaint, which officially notifies you of the lawsuit.
If you respond to the lawsuit by filing an answer, the case proceeds through several stages. Both parties engage in “discovery,” where they exchange information and evidence. The collector must prove they own the debt, that you owe the amount claimed, and that they have the legal right to collect. You have the opportunity to present defenses and challenge their evidence.
According to Pew research, more than 70% of debt collection lawsuits result in default judgments because defendants don’t respond or appear in court. CFPB findings show that approximately 75% of people sued don’t attend their court hearing.
If the court rules in favor of the debt collector, they receive a judgment against you. This legal ruling has serious consequences:
Collection powers after judgment:
- Wage garnishment: The collector can garnish up to 25% of your disposable income
- Bank account levies: Funds in your checking or savings accounts can be frozen and seized
- Property liens: Liens can be placed on real estate or other valuable property
- Additional costs: The judgment typically includes the original debt plus interest, court costs, and attorney fees
According to Pew research, all 50 states and the District of Columbia allow courts to award pre- and post-judgment interest. Rates vary dramatically from 1.5% in New Jersey to 12% in Massachusetts and Washington. A Maryland study found that court costs, attorney fees, and interest added an average of $512—more than 18% of the principal—to total judgments.
Even after a judgment, you may have options. You can negotiate a payment plan with the collector, challenge the judgment if proper procedures weren’t followed, or request a modification based on financial hardship. In some cases, bankruptcy may be appropriate to address overwhelming debt.
How long does a court-ordered garnishment last?
Wage garnishment continues until specific conditions are met, and the duration varies based on multiple factors. According to financial experts, for most consumer debts like credit cards, medical bills, or personal loans, garnishment typically lasts until the original debt amount is paid off, along with accumulated interest, court costs, and attorney fees.
Federal law limits garnishment to 25% of your disposable income or the amount by which your weekly earnings exceed 30 times the federal minimum wage, whichever is less. This doesn’t shorten the garnishment period—it only determines how much comes out of each paycheck.
Factors affecting garnishment duration:
- The type of debt significantly impacts how long garnishment lasts. Federal student loans operate under different rules, with the government able to take up to 15% of disposable income without requiring a court judgment. Tax debts can be garnished until fully satisfied, and the IRS isn’t bound by the same limitations as other creditors.
- The judgment itself has a statute of limitations that varies by state. According to legal resources, many states allow creditors to renew judgments before they expire. Some states permit one or two renewals, while others have no limit. When renewed, the judgment remains enforceable for another full cycle, potentially making it nearly permanent.
- Individual garnishment orders may expire after a specific period, such as 60 or 90 days, requiring renewal to continue. Each renewal typically adds court costs to your total debt. The actual duration depends on your debt amount and the garnishment percentage—the larger the percentage withheld, the faster the debt is paid off.
Options to end garnishment sooner:
- Challenge the garnishment: If improperly issued or the amount is excessive, request a court hearing to contest it. You may be able to reduce the garnishment amount if you can prove financial hardship.
- Negotiate with the creditor: Some creditors accept lump-sum settlements for less than the full balance, which ends garnishment immediately.
- File for bankruptcy: While not suitable for everyone, bankruptcy triggers an automatic stay that stops most wage garnishments immediately. Chapter 7 can discharge certain debts entirely.
- Make additional payments: Voluntary payments beyond the garnished amount reduce the principal faster, ending the garnishment sooner.
If you change employment or become unemployed, garnishment typically stops until the creditor obtains a new order against your new employer. However, the debt doesn’t disappear—the creditor can resume garnishment once you’re employed again.
Do I have to appear in court for debt collection?
Whether you must physically appear in court depends on how you respond to the lawsuit and the specific procedures in your jurisdiction. You’re not automatically required to appear in court simply because you’ve been sued, but ignoring the case entirely will result in a default judgment.
The most critical requirement is filing a written answer to the complaint within the specified timeframe. According to court guidance, this can often be done in writing without initially appearing in person. Your written response addresses the allegations and asserts any defenses you have.
After filing your answer, several scenarios may occur:
When court appearance becomes necessary:
- If the case proceeds to trial, both parties must appear before a judge. However, many debt collection cases settle before trial. If you file an answer and raise valid defenses, the collector may be more willing to negotiate a settlement rather than continue with expensive litigation.
- Some jurisdictions require appearance at preliminary hearings or status conferences, where the judge checks on case progress. You may appear in person or through an attorney. Missing required court dates can result in default judgment, even if you filed an answer.
- According to the Federal Trade Commission, responding to the lawsuit—either personally or through your attorney—preserves your rights. Even if you plan to settle, appearing when required demonstrates good faith and keeps your options open.
Benefits of appearing in court:
When you appear, you force the collector to prove their case with evidence. Many collection lawsuits involve debt buyers who purchased old debts and may lack proper documentation. Your presence requires them to produce:
- Proof that you owe the debt
- Documentation of the original agreement
- Evidence they have the legal right to collect
- Accurate accounting of the amount owed
Without these documents, the case may be dismissed. According to Pew research, recent studies show that even when required, court officials may not adequately review whether claims are valid, how much is owed, or whether the right person is being sued. Your appearance helps ensure proper scrutiny.
Appearing also creates opportunities for negotiation. Many collectors prefer settling to the time and expense of trial. Your willingness to engage can lead to more favorable terms than you’d receive through default judgment.
If you absolutely cannot appear on a scheduled date due to emergency, contact the court immediately to request a continuance. Don’t simply skip the hearing—communicate with the court and the opposing party.
Is it better to settle a debt or go to court?
The decision to settle debt or defend yourself in court depends on your specific financial situation, the validity of the debt, and your long-term goals. Neither option is universally superior—each has advantages and drawbacks that must be weighed carefully.
When settling makes sense:
- Settlement often represents the most practical option when the debt is valid and you have some ability to pay. Settlement amounts typically range from 20% to 60% of the original debt. Creditors often prefer recovering a portion quickly rather than risking the time, cost, and uncertainty of litigation.
- Settling before legal action provides maximum leverage. Once a lawsuit is filed, your negotiating position weakens, though settlement remains possible even after being served. Having cash available for a lump-sum payment makes creditors more willing to accept reduced amounts, as it guarantees immediate recovery.
- A court judgment damages your credit for years and opens the door to wage garnishment, bank levies, and property liens. Settlement, while still negative for your credit, typically causes less long-term damage than a judgment. Settled accounts remain on credit reports for seven years from the date of first delinquency but are generally viewed more favorably than judgments by future lenders.
Important settlement considerations:
- The forgiven portion of settled debt may be considered taxable income by the IRS. If you settle a $10,000 debt for $3,000, you might receive a 1099-C form for the $7,000 in forgiven debt, creating potential tax liability. Settlement also requires available funds—you must be able to make the agreed-upon payment, whether lump-sum or installment plan.
- Always get settlement agreements in writing before making payment. The agreement should specify the total amount, payment terms, and confirm that payment satisfies the debt completely. Without written documentation, disputes can arise about whether the debt was truly settled.
When going to court makes sense:
- Defending yourself in court becomes appropriate when you have legitimate reasons to challenge the debt. If you don’t believe you owe the debt, it’s already been paid, the amount is incorrect, you’re a victim of identity theft, or the statute of limitations has expired, going to court may be your best option.
- Once served with a summons, you have no choice but to engage with the legal process. However, appearing and defending forces the collector to prove their case. According to legal resources, many debt buyers lack proper documentation, and cases may be dismissed when collectors can’t produce required evidence.
- Some individuals are “judgment-proof,” meaning they have no wages to garnish, no valuable assets to seize, and their income sources (like Social Security or disability) are protected from creditors. If you’re judgment-proof, going to court may cost you less than settling, though you should consult an attorney before assuming this protection.
The bottom line
There’s always a practical hybrid approach when it comes to settling or going to court. According to debt settlement attorneys, settlement and litigation aren’t mutually exclusive—it’s often best to pursue both simultaneously. Even after being served with a lawsuit, you can continue negotiating while preparing your court defense. Many cases settle shortly before trial when collectors realize you’re prepared to fight.
If you decide to negotiate, consider the following timeline:
- Before lawsuit: Maximum leverage; creditors most willing to settle
- After lawsuit filed: Still possible but with less leverage
- After judgment: Limited options; may need to pay full amount plus costs
The key is taking immediate action. Whether you choose settlement or court defense, ignoring the situation guarantees the worst outcome. Consult with a debt attorney or credit counselor to evaluate your specific circumstances and determine the most appropriate strategy.
There’s always JG Wentworth…
Do you have $10,000 or more in unsecured debt? If so, there’s a good chance you’ll qualify for the JG Wentworth Debt Relief Program.* Some of our program perks include:
- One monthly program payment
- We negotiate on your behalf
- Average debt resolution in as little as 24-60 months
- We only get paid when we settle your debt
- Some clients save up to 45% before program fees
If you think you qualify for our program, give us a call today so we can go over the best options for your specific financial needs. Why go it alone when you can have a dedicated team on your side?
* This information is provided for educational and informational purposes only. Such information or materials do not constitute and are not intended to provide legal, accounting, or tax advice and should not be relied on in that respect. We suggest that You consult an attorney, accountant, and/or financial advisor to answer any financial or legal questions.
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* Program length varies depending on individual situation. Programs are between 24 and 60 months in length. Clients who are able to stay with the program and get all their debt settled realize approximate savings of 43% before our 25% program fee. This is a Debt resolution program provided by JGW Debt Settlement, LLC (“JGW” of “Us”)). JGW offers this program in the following states: AL, AK, AZ, AR, CA, CO, FL, ID, IN, IA, KY, LA, MD, MA, MI, MS, MO, MT, NE, NM, NV, NY, NC, OK, PA, SD, TN, TX, UT, VA, DC, and WI. If a consumer residing in CT, GA, HI, IL, KS, ME, NH, NJ, OH, RI, SC and VT contacts Us we may connect them with a law firm that provides debt resolution services in their state. JGW is licensed/registered to provide debt resolution services in states where licensing/registration is required.
Debt resolution program results will vary by individual situation. As such, debt resolution services are not appropriate for everyone. Not all debts are eligible for enrollment. Not all individuals who enroll complete our program for various reasons, including their ability to save sufficient funds. Savings resulting from successful negotiations may result in tax consequences, please consult with a tax professional regarding these consequences. The use of the debt settlement services and the failure to make payments to creditors: (1) Will likely adversely affect your creditworthiness (credit rating/credit score) and make it harder to obtain credit; (2) May result in your being subject to collections or being sued by creditors or debt collectors; and (3) May increase the amount of money you owe due to the accrual of fees and interest by creditors or debt collectors. Failure to pay your monthly bills in a timely manner will result in increased balances and will harm your credit rating. Not all creditors will agree to reduce principal balance, and they may pursue collection, including lawsuits. JGW’s fees are calculated based on a percentage of the debt enrolled in the program. Read and understand the program agreement prior to enrollment.
This information is provided for educational and informational purposes only. Such information or materials do not constitute and are not intended to provide legal, accounting, or tax advice and should not be relied on in that respect. We suggest that you consult an attorney, accountant, and/or financial advisor to answer any financial or legal questions.