It is imperative that you show evidence to the attorney who filed suit against you to show you are current in your payments to the original creditor. Do not assume that this situation will sort itself on its own. Murphy's Law applies here.
There are several reasons for you to clear up this matter before a judgment is filed against you. First, it is waste of everyone's time. Judges get especially cranky if the parties in dispute appear in his or her court and have already settled the matter. Second, if a judgment is filed against you in error, it may be very difficult to unwind and vacate the judgment. Third, a judgment will appear on your credit report.
As mentioned in some states, if a judgment is paid before it is recorded never becomes part of the judgment records and will therefore not appear on your credit report. Once a judgment is entered, you may be able to negotiate with the judgment creditor (the plaintiff) to file a motion to have the judgment expunged as part of the settlement agreement. These last two options are much more difficult and time consuming that simply settling with the plaintiff before the judgment is issued.
Discuss settlement options with the attorney who is threatening to file the lawsuit before a judgment is entered against you. A judgment will almost certainly damage your credit score, so if a judgment can be avoided through proving it is unnecessary, I would encourage you to consider that option.
To read more about credit and credit scoring, I encourage you to visit the of Bills.com Credit Solutions and Resources page.
I hope this information helps you Find. Learn & Save.