If you are looking into a debt management program or you are pursuing your options for legal debt settlement, you may be discouraged by hearing how your creditors plan to sue you, regardless of the fact that you are trying to settle your debts. Although the debt collector may have meant it as an idle threat, once it has been stated that their company intends to sue you, there are four steps which they are legally obligated to follow.

If a law firm or a collection agency has taken over your account, they must notify you of this in writing. The letter must clearly state that any information you provide to them will be used for the purpose of collecting a debt. It must also give you the right to dispute the accuracy of the claim within 30 days of receiving the letter. The agency pursuing collection efforts against you must be licensed to do business in the state you reside in.

Assuming that you did not dispute the validity of the claim, the next communication you will receive is Notification of Summons and Complaint. This may come through the postal mail or by summons, which means it will be handed to you by a sheriff. This document will explain why you are being sued and for what amount.

Depending on the county where you live and their laws concerning debt collection, you may be given up to 20 days to respond to the official notification. The answer gives you the chance to defend the debt. Also, in the 20 days you have before an answer is due, you have the opportunity to accumulate funds to pay the creditor or try to work out a debt settlement that is favorable to both parties. If you do not provide an answer to the summons, the creditor wins a judgment against you by default.

If the creditor does win a judgment, they may now proceed to collect their money through wage garnishment, a lien on your home or car or a levy against your bank account. The legality of these steps depends on the laws of the state you reside.