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Information & Advice if Getting Sued by a Creditor

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Mark Cappel
UpdatedApr 29, 2024
Key Takeaways:
  • FDR has a good track record of assisting customers sued by a creditor.

I am currently enrolled in a debt settlement program and two creditors have filed a lawsuit. Will the company help me?

I went with FDR last February and have only paid off one debt. I currently have 2 debtors that have filed a lawsuit against me and I need to know what happens in such a case. Do they get a judgment against me or does FDR do something?

When you refer to FDR, I assume that you are talking about Freedom Debt Relief. Based on my past experience with debt negotiation firms like FDR, some are better than others when it comes to assisting customers who are facing legal action filed by their creditors. Thankfully, FDR has a good track record of assisting customers sued by a creditor while enrolled in its debt negotiation program.

The first thing that I would recommend that you do, if you have not already done so, is contact FDR as soon as possible to let them know that these lawsuits have been filed against you. Once they are made aware of the lawsuits, FDR will likely contact the attorneys representing these creditors to discuss possible options available to stop these lawsuits from proceeding. For example, if you have adequate funds available to negotiate a settlement with one or both of the creditors, the lawsuits can hopefully be resolved through settlement before they proceed any further. If you have not yet accumulated adequate funding to settle with these creditors, FDR will likely try to negotiate a payment arrangement with the creditors’ attorneys to stabilize the situation. If your funding allows for a settlement of the accounts in question, then it is possible that they will be settled prior to the court entering judgments against you. In cases where a payment arrangement is needed, the creditor may proceed with obtaining a judgment against you to guarantee that payments are made, but it should not take any action to enforce the judgment as long as payments are timely. Whether to settle the accounts or to negotiate payment terms, I would expect that FDR will work with these attorneys to try to prevent these lawsuits from escalating any further. For more information about debt negotiation and settlement services, I encourage you to visit the debt negotiation page.

I have worked with FDR in the past and know that only a small percentage of the accounts enrolled in the FDR program have legal action filed by the creditor to collect the balance owed. In the vast majority of cases, creditors will pursue standard collection tactics, such as sending accounts to collection agencies, while the consumer builds funds to negotiate settlements. However, for that small percentage of accounts that do end up in litigation, FDR has a dedicated team of legal account specialists who focus on resolving these accounts before the creditor can take further action against the consumer to enforce the debt. If you have not already spoken with FDR’s legal accounts team, you should definitely contact them to advise them of the situation you are facing so they can begin working to resolve these lawsuits. They may also be able to provide guidance as to the legal process in your state and what resources are available to you to help you with responding to these lawsuits.

I strongly encourage you to maintain frequent communication with FDR so that you know what progress is being made in the negotiations to resolve these lawsuits. FDR should be able to tell you what options the creditors are offering to resolve these accounts, and in a worst case scenario, discuss alternative options with you if the options being offered by the creditors are not affordable. From my experience, the negotiators at FDR are skilled in resolving such accounts, and I would fully expect that that they can work with you to manage the difficulties you are currently facing.

I wish you the best of luck in resolving these lawsuits, and hope that the information I have provided helps you Find. Learn. Save.



Struggling with debt?

Debt is used to buy a home, pay for bills, buy a car, or pay for a college education. According to the NY Federal Reserve total household debt as of Q4 2023 was $17.503 trillion. Auto loan debt was $1.607 trillion and credit card was $1.129 trillion.

According to data gathered by from a sample of credit reports, about 26% of people in the US have some kind of debt in collections. The median debt in collections is $1,739. Student loans and auto loans are common types of debt. Of people holding student debt, approximately 8% had student loans in collections. The national Auto/Retail debt delinquency rate was 4%.

Each state has its rate of delinquency and share of debts in collections. For example, in Nebraska credit card delinquency rate was 3%, and the median credit card debt was $463.

While many households can comfortably pay off their debt, it is clear that many people are struggling with debt. Make sure that you analyze your situation and find the best debt payoff solutions to match your situation.



PPrerana, Jul, 2021

So Freedom Debt Relief told me that I need to call the court and ask them for extension because I do not have money in my dedicated account. But I was under the impression that their lawyers will talk to court even though I did not have enough money. If I was communicated that I had to go to court I would have never gone with this company. I feel like I was blind sited. I even called them when Discover offered me settlement they said that I need to send them to sue me. This is so not right. I am very disappointed at this company.

JJosh, Aug, 2021

Hello Prerana,
Thank you for reaching out to us today. We have notified upper management of Freedom to address your concern. One of their experienced representatives will be reaching out.

Regards, Josh

BBill, Aug, 2009
Income tax returns are not public information. Creditors do not have access to these records, unless you send them copies of your returns, such as when applying for a mortgage.
zzak, Aug, 2009
does a potential creditor have access to my tax returns, and can they just pull up my income, exemptions,status,etc.?
SSam, Apr, 2009
You do not have to have an attorney to respond to this summons, you can go to the court form which the summons originated and file a reply with the clerk, they will explain what you will need to do. You can explain your situation in front of the judge and I am pretty sure he will take your unemployment status into consideration. The worst case scenario is that a judgment will be passed against you for which, depending on the state law, your future wages might be garnished. Fixed income such as unemployment and disability are usually protected from creditor garnishments.
BBig Moe, Apr, 2009
I being sue by a collector attorney for an unsecured loan of $20,000 which I can not make any payments nor arrange an agreement due to unemployment and unability to find work due to most to my age and physical limitations. What can I write to respond to this lawsuit or what are the worst case scenario. Since I am unemployed and not having the financial resources to pay for a legal defense or bankruptcy
BBill, Sep, 2008
I am sure if a creditor sees money in your accounts they are going to give you a tough time with the settlements (remember they have access to your credit profile). You should discuss this issue with the counselors at Freedom Debt Relief. Call up their customer service department at the earliest and see what they advise you to do. Were you of the required age (59 1/2) while making the withdrawal, or did you pay penalties? This withdrawal will be reported as income on your income tax returns.
CCarmen Lopez, Sep, 2008
my husband has requested $15,000 from a 401k (of which we will be paying taxes and fees) account to cover any emergencies that arise since we signed up with FDR. will there be any repercusssions becuase we have this emergency fund in our savings account? where should we keep the money if not in savings?